Mpotshane Safaris CC v Brill (5468/2016) [2017] ZAECGHC 107 (22 September 2017)

Mpotshane Safaris CC v Brill (5468/2016) [2017] ZAECGHC 107 (22 September 2017)

The court held that section 50 of the Close Corporations Act does not authorise the corporation itself to institute proceedings in its own name at the instance of a member. Rather, it permits a member to bring proceedings in his own name but for the benefit of the corporation, after notifying all other members. The plaintiff's particulars of claim were defective because the action was brought in the name of the corporation, not by a member on behalf of the corporation, and failed to allege a resolution by a majority of members. The notification requirement was satisfied by the email, but this did not cure the fundamental defect in the manner of institution of proceedings. The exception...

Citation
[2017] ZAECGHC 107
Parties
Plaintiff: Mpotshane Safaris CC; Defendant: Andrew Walter Brill
Court
Eastern Cape High Court, Grahamstown
Jurisdiction
South Africa
Judgment Date
22 September 2017
Case Number
5468/2016
Procedural Posture
Civil Procedure / Exception to Particulars of Claim
Outcome
Exception upheld; plaintiff granted leave to amend particulars of claim within 15 days; plaintiff to pay costs of the exception.
Judges
N Conjwa
Legal Topics
Close Corporations Act, Derivative Action, Exception Procedure, Pleading Requirements
Civil Procedure Commercial and Corporate Close Corporations Act Derivative Action Exception Procedure Pleading Requirements

Case Brief

Summary, issues, holding and outcome

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Parties

Mpotshane Safaris CC

Plaintiff

Andrew Walter Brill

Defendant

Procedural Posture

Civil Procedure / Exception to Particulars of Claim

Legal Issues

  1. 1 Whether section 50 of the Close Corporations Act permits a corporation to institute proceedings in its own name or only allows a member to do so on behalf of the corporation.
  2. 2 Whether the plaintiff's particulars of claim comply with Rule 18(4) of the Uniform Rules by containing sufficient material facts.
  3. 3 Whether proper notice was given to all members as required by section 50 before instituting proceedings.

Ratio Decidendi

The court held that section 50 of the Close Corporations Act does not authorise the corporation itself to institute proceedings in its own name at the instance of a member. Rather, it permits a member to bring proceedings in his own name but for the benefit of the corporation, after notifying all other members. The plaintiff's particulars of claim were defective because the action was brought in the name of the corporation, not by a member on behalf of the corporation, and failed to allege a resolution by a majority of members. The notification requirement was satisfied by the email, but this did not cure the fundamental defect in the manner of institution of proceedings. The exception...

Court Disposition

Exception upheld; plaintiff granted leave to amend particulars of claim within 15 days; plaintiff to pay costs of the exception.

Orders

  • The exception is upheld.
  • The plaintiff is granted leave to amend its particulars of claim within 15 days of the date of this order.