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Court case on heir’s right to sue

Labuschagne and Others v Menlyn Brake and Clutch CC and Others [2020] ZAGPPHC 39

The applicants brought an application in the Pretoria High Court asking the court to order, inter alia, that they are the rightful holders of part of the membership interest in the first respondent (MB&C).  The second respondent, P, is the holder of the remaining 41% of the membership interest.  The first applicant (E) is the surviving spouse and sole heir of her deceased husband’s (C) estate, the second applicant (B) acted in his capacity as trustee of the Bo-Kloof Trust (the trust) as did the third and fourth applicants.

B, C, and P formed a close corporation (BMT) 2010 in order to buy the business known as Menlyn Brake and Clutch from a like-named close corporation.  After the sale BMT’s name was changed, rather confusingly, to Menlyn Brake and Clutch CC, the same name as that of the previous owner of the business, but under a new registration number.  B and C (P’s father) supplied part of the capital and received 36% and 23% respectively of the membership interest.  E’s and B’s case is that B and C at all times meant to be part of the business.  P’s case is that B and C lent him money and that their interest in MB&C was just to provide them with security for the loans.  In the second half of 2017 he requested them at a meeting to sign CIPC documents transferring their interest to him as he had repaid their loans by then.  They refused.  C died a few months later.

P also argued that E has no locus standi as she is not the executor in C’s estate.  ABSA Trust was nominated as executors in C’s will, but agreed to renounce in order for E’s attorneys to be appointed.  The court was not informed whether an executor was in fact appointed by the Master of the High Court.

The court (Ranchod J) held that E had locus standi on the basis that she is the sole heir in C’s estate.  The court also held that nothing in the papers or the circumstances of the case supported P’s case. The court ordered that E was the holder of 23% of the membership interest in MB&C and the trust the holder of 36% of the membership interest, and that MB&C’s register must reflect that.

Comment:
It is not clear from the judgement whether the estate was wound up by the time the application was lodged and the membership interest transferred to E.  If not, it is not clear on what basis the court held that E had locus standi as it is trite law that only the executor may sue on behalf of an estate under administration, except under certain circumstances.  The court does not refer to Standard Bank v July [2018] ZASCA 85 where the Beningfield exception was held to have been correctly applied.  See our discussion of this judgement posted on the FISA website on 21 June 2018.

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