The Johannesburg High Court has dismissed an application by the City of Johannesburg seeking R2-million in security for legal costs from two companies involved in a protracted property dispute.
According to the high court, the application was dismissed because the firms no longer legally exist.
This brought a decisive turn in litigation that dates back more than two decades.
Contested property sales
The case stems from contested property sales in Alexandra Township in 2001, which were later declared null and void by a court order in 2003.
The respondent companies, Capensis Investments 352 and Capensis Investments 322, had launched a damages claim exceeding R27-million against the City in 2014. However, the companies were deregistered in March 2023 after failing to file annual returns, effectively rendering them non-existent in law.
Despite this, the City continued with an interlocutory application in August 2024, seeking security for costs.
Amended notice struck out
It later attempted to expand its case through an amended notice of motion filed in March 2026. The amendment sought additional relief, including a declaration that all legal steps taken on behalf of the companies were invalid and that their legal representatives be held personally liable for costs.
The court struck out the amended notice, finding it did not comply with procedural rules and had not been properly authorised.
The Judge highlighted that while courts may permit amendments at any stage, the City failed to formally apply for such leave.
Deregistered companies ‘are legal nullities’
Central to the ruling was the legal effect of deregistration.
The court reaffirmed that once a company is deregistered, it ceases to exist and cannot participate in legal proceedings as a result, it cannot be ordered to furnish security, comply with court orders, or bear costs.
In a pointed observation, the judge criticised the City’s inconsistent stance.
While it argued that the respondents’ legal representatives lacked authority to act for non-existent entities, it simultaneously sought relief against those same entities.
With the companies deemed legal nullities, the application for security for costs was dismissed. The court also declined to entertain the request for personal cost orders against the respondents’ legal representatives.
The City of Johannesburg was ordered to pay the legal costs of the application.
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- The Johannesburg High Court dismissed the City of Johannesburg’s application for R2-million security for legal costs from two companies involved in a long-standing property dispute.
- The companies, Capensis Investments 352 and 322, were deregistered in March 2023, rendering them legally non-existent and unable to participate in legal proceedings.
- The dispute originates from contested property sales in Alexandra Township in 2001, with the companies launching a damages claim against the City in 2014.
- The City’s later attempt to expand its case and hold the companies' legal representatives personally liable was struck out due to procedural non-compliance.
- The court ordered the City to pay legal costs, emphasizing that deregisrated companies cannot be held liable or required to provide security, criticizing the City’s inconsistent legal stance.
Despite this, the City continued with an interlocutory application in August 2024, seeking security for costs.
It later attempted to expand its case through an amended notice of motion filed in March 2026.
Central to the ruling was the legal effect of deregistration.
In a pointed observation, the judge criticised the City’s inconsistent stance.
While it argued that the respondents’ legal representatives lacked authority to act for non-existent entities, it simultaneously sought relief against those same entities.
ALSO READ: City of Johannesburg continues to catch the eye of the global community
