Dis-Chem Pharmacies has been sued by a close corporation for about R12m in damages for allegedly breaching a sale agreement.
However, the trial’s status is uncertain, after the close corporation fired its attorneys and asked the court to allow a non-lawyer to litigate on behalf of the corporation, despite SA law usually not allowing this.
Background
When a close corporation institutes legal proceedings, it usually has to furnish security for costs to its opponent. This is done, for example, when it appears the close corporation might not be able to pay the legal costs later should it lose.
Years ago, the close corporation HG Manolas CC — trading as Sunward Park Pharmacy — sold a pharmacy to Dis-Chem. However, according to Manolas CC, Dis-Chem breached the sale agreement by not fulfilling obligations in the contract (which has yet to be seen as the matter is ongoing). It is suing Dis-Chem for almost R12m in damages.
Because Manolas CC is a close corporation, Dis-Chem demanded security for costs to enter litigation. At the time, Mr HG Manolas, the close corporation’s sole member, instructed his attorneys to pay the required R250 000.
However, he later disputed that he had any obligation to pay.
The new case
His refusal led to Dis-Chem bringing an interim case. Dis-Chem asked the court to compel the close corporation to pay the security. Until the close corporation pays, the entire matter must be put on hold.
In the end, Johannesburg high court judge Stuart Wilson agreed the close corporation must pay.
The close corporation tried to fight back, making three unsuccessful submissions.
First, the close corporation argued that Manolas was only persuaded by his then lawyers to tender security “to speed litigation up”. However, this did not happen. As a result of not speeding up litigation, Manolas argued his corporation should not have to provide the security.
Judge Wilson said he was “sympathetic... to what appears to be a layperson’s obvious frustration with the delays inherent in litigation”, but this was not enough. Manolas did not make out any legal argument here, Wilson said.
The close corporation also sought leave to file another affidavit but Wilson refused. “The affidavit does not canvas any material that could conceivably be relevant to the question of whether the close corporation should provide the security [for costs].”
Finally, the close corporation requested Manolas appear on its behalf to represent it in the main action against Dis-Chem. “Mr Manolas has, for reasons that are not clear but with which it is hard not to have sympathy,” wrote Wilson, “decided to do away with his lawyers and run his case himself. However, as with most decisions born purely of frustration, Mr Manolas’ choice was unwise.”
Wilson noted SA law stipulates companies and close corporations “may not be represented in legal proceedings by a layperson, even if that layperson is a director or shareholder of the company, or a member of the close corporation.”
Courts have the discretion to order otherwise but only in rare instances. For example, in these interim proceedings, Wilson allowed Manolas to appear on behalf of his close corporation. “The alternative,” Wilson notes, “would have been to have Mr Manolas sit in the public gallery while I heard only from counsel for Dis-Chem.” This would have been “demeaning”.
Wilson noted that, importantly, by Manolas’ dismissing his lawyers, he caused the very “delays of which he complains”. Further, “there is no suggestion that the close corporation cannot afford to obtain representation or to provide the security tendered. Mr Manolas’ decision to go it alone seems to be little more than hubris.” Mr Manolas’ approach was “misconceived”.
Wilson dismissed Manolas’ arguments and ordered the close corporation to furnish the costs.
However, Wilson also dismissed Dis-Chem seeking punitive costs against Manolas. Wilson said he did not “wish to open the door to punitive costs orders against mistakes made without malice by lay litigants.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.