REPORTABLE

CASE
NO.: SA 23/2008

IN
THE SUPREME COURT OF NAMIBIA

In
the matter between

NATIONWIDE DETECTIVES
AND

PROFESSIONAL
PRACTITIONERS CC FIRST APPELLANT

And

ONDANGWA TOWN
COUNCIL FIRST RESPONDENT

CORAM: Chomba
AJA, Mtambanengwe, AJA et
Damaseb,
AJA

HEARD
ON: 2009/03/12

DELIVERED
ON: 2009/06/17

APPEAL
JUDGMENT

MTAMBANENGWE,
A.J.A.:

[1] This
appeal is against the dismissal with costs by the High Court (Hoff J)
of an application for the rescission of an order granted by the High
Court (Silungwe AJ) dismissing appellant’s application for summary
judgment.

[2] In
brief the background to the appeal is the following. The appellant,
represented by Mr Kamwi, acting as its alter
ergo,
issued summons against respondent claiming the sum of N$72, 913.46
apparently for services rendered. When appearance to defend was
entered appellant applied for summary judgment. That application was
set down by appellant for hearing at 9h30 on 30^th
September 2006. It is common cause, or not disputed, that the matter
was enrolled on the Motion Court roll for that day, starting at
10h00, as well as in Court F. The result was that Mr Kamwi, having
seen the matter on the Motion Court roll, did not attend Court F as
he did not bother to make enquiries until he saw the legal
representatives of respondent walking out through the motion Court
where he was waiting for the matter to be called. Meanwhile the
matter had been called in Court F, and, in Mr Kamwi’s absence,
Silungwe AJ, at respondent’s legal practitioners’ request,
dismissed the application for summary Judgment with costs including
costs of a Rule 30 application that respondent’s legal
practitioners had lodged for hearing on the same date.

The
application for the rescission of Silungwe AJ’s order took various
forms, including two notices of motion to that effect dated 08
September 2006 and 21 February 2007. These were withdrawn and
replaced by a new application on notice of motion filed on 29 March
2007. Suffice to say the final application for rescission was made
in terms of Rule 44(1)(a) of the High Court Rules.

2. 
   Summons
   against respondent
   in the main action was issued by Mr Kamwi as representative of
   appellant acting under the authority of a resolution which reads as
   follows:

   
   

“In terms of Rule 7 of the High
Court the close corporation hereby nominates its sole member in terms
of section 42 and 54 of the close corporation act to act and
represent it in all its dealings including proceedings in the court
of law”.

[4] In
his heads of argument Mr Dicks, appearing for respondent, raised two
points in
limine;
either of which, if sustained by this Court, would, independently,
sound the death knell to this appeal. Before turning to consider
these points I should, however, record that both the points in
limine
and the merits of the appeal were addressed in both heads of argument
submitted on behalf of the parties and in oral argument before this
Court. I now turn to consider the first point in
limine.

[5] The
first point is based on the provisions of section 26 of the Close
Corporation Act, 26 of 1988 (the Act), which provides:

“(1) If the
Registrar
has reasonable cause to believe that a corporation is not carrying on
business or is not in operation, he shall serve on the corporation at
its postal address a letter by certified post in which the
corporation is notified thereof and informed that if he is not within
sixty days from the date of his letter informed in writing that the
corporation is carrying on business or is in operation, the
corporation will, unless good cause is shown to the contrary, be
deregistered.

(2) After the expiration of the period
of sixty days mentioned in a letter referred to in subsection (1), or
upon receipt from the corporation of a written statement signed by or
on behalf of every member to the effect that the corporation has
ceased to carry on business and has no assets or liabilities, the
Registrar may, unless good cause to the contrary has been shown by
the corporation, deregister that corporation.

(3) Where a
corporation has been deregistered, the Registrar shall give notice to
that effect in the Official Gazette, and the date of the publication
of such notice shall be deemed to be the date of deregistration.”

Notice
in terms of the Act, listing
in the schedule thereof appellant as one of the close corporations
deregistered thereby, appeared in Government Gazette No. 4037 of 29
April 2008. Section 1 of the Act defines “Deregistration” as
“the cancellation of the registration of the corporation’s
founding statement”. Mr Kamwi admitted all this and went further
to state that the deregistration of appellant in fact took place on
his request.

[6] Mr
Dicks submitted that the effect of deregistration of a corporation is
that its existence as a legal person ceases and that upon such
deregistration “all its property, movable and immovable, corporeal
and incorporeal, passes automatically (i.e. without any necessity for
delivery or any order of Court) into the ownership of the State as
bona
vacantia.”
For this submission Mr. Dicks relied on authorities cited in General
Note on s 73 of the Companies Act and submitted that this applied a
fortiori in the case of a close corporation. In one of the cases he
listed, Ex
parte Jacobson: In re Alex Jacobson Holdings (Pty) Ltd
1984(2) SA 372 (D) Goldstone J noted at 374D-

“There is a long
line of authority to the effect that where a company is deregistered
any property which it may have owned on the date of deregistration
becomes bona
vacantia
and vests in the State.”

