Salat Enterprises (Pty) Ltd v Conspiracy Fashions Lesotho Ltd and Others (CIV/T/340/2004 )

Case No: 
CIV/T/340/2004
Media Neutral Citation: 
[2004] LSHC 124
Judgment Date: 
18 October, 2004

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CIV/T/340/2004 IN THE HIGH COURT OF LESOTHO

In the matter between:-

SALAT ENTERPRISES (PTY) LTD PLAINTIFF

and

CONSPIRACY FASHIONS LESOTHO

LTD Ist DEFENDANT

CHAO CHANG CHI (Mr ) 2nd DEFENDANT

LU SHOO LIN (Mr) 3rd DEFENDANT

Ruling

Delivered by the Hon. Mrs Justice A. M. Hlajoane on 18th

October, 2004.

Plaintiffs case is based on a Sublease Agreement relating to the Commercial premises situated at Maputsoe Plot No.23134 - 019. The claim is about arrear rentals owed to the Plaintiff by the Defendants in breach of the said Agreement for none performance of payment on their part.

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The third Defendant had filed notice of appearance to defend and subsequent to that also filed notice of exception. The exception was taken on the basis that Plaintiffs declaration lacked averments necessary to sustain an action against the third Defendant.

The third Defendant has given grounds upon which his exception is founded. He says that he was not a party to the agreement and as such incurred no personal liability against the plaintiff. He merely acted on behalf of the first Defendant and in his capacity as duly authorized representative of the first Defendant. Also that Plaintiffs declaration alleges no alternative ground upon which the third Defendant could be held liable in his personal capacity for the payment of arrear rentals.

According to the Plaintiff, the third Defendant has been sued in his representative and official capacity as one of the Directors and shareholders of the first Defendant. He has not just been sued as a witness to the Sublease Agreement, but as a party representing first Defendant and as such could be held liable in conducting himself negligently and acting in breach of his duty. Third Defendant is considered liable in terms of Companies Act of 1967, Sections 27 (1) 29, 34 (2), 141, 168, 172, 272 and 275.

In the declaration, the role played by the third Defendant was where he

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represented the first Defendant when the Sub-lease Agreement was entered into between the Plaintiff and the first Defendant. It has not been stated whether or not the company was a private one or what, in order to bring it under the given provisions of the Companies Act. It has also not been stated whether the company was in the process of winding up or under judicial management for provisions of sections 168, 172, 272 and 275 of the Act to apply.

A company being a legal person can contract in the same way as an individual. But, however, unlike an individual, it cannot contract in person but must do so through a person acting under its authority. From the sublease agreement and in terms of the resolution that was taken by the board of directors of the first Defendant, the third Defendant was authorized to represent the first Defendant. Tuckers Land and Development Corporation v Perpellief 1978 (2) S.A. 12 at 14 (f).

The first Defendant has been described as a company with limited liability and as such a legal person with its corporate identity, separate and distinct from the directors or shareholders and its own property rights and interests to which alone it is entitled. If the company is in the wrong, the company itself has to be sued. This principle has been cited with approval by Hoexter JA in Francis George Hill Family Trust v South African Reserve Bank & Others 1992 (3) SA 91 (A) at 97E-F.

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Because the third Defendant was acting as representative of first Defendant as director, he could therefore not be personally held liable but the company as he was authorized so to act.

It has also been the Plaintiffs case that the third Defendant's exception did not give plaintiff notice to amend the summons to withdraw action against the third Defendant or amend such summons in terms of Rule 29(3)(a) & (b) of the High Court Rules. On the reading of the provisions of that section, I learn that the word used is "may" thus giving a person a discretion.

The giving of a notice to amend is not mandatory as the word may has been used. As a result, the exception is allowed and the Plaintiffs particulars of claim as against the third Defendant are set aside. The Plaintiff is given leave, if so advised, to file amended particulars of claim within 30 days from date of delivery of this ruling.

A. M. HLAJOANE JUDGE

For Plaintiff: Mr Mabulu

For Defendants: Mr P. J. Loubser