THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Not reportable

Case No: 20096/2014

In the matter between:

P REDDY

APPELLANT

and

ABSA BANK LTD

FIRST RESPONDENT
COLIN MARK POOLE NO

SECOND RESPONDENT
NICOLA CRONJE NO

THIRD RESPONDENT

Neutral citation:
Reddy v Absa Bank (20096/2014) [2015] ZASCA 83 (28

May 2015).

Coram:

Lewis, Ponnan and Saldulker JJA and Van der Merwe

and Mayat AJJA

Heard:

21 May 2015

Delivered:

28 May 2015

Summary:
The winding up of a close corporation during the period of
deregistration is automatically retrospectively validated upon  reinstatement in
terms of s 82(4) of the Companies Act 71 of 2008.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from: KwaZulu-Natal Division of the High Court, Durban (Koen J
sitting as court of first instance): reported sub nom Missouri Trading CC v
Absa Bank 2014 (4) SA 55 (KZD).

The appeal is dismissed with costs.
______________________________________________________________

JUDGMENT
______________________________________________________________

Van der Merwe AJA (Lewis, Ponnan and Saldulker JJA and Mayat AJA
concurring):

[1] As a result of its failure to submit annual returns, Missouri Trading CC
(Missouri) was deregistered in terms of s 82(3)(a) of the Companies Act 71 of
2008 (the Act) on 29 July 2011. It is common cause that the registration of
Missouri was reinstated in terms of s 82(4) of the Act on 18 April 2013. (These
provisions of the Act are applicable to close corporations in terms of s 26 of
the Close Corporation Act 69 of 1984). The issue in this appeal is whether the
corporate activities of Missouri, during the period of its deregistration, had
been validated upon its reinstatement.

[2] On 2 August 2011, the first respondent launched an application for the
provisional winding up of Missouri. Despite opposition, a provisional winding
up order was granted on 31 May 2012. A final winding up order was made on
27 August 2012. The second and third respondents were appointed as the
liquidators of Missouri and they commenced with the winding up of its affairs
in terms of the Act.

[3] Only at this stage did the deregistration of Missouri come to the
knowledge of the first respondent and to that of the appellant, the sole
member of Missouri. The appellant consequently launched an application in

the KwaZulu-Natal Division of the High Court, Durban for an order declaring
that the winding up of Missouri was void and of no force and effect. The
application was based solely on the ground that when the provisional and final
winding up orders and the appointment of the second and third respondents
as liquidators were made, Missouri had been deregistered.

[4] The first respondent opposed the application and filed a counter-
application. It essentially asked for a declarator that the winding up of Missouri
was valid in all respects and of full force and effect. The counter-application
was in turn based only on the contention that the reinstatement of Missouri
operated retrospectively.

[5] The High Court (Koen J) dismissed the application of the appellant and
granted the declarator sought by the first respondent. It is clear that the fate of
the appeal depends on whether the reinstatement of Missouri retrospectively
validated the corporate activities thereof during the period of its deregistration.
This question was decisively settled by this court in Newlands Surgical Clinic
v Peninsula Eye Clinic [2015] ZASCA 25 (20 March 2015). In para 29 of
Newlands, Brand JA stated that s 82(4) of the Act ‘has automatic
retrospective effect, not only in revesting the company with its property but
also in validating its corporate activities during the period of its deregistration’.
It is accordingly not necessary to analyse the reasoning of the court a quo.

[6] Upon its reinstatement the winding up of Missouri had therefore been
automatically validated retrospectively in all relevant respects. It follows that
the appeal is devoid of merit.

[7] In supplementary heads of argument, the attorney for the appellant
appeared to attempt to seek relief in terms of s 83(4) of the Act, based on
factual allegations put forward in the heads of argument. It suffices to say that
this is wholly impermissible.

[8] The appeal is dismissed with costs.

_______________________
C H G VAN DER MERWE
ACTING JUDGE OF APPEAL

APPEARANCES:
For Appellant:

C Lenasch
Instructed by:
Lenasch Attorneys, Durban
Honey & Partners, Bloemfontein

On behalf of first, second and third respondents:

A Stokes SC
Instructed by:

Johnston & Partners, Durban

Phatshoane Henney Inc, Bloemfontein