GRIMMEL NO v FAWCETT SECURITY OPERATIONS (PVT) LTD

HIGH COURT, HARARE

[Civil Trial HH 52-16]

January 13 and 20, 2016

MATANDA-MOYO J

Company law  – Companies Act [Chapter 24:03]  – Power of liquidator to bring proceedings in the name of the company  – Whether section 221 of the Companies Act prohibits a liquidator from bringing proceedings in his or her name on behalf of the company in liquidation.

Company law  – Companies Act [Chapter 24:03]  – Requirement for liquidator to seek leave of court before instituting proceedings  – Whether failure to obtain leave is fatal  – Implications of section 221 (2) of the Companies Act.

The liquidator, as plaintiff, instituted proceedings against the defendant seeking to recover a payment made to the defendant by the company in liquidation within six months immediately preceding liquidation. The liquidator claimed that the payment was a voidable preference. At the commencement of the trial, the defendant raised, among others, two points in limine, namely that (i) there was no proper plaintiff as the liquidator had brought the proceedings in her own name and (ii) the proceedings were invalid as the liquidator had not obtained the leave of the court.

Held, that a liquidator is entitled to bring proceedings in his or her own name as long as it is clear that he or she is suing in his or her official capacity on behalf of the company and provided further that there is no prejudice to the other party.

Held, further, that a liquidator cannot institute proceedings on behalf of a company in liquidation without the leave of the court or other authorisation under the Companies Act. Any purported litigation without such leave or authorisation is invalid.

Cases cited:

De Villiers and Others NNO v Electronic Media Network (Pty) Ltd 1991 (2) SA 180 (W), referred to

Gainsford and Others v Hiab AB 2000 (3) SA 635 (W), followed

Letsitele Stores (Pty) Ltd v Roets and Others 1958 (2) SA 224 (T), referred to

Shepstone & Wylie and Others v Geyser NO 1998 (1) SA 354 (N), followed

Legislation considered:

Companies Act [Chapter 24:03], ss 218 (4)(a), 221, 221 (2), 221 (2)(a), 269

Book cited

Diemont MA (assisted by Boehmke MA) Pyemont’s Company Law of South Africa (6th edn, Juta & Co Ltd, Cape Town, 1953)

D Ochieng, for the plaintiff

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