The South African Medical Association Trade Union v The South African Medical Association NPC and Another

The South African Medical Association NPC (SAMA), a non-profit company established in 1927, represents medical professionals in South Africa. Following the enactment of the Labour Relations Act 66 of 1995, SAMA established the South African Medical Association Trade Union (SAMATU) to represent public sector doctors. SAMATU was registered in 1996 but never operated independently and was run as a division of SAMA, without separate bank accounts or financial statements. Membership subscriptions of public sector doctors were deducted via the PERSAL payroll system and paid into SAMA’s account. In 2019 SAMATU was placed under administration, and disputes arose regarding entitlement to the PERSAL deductions. The Labour Court declared that the deductions were trade union subscriptions payable to SAMATU and that affected doctors were SAMATU members unless they proved otherwise. SAMATU thereafter sought a final winding-up of SAMA in the High Court on the grounds that SAMA was unable to pay its debts (allegedly exceeding R300 million) or, alternatively, that it was just and equitable to liquidate SAMA. The High Court dismissed the application, finding the alleged indebtedness bona fide disputed and liquidation not just and equitable. SAMATU appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel, and the High Court’s refusal to grant a final winding-up order was confirmed.

The case reaffirms South African principles that winding-up proceedings are inappropriate where alleged indebtedness is bona fide disputed and that insolvency must be clearly established. It also underscores the cautious and discretionary nature of the ‘just and equitable’ ground for liquidation, particularly where alternative remedies exist and where liquidation would adversely affect a long-standing, solvent non-profit entity.