Godfrey Goliath Nicholls N O and Others v Magdalena Gaybba and Another

The appellants, trustees of the Nicholls Vrugteverspreiders Trust, sued Ms Magdalena Gaybba, the sole member of HTI Technologies Corporation, a deregistered close corporation. The Trust had acquired the business of GGN Vrugteverspreiders (Pty) Ltd, including claims against HTI. It alleged that over several years funds exceeding R21 million were fraudulently paid from GGN and the Trust to HTI through fictitious transactions orchestrated by Ms Gaybba’s late husband, the bookkeeper, with Ms Gaybba’s knowledge. HTI repaid part of the funds, leaving a shortfall of R9.88 million. After forensic investigations completed in 2015–2016, summons was served in April 2019. Ms Gaybba raised a special plea of prescription, contending that the claims had prescribed.

The appeal was upheld with costs. The high court’s order was replaced with an order dismissing the special plea of prescription with costs, including the costs of two counsel.

The judgment clarifies South African prescription law by confirming that claims under section 64 of the Close Corporations Act are not subject to prescription, as they depend on an equitable judicial declaration. It aligns SCA jurisprudence with Constitutional Court authority in Makate and Off-Beat, and provides important guidance on piercing the corporate veil and creditor protection in cases of reckless or fraudulent corporate conduct.