Court slams brakes on Joburg R2m cost claim against deregistered firms

The South Gauteng High Court in Johannesburg has dismissed an application by the City of Johannesburg seeking R2 million in security for costs from Capensis Investments 352 (Pty) Ltd and Capensis Investments 322 (Pty) Ltd.

The court ruled that the application was brought against deregistered entities, rendering it invalid.

The case, which dates back to 2001, involves a complex history of litigation concerning the alleged unlawful sale of properties in Alexandra Township.

In November 2014, the plaintiffs initiated a damages claim exceeding R27 million against the city, following a court order that declared the sale agreements null and void in 2003.

Despite attempts by the plaintiffs to vary the 2003 order, their applications were dismissed, and the matter remained unresolved for years.

The sole director of the respondent companies, K.P. Matsheke, passed away in September 2021, complicating the proceedings further.

Following his death, the companies began the deregistration process due to non-compliance with annual return filings.

In February 2022, Advocate Ephraim Sepheka entered the case, representing the interests of Matsheke’s estate.

However, the applicant raised concerns about the authority of the legal representatives and the ability of the respondent companies to pay costs.

The court noted that both respondent companies were ultimately deregistered on March 30, 2023, ceasing to exist as legal entities.

During the proceedings, the court found that a deregistered company cannot engage in litigation, and any legal actions taken on its behalf are null and void.

In his judgment, Acting Judge Mogotsi emphasised that the applicant could not seek relief from entities that no longer exist.

Consequently, the court dismissed the application for security for costs and struck out the amended notice of motion filed on March 4, 2026, deeming it an irregular step.

The court also ruled that the applicant must bear the respondents’ costs for the application, adhering to the standard legal principle that costs follow the outcome of the case.