Vermeulen & Another v Mellet N.O. & 2 others (A142/2020) [2021] ZAFSHC 141; [2021] 4 All SA 281 (FB) (27 May 2021)

Vermeulen & Another v Mellet N.O. & 2 others (A142/2020) [2021] ZAFSHC 141; [2021] 4 All SA 281 (FB) (27 May 2021)

The majority held that a trust inter vivos may only be a member of a close corporation if all statutory conditions in section 29(1A) of the Close Corporations Act are strictly complied with. In this case, the respondents failed to provide evidence of compliance, such as the trust deed, resolutions, or proof of appointment of a representative trustee. The registration of the member's interest in the name of the trust was insufficient, especially given evidence of fraudulent transfers and unexplained allocations. The purported agreement was void ab initio, as the trust could not legally possess or transfer the member's interest. Restitution was ordered, and the appeal succeeded. The...

Citation
[2021] ZAFSHC 141
Parties
Appellant: Marais Rocco Vermeulen; Appellant: Evan Ernest Corbett; Respondent: Blucher Hauman Mellet N.O.; Respondent: Hendrik Francois Mellet N.O.; Respondent: Carolina Johanna Prinsloo N.O.
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
27 May 2021
Case Number
A142/2020
Procedural Posture
Civil Appeal / Appeal From Single Judge Decision; Main and Counter Application
Outcome
Appeal upheld; agreement declared void ab initio; restitution ordered.
Judges
C.J. Musi, P.J. Loubser, J.P. Daffue
Legal Topics
Close Corporations Act, Trusts as Members, Statutory Compliance, Nullity of Contract, Declaratory Relief
Commercial and Corporate Civil Procedure Close Corporations Act Trusts as Members Statutory Compliance Nullity of Contract Declaratory Relief

Case Brief

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Parties

Marais Rocco Vermeulen

Appellant

Evan Ernest Corbett

Appellant

Blucher Hauman Mellet N.O.

Respondent

Hendrik Francois Mellet N.O.

Respondent

Carolina Johanna Prinsloo N.O.

Respondent

Procedural Posture

Civil Appeal / Appeal From Single Judge Decision; Main and Counter Application

Legal Issues

  1. 1 Whether a trust inter vivos may lawfully hold a member's interest in a close corporation without complying with statutory requirements.
  2. 2 Whether the deed of sale of membership interest between the trust and appellants is valid under the Close Corporations Act.
  3. 3 Whether the agreement is void ab initio due to non-compliance with section 29(1A) of the Close Corporations Act.

Ratio Decidendi

The majority held that a trust inter vivos may only be a member of a close corporation if all statutory conditions in section 29(1A) of the Close Corporations Act are strictly complied with. In this case, the respondents failed to provide evidence of compliance, such as the trust deed, resolutions, or proof of appointment of a representative trustee. The registration of the member's interest in the name of the trust was insufficient, especially given evidence of fraudulent transfers and unexplained allocations. The purported agreement was void ab initio, as the trust could not legally possess or transfer the member's interest. Restitution was ordered, and the appeal succeeded. The...

Court Disposition

Appeal upheld; agreement declared void ab initio; restitution ordered.

Orders

  • The appeal is upheld with costs.
  • The order of the Court a quo is set aside and replaced with: (a) The application is dismissed with costs; (b) The counter application is granted with costs.