Motor Industry Bargaining Council v Khan and Another (J388/14) [2015] ZALCJHB 280 (2 September 2015)

Motor Industry Bargaining Council v Khan and Another (J388/14) [2015] ZALCJHB 280 (2 September 2015)

The court held that section 26(5) of the Close Corporations Act was operative at the time the close corporation was deregistered, and the repeal of the section does not retrospectively extinguish liabilities incurred under it. Section 12(2)(c) of the Interpretation Act preserves such liabilities. The application was brought and served within the three-year prescription period, and there was no basis for the court to raise prescription mero motu. The respondents, as members at deregistration, are personally liable for the debts of the deregistered close corporation and for compliance with arbitration awards issued by the applicant's Dispute Resolution Council. The application was properly...

Citation
[2015] ZALCJHB 280
Parties
Applicant: Motor Industry Bargaining Council; Respondent: Nihal Khan; Respondent: Sawintra Devi Khan
Court
Labour Court Johannesburg
Jurisdiction
South Africa
Judgment Date
2 September 2015
Case Number
J388/14
Procedural Posture
Urgent Application / Application for Personal Liability Order Post Deregistration
Outcome
Application granted with costs; respondents declared personally liable for debts and compliance with arbitration awards.
Judges
Voyi
Legal Topics
Close Corporation Liability, Deregistration, Personal Liability of Members, Repeal of Statutory Provision
Commercial and Corporate Civil Procedure Close Corporation Liability Deregistration Personal Liability of Members Repeal of Statutory Provision

Case Brief

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Parties

Motor Industry Bargaining Council

Applicant

Nihal Khan

Respondent

Sawintra Devi Khan

Respondent

Procedural Posture

Urgent Application / Application for Personal Liability Order Post Deregistration

Legal Issues

  1. 1 Whether members of a deregistered close corporation can be held personally liable for its debts under the now repealed section 26(5) of the Close Corporations Act.
  2. 2 Whether the repeal of section 26(5) affects liabilities incurred prior to its repeal.
  3. 3 Whether prescription bars the applicant's claim.

Ratio Decidendi

The court held that section 26(5) of the Close Corporations Act was operative at the time the close corporation was deregistered, and the repeal of the section does not retrospectively extinguish liabilities incurred under it. Section 12(2)(c) of the Interpretation Act preserves such liabilities. The application was brought and served within the three-year prescription period, and there was no basis for the court to raise prescription mero motu. The respondents, as members at deregistration, are personally liable for the debts of the deregistered close corporation and for compliance with arbitration awards issued by the applicant's Dispute Resolution Council. The application was properly...

Court Disposition

Application granted with costs; respondents declared personally liable for debts and compliance with arbitration awards.

Orders

  • The First and Second Respondents are declared to be personally liable, jointly and severally, as members of the deregistered close corporation Nihals Autofit and Parts Centre CC, for its debts and for compliance with arbitration awards issued by the applicant under case numbers MINT11094, MINT18586, MINT18398 and...
  • The First and Second Respondents are ordered to pay the costs of the application on an attorney and client scale, jointly and severally, the one paying the other to be absolved.