Gouws v Glenwood Beleggings Bk

• Jurisdiction: South Africa
• Judge: Makgoka J, Preller J and Tlhapi J
• Judgment Date: 28 March 2013
• Docket Number: A679/2010
• Court: North Gauteng High Court, Pretoria
• Hearing Date: 01 August 2012
• Citation: 2013 JDR 0700 (GNP)

Makgoka, J

[1]

This is an appeal, with leave of the court a quo, against a costs order made by a single judge of this court (Potterill J) on 4 August 2009. The appellant was the (substantially) successful applicant in an application in terms of s 56(4) of the Close Corporation Act 84 of 1984, in terms of which she sought to compel the respondents to allow her to inspect the records of the first respondent and make copies thereof. The applicant also sought an order that she was entitled to be accompanied by her legal representative and her auditor for the purpose of the inspection.

[2]

She was successful with the first prayer, and partially successful with the latter, in that she was only granted her request to be accompanied by her auditor for inspection, as she had abandoned her request to be accompanied by a legal representative. Despite her success, the court not only deprived her of costs, but ordered her to pay the respondents' costs as between attorney and client. The reasoning of the court was that the applicant had caused unnecessary litigation. The appellant is aggrieved by that finding and the resultant costs order, hence this appeal.

[3]

Before I consider the merits of the appeal, I should deal with the appellants application for condonation for the late noting of the appeal, and the late furnishing of security for costs. This is opposed by the respondents. The affidavit supporting these applications was deposed to by the appellant's attorney of record, Mr. AdIam. The gist of his explanation is that his firm switched from among others, a manual system of diary to an electronic one during March 2010. Due to the sheer volume of files that had to be manually changed to the electronic system, an error occurred which resulted in this specific file not being diarised.

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Makgoka, J

[4]

As a result the file was not drawn for the attorney to attend to the necessary application for a date of hearing of the appeal. It was only on 21 June 2010 that Mr. Adlam got hold of the file, and noticed that the time for applying for a date of hearing had expired two days before. The respondents oppose the application on the basis that the explanation by Mr. Adlam is inadequate. I do not agree. In my view this explanation is adequate. A change over from manual system to an electronic one is always bound to experience some glitches. His lapse was not serious enough to warrant a refusal of condonation.

[6]

Even if the above conclusion is wrong, lack of proper explanation is not the only consideration. There are other factors to be considered, too, to determine whether condonation should be granted or not. In Federated Employers Insurance CO Ltd v McKenzie1969 (3) SA 360 (A), the following is said at 362G-H:

'In considering petitions for condonation under Rule 13, the factors usually weighed by the Court include the degree of non-compliance, the explanation therefor, the importance of the case, the prospects of success, the respondent's interest in the finality of his judgment, the convenience of the Court and the avoidance of unnecessary delay in the administration of justice.... The cogency of any such factor will vary according to the circumstances, including the particular Rule infringed"

[6]

In the present case, I am of the view that lack of a proper explanation (if any) would be far outweighed by the other factors. The delay was by no means inordinate. The court is not inconvenienced as all sets of papers are before court, and therefore a need for a postponement does not arise. It is furthermore essential for the administration of justice that this appeal be decided on its merits.

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Makgoka, J

[7]

I therefore conclude that the appellant has made out a proper case for the condonation of her late application for a date of hearing and the late furnishing of security.

[8]

That brings me to the merits of the appeal. The first respondent is the owner of an office block in Lynwood Glen, Pretoria. The appellant, the second and the third respondents are members of the first respondent (the close corporation). The appellant holds 48.75% membership interests in the close corporation, while the second respondent holds 43.75% and the third respondent holds 12.5%. The applicant had complained that the first respondent had surplus funds available which were retained and not paid out to the members by way of dividends or otherwise. She further complained that despite such surplus funds, little or no interest was shown in the financial records of the close corporation.

[9]

The respondent, explanation was that the close corporation had obtained a loan from Absa Bank for R930 000 and the balance of the purchase price of the property was obtained from members' loans. In order to liquidate the Absa loan expeditiously, GEOstelsels had paid portions of the amount due, by way of loans by it to the close corporation. The arrangement with GEOstelsels was that once the loans were paid off, the close corporation would make available to GEOstelsels its surplus funds until such time as GEOstelsels recovered all interest lost in the process. When the application was launched, GEOstelsels was entitled to a further R565 250.91. The respondents alleged that this arrangement was entered into with the full knowledge and consent of the

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Makgoka, J

applicant. The applicant had furthermore signed statements since 1990, which reflected this arrangement

[10]

Not satisfied with this explanation, the applicant instructed her attorneys to obtain certain documentation concerning the affairs of the close corporation. This was communicated to the close corporation in a letter dated 12 September 2005. The close corporation, represented by both the second and the third respondents, declined to respond to the applicant's request, and referred the applicant to earlier correspondence on 13 October 2008, in which the applicant was invited to personally, and by appointment, in her capacity as a member, inspect all the books and source documents of the close corporation at its offices.

[11]

The appellant was further informed that she would be allowed to make notes regarding the contents of the documents, but not to make copies thereof. The appellant was further invited to contact the auditor of the close corporation in the event of her requiring any advice, and informed that the...