At
p 376 H to 377 C the learned judge amplified his comments as follows:

‘In terms of s 1
of the Act deregistration – ‘in relation to a company, means the
cancellation by the Registrar of the registration of the memorandum
and articles of the company…’

And, in terms of ss
64 and 65 of the Act it is that registration of the memorandum and
articles of a company which results in the incorporation of the
company. From the date of such incorporation life is breathed into
the association and it –

‘becomes capable
of exercising all the functions of an incorporated company, and
having perpetual succession…’

(s 65 (1)).

In my
opinion the cancellation of the registration of the memorandum and
articles of the company must have the opposite effect, i.e. its
corporate personality comes to an end. In the passage from Cilliers,
Benade and De Villiers Company
Law
cited by MELAMET J supra
recognition is given to the fact that deregistration ‘deprives the
company of its legal personality’. In my opinion that means no
more and no less than that the company ceases to exist: see Joubert
The
Law of South Africa
vol 4 para 361. If any further authority is required it may be found
in the provisions of s 73 (6) itself. It is there provided that upon
restoration of the registration of a company –

‘the company
shall be deemed to have continued in existence as if the
registration of its memorandum and articles had not been cancelled’.

In other words,
upon deregistration a company ceases to exist and this deeming
provision is necessary to create a state of affairs which did not in
fact obtain, ie the continued existence
of the company after the deregistration thereof.”

1. 
   In
   Bowman
   NO v Sacks and Others
   1986 (4) SA 459 (W) at 463 G – H Fleming J stated:
   

   
   

“Upon dissolution
of a company it disappears as a
legal entity. A similar result may arise for other reasons, eg by
deregistration, where legal personality falls away from the
association of persons perhaps without any liquidation of company
affairs. Such
other possibilities do not detract therefrom that dissolution of a
company is a manner in which the legal
personality
of a company is destroyed.
Cf Pennington’s Company Law 4th ed (1979) at 784. With
cessation of existence, there is also an end to any corporate
activity;
acts
thereafter done on behalf of the company would be ‘acts of mere
usurpation.”
(My emphasis)

Mr Dicks lastly submitted
that as there was no proof that appellant had been restored the
applicant had lost its legal personality, and that the current appeal
was an act of mere usurpation.

[8] In
his written reply to this point in
limine
Mr Kamwi agreed that “the deregistration of a close corporation
indeed results in the cancellation of the founding statement and loss
by the association of members forming the corporation of legal
personality and corporate status.” He however, argued that
deregistration “does not terminate the existence of the
corporation.” To put it in his own words:

“Upon
deregistration only the association of persons sustaining the
corporation merely loses its corporate
personality and further deregistration does not affect any liability
of any person to the corporation and such liability must be enforced
as if the corporation were not deregistered (see section 26(4) of Act
26 of 1988.”

He
further relied on Rule 15(1) of the High Court Rules, (which he said
applied to the Supreme Court a fortiori)
where it provides that

“No proceedings
shall terminate solely by reason of death, marriage or other changes
of status of any party there to unless the cause of such proceedings
is thereby extinguished.”

[9] Mr
Kamwi’s reply reveals a number of misconceptions which I shall deal
with shortly hereunder. Before I do so, however, it is necessary to
repeat in greater detail certain aspects of the matter so as to put
the proceedings in question in a proper perspective. The main action
against respondent commenced with the issue of summons on 23 June
2006. Then followed steps taken by either party in connection with
the pleadings, culminating in appellant’s application for summary
judgment which was heard and dismissed by the High Court on 30
September 2006. An application for the rescission of the order
dismissing the application for summary judgment was initially
launched by notice on 8 November 2006, followed on 21 February 2007
by an amended notice to rescind the order; both these notices were
withdrawn on 29 March 2007 and on the same day a fresh notice was
filed to apply on 13 April 2007 for rescission of the order in terms
of Rule 44(1)(a) of the High Court Rules. After several
postponements the application was heard on 2 May 2007. The appeal
against Hoff J’s order dismissing with costs the application in
terms of Rule 44(1)(a) was then noted on 7 June 2007 and was on 13
October 2008 enrolled for hearing.

