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[2011] ZAGPJHC 133
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Gollel Investments (Pty) Ltd v 48 Nagington Road (Pty) Ltd (2011/16580) [2011] ZAGPJHC 133 (23 September 2011)
NOT
REPORTABLE
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE NO
:
2011/16580
DATE:23/09/2011
In the matter between:
GOLLEL
INVESTMENTS (PTY)
LTD
..................................................
Applicant
and
48
NAGINGTON ROAD (PTY)
LTD
................................................
Respondent
J U D G M E N T
LAMONT, J
:
[1] The applicant who is a
member of the respondent applies for the appointment of a provisional
curator ad litem
in terms of section 266(3) of the Companies Act No. 61 of 1973 (“
the
Act
”) to conduct
an investigation into certain of the affairs of the respondent.
[2] On 30 March 2011 the applicant gave notice to the respondent in
terms of section 266 of the Act calling upon the respondent
to
institute proceedings within one month from the date of service of
the notice. On 29 April 2011 the applicant issued and served
the
present application on the respondent.
[3] On 1 May 2011 the new Companies Act, the
Companies Act No. 71 of
2008
came into effect. In terms of
section 10
of Schedule 5 to the
new Act:
“
10(1)
Any proceedings in any court in terms of the previous Act
immediately before the effective date are continued in terms of
that
Act as if it had not been repealed.
”
The effective date is 1 May 2011.
[4] As at that date the present proceedings were pending in this
Court.
[5] Accordingly the proceedings
in this Court in respect of this matter are to be dealt with as if
the new Act had not repealed
the Act.
[6] The provisions of section 266 of the Act provide:
“
266. Initiation
of proceedings on behalf of company by a member.—(1) Where
a company has suffered
damages or loss or has been deprived of any
benefit as a result of any wrong, breach of trust or breach of faith
committed by any
director or officer of that company or by any past
director or officer while was a director or officer of that company
and the
company has not instituted proceedings for the recovery of
such damages, loss or benefit, any member of the company may initiate
proceedings on behalf of the company against such director or officer
or past director or officer in the manner prescribed by this
section
notwithstanding that the company has in any way ratified or condoned
any such wrong, breach of trust or breach of faith
or any act or
omission relating thereto.
(2) (a) Any such member shall serve a
written notice on the company calling on the company to institute
such
proceedings within one month from the date of service of the
notice and stating that if the company fails to do so, an application
to the Court under paragraph (b) will be made.
(b) If the company fails to institute such proceedings
within the said period of one month, the member may make application
to the Court for an order appointing a curator ad litem for the
company for the purpose of instituting and conducting proceedings
on
behalf of the company against such director or officer or past
director or officer.
(3) The Court on such application, if it is satisfied—
(a) that the company has not instituted such proceedings;
(b) that there are prima facie grounds for such proceedings; and
(c) that an investigation into such grounds and into the
desirability of the institution of such proceedings is justified,
may appoint a provisional curator ad litem and direct him to
conduct such investigation and to report to the Court on the return
day of the provisional order.
(4) The Court may
on the return day discharge the provisional order referred to in
subsection (3) or confirm the appointment
of the curator ad litem for
the company and issue such directions as to the institution of
proceedings in the name of the company
and the conduct of such
proceedings on behalf of the company by the curator ad litem, as it
may think necessary and may order that
any resolution ratifying or
condoning the wrong, breach of trust or breach of faith or any act or
omission in relation thereto
shall not be of any force or effect.
”
[7] As appears more fully from
paragraphs 266(2)(a) the applicant was required to serve a written
notice on the respondent calling
on the respondent to institute the
relevant proceedings within one month from date of service of the
notice. The notice was also
required to state that if the respondent
failed to do so the applicant would make an application to the court
under section 266(2)(b).
[8] A compliant notice was duly
served on 30 March 2011.
[9] Under and in terms of
section 266(2)(b) if the respondent failed to institute such
proceedings within one month the applicant
would be entitled to make
application for the appropriate order.
[10] The applicant was entitled to make application within one month
from the date of service. One month means one calendar month.
The
civil method of computation of time is used.
See: Section 2 of the
Interpretation Act 33 of 1957 Blackman Jooste and Everingham
Commentary on the
Companies Act
>
(8
th
Revision, 2011) para 78-2.
