Understanding the use of company resolution in legal proceedings
IN legal proceedings, a company, being an artificial person, is represented by its officers.
When a company is engaged in litigation, the person who deposes to an affidavit on its behalf must prove two things: first, that the company is the one that is litigating, and secondly that he has its authority to represent it in the legal proceedings.
To do this, the person has to attach to the affidavit a resolution of the company directors which proves these two things.
A company, being a separate legal persona from its directors or shareholders, cannot be represented in a legal suit by a person who has not been authorised to do so.
Therefore, a company resolution is required for two reasons, first, to prove that the entity is aware of the legal proceedings and has authorised them and, secondly, that the person representing it has been clothed with the requisite authority to represent it in the proceedings.
In the First Mutual Investment (Pvt) Ltd v Roussaland Enterprises (Pvt) Ltd and Ors HH 301/17, the court noted the following: “A company, as a legal person, has no mouth through which it articulates its intentions. It has no ears with which to hear. It has no sense of sight or smell. It has no mind of its own. It speaks to no one except through its directors, not individually, but collectively, through resolutions which they pass when they are assembled in one room for the purpose of transacting the business of the company. Directors and no one else are, together, the eyes, ears, nose and mind of the company.”
The company’s authority is required for the purpose of binding it to all the consequences of the litigation, including payment of costs. A person who represents a legal entity, when challenged, must show that he is duly authorised to represent the entity.
He cannot claim being authorised by the company to represent it by virtue of the position he holds in the company.
He must produce a resolution of the board of that entity which confirms that the board is indeed aware of and has authorised the proceedings, and that it has given such a person the authority to represent the entity.
The need to produce such authority is only necessary in those cases where the authority of the deponent is put in issue.
The problem with producing evidence of authority after it has been challenged in application proceedings is that an application stands or falls on the founding affidavit. Providing a resolution in the replying affidavit may result in the case being dismissed on the basis that the founding papers were deficient.
In the Mall (Cape) (Pty) Ltd v Merino Ko-operasie Bpk 1957 (2) SA 347 (CPD), it was held that, where a company commences proceedings by way of application, it must appear that the person who makes the application on behalf of the company is duly authorised by the company to do so.
This is a rule which is applicable to proceedings where the applicant is an artificial person.
In such cases, some evidence should be placed before the court to show that the applicant has duly resolved to institute proceedings, and that the proceedings are instituted at its instance.
Each case must be considered on its own merits and the court must decide whether enough has been placed before it to warrant the conclusion that, that it is the applicant which is litigating and not some unauthorised person on its behalf. Where, the respondent has offered no evidence at all to suggest that the applicant is not properly before the court, then a minimum of evidence will be required from the applicant.
The law regarding the proof of authority for the deponent is really not settled. In some cases, all the court is required to do is satisfy itself that enough evidence has been placed before it to show that it is indeed the company which is litigating and not an unauthorised person.
In some cases, the courts said a resolution is essential unless the authority of the deponent is challenged.
The person who challenges it must prove why he or she alleges that the deponent has no authority.
It is best is to attach to the founding papers evidence, in the form of a company resolution, to prove that the company has authorised the legal proceedings as well as the person who represents it in those proceedings.
The requirement for a resolution also applies in criminal proceedings where a legal entity is being prosecuted. A director of the entity who appears in court on behalf of the entity cannot plead guilty to the offence on behalf of the entity unless he is authorised by resolution of the company to so plead. ◆ Trust Maanda is a legal practitioner and a partner at Maunga Maanda And Associates. He writes in his personal capacity. He can be contacted on +263 772432646 or maandat@yahoo.com.