Malvern Trading CC v Absa Bank Ltd [2023] ZAGPJHC 541 (23 May 2023)

 Malvern Trading CC v Absa Bank Ltd [2023] ZAGPJHC 541 (23 May 2023)

In the case of Malvern Trading CC v Absa Bank Ltd, Malvern Trading CC (the applicant) sought the rescission of a default order granted in favor of Absa Bank Ltd (the respondent) for the delivery of a Mercedes Benz GLS 400d motor vehicle. The default order was granted after Malvern Trading failed to give notice of intention to oppose the respondent's motion for the return of the vehicle.

The respondent had issued a notice of motion claiming the return of the motor vehicle on the basis that it was sold to the applicant under an installment agreement, which the applicant breached by failing to pay the agreed installments. The respondent canceled the agreement after the applicant did not remedy its default following a proper demand.

The applicant's registered address was in Johannesburg, but it had chosen a domicilium citandi (an address for service of legal documents) in Polokwane. The notice of motion was served at the registered address in Johannesburg, but an attempt to serve at the domicilium citandi in Polokwane was unsuccessful due to an issue with the address description.

The applicant admitted to the breach of the agreement and did not raise any defense on the merits of the claim but argued that the order was erroneously sought and granted in its absence, contending that service at the registered address was invalid since the applicant was no longer present there, and that the court in Johannesburg did not have jurisdiction over the applicant since its principal place of business had moved to Polokwane.

The ratio decidendi of the case Malvern Trading CC v Absa Bank Ltd can be distilled into several core legal principles:
1. Validity of Service at Registered Address: The court held that service of process at the registered address of a close corporation is valid and effective for legal purposes, as per Section 25 of the Close Corporations Act, Act 69 of 1984. This holds true even if the close corporation is no longer present at that address. Knowledge of the corporation's absence from the registered address does not invalidate the service.
2. Domicilium Citandi and Alternative Service: The choice of a domicilium citandi does not preclude other legitimate forms of service of process. The court rejected the applicant's argument that the respondent was required to serve the application only at the applicant’s chosen domicilium citandi in Polokwane, and that service at the registered address in Johannesburg was invalid.
3. Jurisdiction Based on Registered Address: The court found that for jurisdictional purposes, a close corporation is deemed to have dual residency at its registered office and its principal place of business, if these locations differ. This dual jurisdiction principle allows different courts to have jurisdiction over a close corporation at the same time. The court held that the location of a close corporation's registered office within the court's jurisdiction confers jurisdiction on the court, even if the corporation's principal place of business is elsewhere.
4. Constitutional Imperative to Protect Access to Courts: The court also considered the constitutional imperative under Section 34 of the Constitution of the Republic of South Africa, 1996, which guarantees the right of access to courts. The court reasoned that recognizing dual jurisdiction in respect of close corporations is necessary to protect this right, as it ensures that plaintiffs or applicants can rely on the registered address to initiate legal proceedings, even when the principal place of business is difficult to determine or when the corporation is dysfunctional.

In its reasoning process, the court referred to several cases. One of the key cases cited was Bisonboard Ltd v K Braun Woodworking Machinery (Pty) Ltd 1991 (1) SA 482 (A). This case was particularly significant as it established the principle of dual jurisdiction for companies, which the court in Malvern Trading CC v Absa Bank Ltd applied by analogy to close corporations. The court found that the legal position regarding jurisdiction over close corporations was unaffected by the debate regarding the effect of the 2008 Companies Act on the dual jurisdiction principle applicable to companies under the 1973 Companies Act.

Additionally, the court referenced the following cases in its analysis of service of process and the interpretation of legal documents:

1. Hollard's Estate v Kruger 1932 TPD 134
2. United Building Society v Steinbach 1942 WLD 3
3. Shepard v Emmerich 2015 (3) SA 309 (GJ)

These cases were used to support the argument that knowledge of a corporation's absence from its registered address does not invalidate otherwise valid service of process.

Furthermore, the court discussed the principles of statutory interpretation as outlined in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA). This case provided the framework for interpreting legislation in a manner that considers the language used, the context, the apparent purpose, and the material known to those responsible for its production. The court applied these principles to interpret the Close Corporations Act, Act 69 of 1984, in a way that supported the finding of dual jurisdiction for close corporations.