Mellet N O and Others v Vermeulen and Another (1049/2021) [2022] ZASCA 176 (7 December 2022)

Mellet N O and Others v Vermeulen and Another (1049/2021) [2022] ZASCA 176 (7 December 2022)

The Supreme Court of Appeal held that only natural persons may hold member's interests in a close corporation unless the requirements of s 29(1A) of the Close Corporation Act are strictly met. In this case, the Trust itself purported to hold the member's interest, rather than the trustees in their capacity as such. The appellants failed to provide any evidence that the Trust met the statutory requirements, such as the absence of juristic persons as beneficiaries and the limitation on the number of beneficiaries and members. Reliance on a certificate from the Companies and Intellectual Property Commission was insufficient, as it did not prove compliance with s 29(1A). The agreement was...

Citation
[2022] ZASCA 176
Parties
Appellant: Blucher Hauman Mellet N O; Appellant: Hendrik Francois Mellet N O; Appellant: Carolina Johanna Prinsloo N O; Respondent: Marais Rocco Vermeulen; Respondent: Evan Ernest Corbett
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
7 December 2022
Case Number
1049/2021
Procedural Posture
Civil Appeal / Appeal From the Free State Division of the High Court, Bloemfontein
Outcome
Appeal dismissed with costs.
Judges
Petse, Makgoka, Plasket, Makaula, Masipa
Legal Topics
Close Corporation Act, Trusts as Members, Statutory Interpretation, Invalidity of Contract, Onus of Proof
Commercial and Corporate Close Corporation Act Trusts as Members Statutory Interpretation Invalidity of Contract Onus of Proof

Case Brief

Summary, issues, holding and outcome

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Parties

Blucher Hauman Mellet N O

Appellant

Hendrik Francois Mellet N O

Appellant

Carolina Johanna Prinsloo N O

Appellant

Marais Rocco Vermeulen

Respondent

Evan Ernest Corbett

Respondent

Procedural Posture

Civil Appeal / Appeal From the Free State Division of the High Court, Bloemfontein

Legal Issues

  1. 1 Whether a Trust inter vivos can legally hold a member's interest in a close corporation under s 29(1) and s 29(1A) of the Close Corporation Act.
  2. 2 Whether the appellants discharged the onus of proving compliance with s 29(1A) requirements.
  3. 3 Whether the agreement of sale is invalid due to non-compliance with statutory requirements.

Ratio Decidendi

The Supreme Court of Appeal held that only natural persons may hold member's interests in a close corporation unless the requirements of s 29(1A) of the Close Corporation Act are strictly met. In this case, the Trust itself purported to hold the member's interest, rather than the trustees in their capacity as such. The appellants failed to provide any evidence that the Trust met the statutory requirements, such as the absence of juristic persons as beneficiaries and the limitation on the number of beneficiaries and members. Reliance on a certificate from the Companies and Intellectual Property Commission was insufficient, as it did not prove compliance with s 29(1A). The agreement was...

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.