The use of the term “
from
date of service
”
is indicative that the first day is to be excluded and that the one
month period would expire one month from the date of
the notice
(namely on 30 April 2011). See
Pivot
Point SA (Pty) Ltd v Registrar of Companies and Another
1980 (4) SA 74 (T) at 79B-D. Even if the other method of calculation
is used (namely including the day upon which the notice was
given the
respondent would be entitled until midnight on 29 April 2011 to
institute the proceedings referred to in the notice.
[11] On any calculation if the
words “
make
application
”
constitute issue or issue and service the present proceedings were
launched during the one month period available to the
respondent to
institute proceedings. It was submitted that the words “
make
application
”
mean actually move the application in court.
[12] The authorities are set out
in the matter of
The
Government of the Islamic Republic of Iran v Berends
1998 (4) SA 107 (NmHC). The words “
make
application”
are
ambiguous. They could mean make application by issuing only; issuing
and serving; issuing, serving and setting down for hearing
or
issuing, serving, setting down for hearing and actually being heard.
The words in the Statute must be considered to discover
what the
appropriate meaning is.
[13] The Act requires the notice
to set out that application will be made if the company fails to
perform an act within a particular
time. If this does not happen a
right is then conferred upon the applicant in section 266(2)(b) to
make application. Integral
to the right to make application is the
failure of the company to have performed the act required of it
within the period of one
month. Upon a simple reading of the statute
the applicant would have no right to make application to the court
until the one month
period had elapsed.
[14] It was submitted that at
the time the application is made all that the court needs find is
that the company has not instituted
the proceedings. The issue and
service so it was submitted could take place during the one month
period and as long as the hearing
(the making of the application)
took place after the one month period the court would be able to
reach the finding it was required
to reach by section 266(3)(a). If
this interpretation were the correct interpretation the applicant to
make out his cause of action
and produce the evidence required to
substantiate it in the founding affidavit would need only show
delivery of the relevant notice
by the time of issue of the
proceedings. Immediately after the notice had been delivered the
applicant would be able to issue
the application under section 266.
[15] The fact that the applicant
in the notice would be requiring the company to institute proceedings
and that it had afforded
the company the full time allowed at the
date of institution would not disentitle the applicant from
immediately commencing the
proceedings. If this interpretation were
correct the Act would allow parallel proceedings to exist
simultaneously in the sense
that the applicant would have instituted
proceedings seeking an order against the company to obtain the
appointment of a provisional
curator while at the same time requiring
the company to institute proceedings.
[16] In my view it would be
vexatious to allow the applicant to commence proceedings at a time
when the company was allowed the
opportunity of considering its
position and taking steps to implement its decision i.e. during the
one month allowed. In my view
the right of the applicant to institute
proceedings under section 266 is dependent upon the completion of the
month period allowed
to the company.
[17] If it were not so the
company would be obliged to oppose the application and prepare
relevant documentation to oppose the
application while it was
considering its position. The section in my view did not envisage
this vexatious situation. It is not
simply a matter of costs as it
was submitted by the applicant. The company is involved in an
expensive and time-consuming activity
of opposing litigation brought
against it. This very act detracts from its ability to in a settled
atmosphere with proper time,
consider its position.
[18] I need not consider whether the position is different between
issue and issue and serve as there was both issue and service
on the
same date. In my view the making of the application occurred prior
to the lapse of the month allowed the respondent and
hence was
premature.
[19] It was submitted that as the notice had been issued prior to
the coming into force of the new Act the provisions of the new
Act
would govern in any event. The answer to this submission in my view
is to be found in Schedule 5 section 10 of the new Act.
I dealt with
this previously.
[20] The parties were agreed that
the employment of two counsel was warranted.
[21] As the application was
brought prematurely the application in my view must fail.
[22] I accordingly make the
following order:
The application is dismissed with costs including the costs
consequent upon the employ of senior and junior counsel.
_____________________________
C
G LAMONT
JUDGE OF THE SOUTH GAUTENG
HIGH COURT, JOHANNESBURG
Attorneys for
Applicant : Evershed
Counsel for Applicant : Adv.
Subel SC
Adv. Theron
Attorneys for
Respondent : Fluxmans Attorneys
Counsel for
Respondent : Adv. Van der Linde SC
Adv. Currie
Date of hearing : 21
September 2011
Date of Judgment :