Mouton v Boland Bank Ltd (401/99) [2001] ZASCA 58; [2001] 3 All SA 485 (A); 2001 (3) SA 877 (SCA) (10 May 2001)

Mouton v Boland Bank Ltd (401/99) [2001] ZASCA 58; [2001] 3 All SA 485 (A); 2001 (3) SA 877 (SCA) (10 May 2001)

Section 26(7) of the Close Corporations Act does not operate to extinguish the personal liability of a member imposed by section 26(5) upon deregistration. The statutory fiction created by section 26(7) is directed at the continued existence of the corporation, not at reversing liabilities already incurred by members. There is no provision in section 26(5) limiting its operation or making it subject to section 26(7), nor is there any indication in section 26(7) that the legislature intended to relieve members from personal liability. The policy behind section 26(5) is to impose a civil penalty on members who allow deregistration while liabilities exist, and reregistration does not undo...

Citation
[2001] ZASCA 58
Parties
Appellant: Johann Mouton; Respondent: Boland Bank Beperk
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
10 May 2001
Case Number
401/99
Procedural Posture
Civil Appeal / Appeal From Western Cape High Court; Judgment Delivered After Hearing Legal Issue in Limine
Outcome
The appeal and the condonation application are dismissed with costs. Judgment is given in favour of the respondent bank for the agreed quantum.
Judges
Schutz, Scott, Zulman
Legal Topics
Close Corporations Act, Personal Liability of Members, Deregistration and Reregistration, Statutory Interpretation
Commercial and Corporate Close Corporations Act Personal Liability of Members Deregistration and Reregistration Statutory Interpretation

Case Brief

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Parties

Johann Mouton

Appellant

Boland Bank Beperk

Respondent

Procedural Posture

Civil Appeal / Appeal From Western Cape High Court; Judgment Delivered After Hearing Legal Issue in Limine

Legal Issues

  1. 1 Does section 26(7) of the Close Corporations Act operate upon reregistration to release from personal liability a member who became liable for a corporation’s debts in terms of section 26(5) upon its prior deregistration?.

Ratio Decidendi

Section 26(7) of the Close Corporations Act does not operate to extinguish the personal liability of a member imposed by section 26(5) upon deregistration. The statutory fiction created by section 26(7) is directed at the continued existence of the corporation, not at reversing liabilities already incurred by members. There is no provision in section 26(5) limiting its operation or making it subject to section 26(7), nor is there any indication in section 26(7) that the legislature intended to relieve members from personal liability. The policy behind section 26(5) is to impose a civil penalty on members who allow deregistration while liabilities exist, and reregistration does not undo...

Court Disposition

The appeal and the condonation application are dismissed with costs. Judgment is given in favour of the respondent bank for the agreed quantum.

Orders

  • The appellant’s condonation application and the appeal are dismissed with costs.
  • The judgment of the court a quo is supplemented by the addition: The defendant is ordered to pay the plaintiff the sum of R200,841.61 plus interest at 20.375% per annum from 31 May 1995 to date of payment.