1. 
   On 29
   April 2008 appellant was deregistered. It took nearly a year from
   June 2007 to 14 May 2008 for appellant to serve the record of
   proceedings in the Court a
   quo
   on respondent. In a letter to the Registrar of the High Court dated
   4 June 2008 respondent’s legal practitioner complained of the
   delay to apply for a date of hearing of the appeal and to furnish
   the said record. In reply appellant purported to file a notice of
   motion asking for condonation of “the late filing of the records”
   and the striking of respondent’s said letter: in the affidavit in
   support Mr Kamwi still calls himself the ‘alter
   ergo’
   of appellant “duly authorized to depose to this affidavit” and
   explains that

   
   

“The only
reason for the late filing is that appellant did not have funds to
pay for the records at CompuNeeds Namibia CC at the High Court of
Namibia”.

The affidavit was sworn
to and filed on 29 September 2008. What happened thereafter does not
appear from the records except that on 13 October 2008, the Registrar
of the Supreme Court gave notice to the parties that the matter had
been set down for hearing on 12 March 2009.

[11] The
position, therefore, is that from the date of the Registrar’s
notice in the Gazette appellant as a legal person ceased to exist.
Section 26(4) of the Act on which Mr Kamwi relies provides:

“The deregistration of a corporation
shall not affect any liability of a member of the corporation to the
corporation or to any other person; and such liability may be
enforced as if the corporation were not deregistered”.

The
subsection clearly does not empower a member of the corporation to
enforce any person’s liability to the corporation. If, as Mr.
Kamwi accepts, the appellant ceased to exist as a legal personality
on 29 April 2008, it follows that from that date the resolution under
which Mr. Kamwi had been acting hitherto had ceased to have any
effect. Another way of putting it is that Mr. Kamwi’s acts after
the deregistration of appellant, which acts he claims to do as
appellant’s alter ergo, cannot be the acts of the appellant as
appellant no longer existed. (Bowman
N.O v Sacks and Others
supra;
Lees
Import and Export (Pty) Ltd v Zimbabwe Banking Corporation Ltd
1999 (4) SA 1119 (ZS) at 1130 H, Silver Sands Transport (Pty) Ltd v
S.A Linde (Pty) Ltd. 1973 (3) SA 548 (W) at 549.

1. 
   Mr
   Kamwi’s reliance on Rule 15 (1) of the High Court Rules is equally
   misconceived. That where a corporation has ceased to exist, as in
   this case, its property vests
   in the State as bona
   vacantia
   has not been denied by Mr Kamwi. All it means in this case is that
   the right of action which is an incorporeal asset of appellant had
   also vested in the State (Rainbow
   Diamonds (EDMS) BPK en Andere v Suid –Afrikaanse Nationale Lewns
   Assuransie Maats Kappy
   1984 (3) SA 1 (A) at 10 – 12). To put it more plainly, the
   proceedings have not been terminated, but the right of action has
   been lost with the deregistration of the appellant. In the words of
   Fleming
   J in Bowman N.O v Sacks and Others supra
   Mr Kamwi, in continuing to act for appellant after 29 April 2006 was
   thus committing an act of usurpation.

   
   

[13] The
above conclusion on the first point in
limine makes
it unnecessary to consider the second point in
limine
raised by Mr Dicks. It also becomes unnecessary to go into the
merits of the appeal.

The Costs

14. 
    In
    Silver
    Sands Transport
    case supra
    the Court was faced with a situation similar to what obtains in this
    case, i.e. someone acting on behalf of a non-existent company.
    Snyman J remarked at 549 G
    

    
    

“In regard to Mr.
Rall’s act of signing a minute of a meeting of this non-existent
company and thereafter signing a power of attorney authorising
the appointment of attorneys and counsel to act for this non-existent
company, it seems to me that he may well have some responsibility for
the costs which the defendant has incurred. The defendant has been
put to considerable costs preparing for trial and in appearing
through counsel this morning here, and if the fault lies with Mr.
Rall, then it is only fair that he should be ordered to pay the
defendant’s costs.”

14. 
    I
    adopt
    the same approach as regards costs in this matter which Mr Kamwi
    must pay personally for continuing to act for a non-existent
    corporation.
    

    
    

14. 
    In
    the result I make the following order:

    
    

1. 
   The appeal is dismissed
   with costs.

   
   

2. 
   Mr
   Kamwi is ordered to pay respondent’s costs in his personal
   capacity.

   
   

_______________________

MTAMBANENGWE, AJA

I concur.

_______________________

CHOMBA,
AJA

I concur.

_______________________

DAMASEB,
AJA

COUNSEL ON BEHALF OF
THE APPELLANT: In person

COUNSEL ON BEHALF OF
THE RESPONDENT: Mr. G. Dicks

INSTRUCTED
BY: Dr. Weder, Kauta &
Hoveka