The Gauteng High Court in Johannesburg has dismissed a City of Johannesburg application against two companies that had already been deregistered, finding they no longer existed in law and could not be compelled to act.
The matter arises from a protracted dispute dating back to property sale agreements concluded in 2001 and subsequent litigation over the alleged unlawful sale of two properties in Alexandra. The companies later instituted a damages claim exceeding R27 million against the City.
“The matter has a protracted and complex history. The history of the litigation between these parties stretches back to the initial sale agreements in 2001,” said the judge.
In the latest round of litigation, the City sought an order compelling the companies to provide R2 million in security for legal costs.
Dead man litigating
In 2003, the sale of the properties was declared “null and void”, with the properties to be transferred back to the City of Johannesburg.
This was followed by the respondents, Capensis Investments 352 and 322, going to court in 2012 to vary that order. The bid was later abandoned.
Capensis Investments’ sole director and shareholder died in September 2021. When the City attempted to finalise the matter, the respondents’ attorneys indicated that, due to failure to file annual returns, the companies were in the process of being deregistered.
The City tried, unsuccessfully, to halt that process.
A timeline of the City of Johannesburg’s bid to sue companies that don’t exist.
Fake lawyer
In another twist, a man who initially identified himself as Mthenjwa ka Mamthenjwa later said he was Advocate Ephraim Sepheka and stepped into the matter, claiming to act for the late director’s estate.
At one point, he claimed the companies’ deregistration had been put on hold – which later proved incorrect, but not before the companies changed legal representatives.
In the ruling, the judge noted that the City had been highly critical of Adv Sepheka and Mahlakoane Attorneys – who ultimately represented the companies – for purporting to act for deregistered entities.
Can’t have it both ways
“The applicant has argued, correctly in my view, that a deregistered company cannot litigate, that steps taken on its behalf are a nullity, and that the legal representatives are acting without authority.”
Yet, the judge said, in the same application, the “applicant itself has taken a direct legal step against these same deregistered companies. The applicant, in my view, cannot have it both ways”.
Stripping out the legal manoeuvring, the court found that the “respondent companies were finally deregistered on 30 March 2023 and became nullities, meaning that they cannot take any steps in legal proceedings, and no legal proceedings can be launched against them.”
Legal nullity
The judge added that “it follows that it cannot furnish a bank guarantee, comply with a court order, or pay costs”.
“The legal position is clear and well-established… a deregistered company is a legal nullity,” the judgment states.
It continued that such an entity “cannot take any steps in legal proceedings” and “no legal proceedings can be launched against them”.
Having found the application unsustainable, the court dismissed it and ordered the City to pay costs.
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