Storegate Africa (Pty) Limited v Airlink Cargo International (Pty) Ltd

Storegate Africa (Pty) Ltd, a company, instituted an action for damages against Airlink Cargo International (Pty) Ltd arising from the loss of computer equipment allegedly entrusted to Airlink for storage. Airlink defended the action and, relying on s 13 of the Companies Act 61 of 1973, delivered a rule 47(1) notice calling on Storegate to provide security for costs, alleging a belief that Storegate would be unable to pay Airlink’s costs if unsuccessful. The notice was ignored. Approximately eight months later Airlink applied in terms of rule 47(3) for an order compelling security. In support, Airlink relied mainly on a subrogation agreement showing that Storegate’s insurer was entitled to pursue the claim in Storegate’s name. The High Court (Willis J) ordered Storegate to furnish security. Storegate appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the High Court directing the appellant to provide security for costs was set aside and replaced with an order dismissing the application for security with costs.

The case clarifies that orders granting security for costs are appealable and provides authoritative guidance on the strict jurisdictional requirements of s 13 of the Companies Act 61 of 1973. It reinforces that defendants bear the onus of producing credible evidence of a company plaintiff’s inability to pay costs and that courts may not order security in the absence of such evidence. The decision protects company litigants from security orders based on speculation or misplaced inferences.