About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2011
>>
[2011] ZAGPJHC 196
|
|
East Rock Trading 7 (Pty) Ltd and Another v Eagle Valley Granite (Pty) Ltd and Others (11/33767) [2011] ZAGPJHC 196 (23 September 2011)
REPORTABLE
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE
NO: 11/33767
DATE: 23/09/2011
In
the matter between:
EAST ROCK TRADING 7 (PTY)
LTD
..........................................
First
Applicant
DESPOTUSIC;
VJEKOSLAV
.................................................
Second
Applicant
and
EAGLE VALLEY GRANITE (PTY)
LTD
..................................
First
Respondent
VAN OVERBERGHE; DERK GHISLAIN
MAUIRCE
......
Second Respondent
VANERNEWYCK; PHILIPE VICTOR
ROBERT
..................
Third Respondent
PHANA INVESTMENT 95 (PTY)
LTD
..................................
Fourth
Respondent
JUDGMENT
NOTSHE AJ:
[1] The Applicants brought a two part
urgent application. Part A seeks an interim relief pending the
finalization of Part B of the
application.
[2] Part A seeks to stop the holding
of a meeting of the Board of Directors of the First Respondent
scheduled to be held in Brits
at 10h00 on 14 September 2011 and also
any other meeting of Board of Directors of the First Respondent in
which certain resolutions
were to be tabled.
[3] The Respondents opposed the
application on the grounds that the matter was not sufficiently
urgent to be heard as an urgent
application. The Respondents also
dispute that the Applicants have satisfied the requirements for the
granting of an interim interdict.
URGENCY
[4] In a nutshell the Respondents aver
that the Applicants have delayed in instituting the proceedings. They
aver that the Applicants
have known of the intended meeting for some
time. It is then argued that as a result thereof they created their
own urgency.
[5] The issue of whether a matter
should be enrolled and heard as an urgent application is governed by
the provisions of 6(12) of
the Uniform Rules. The aforesaid sub rule
allows the court or a Judge in urgent applications to dispense with
the forms and service
provided for in the rules and dispose of the
matter at such time and place in such manner and in accordance with
such procedure
as to it seems meet. It further provides that in the
affidavit in support of an urgent application the applicant “
…
shall set forth explicitly the circumstances which he avers render
the matter urgent and the reasons why he claims that
he could not be
afforded substantial redress at a hearing in due course.
”
[6] The import thereof is that the
procedure set out in rule 6(12) is not there for taking. An applicant
has to set forth explicitly
the circumstances which he avers render
the matter urgent. More importantly, the Applicant must state the
reasons why he claims
that he cannot be afforded substantial redress
at a hearing in due course. The question of whether a matter is
sufficiently urgent
to be enrolled and heard as an urgent application
is underpinned by the issue of absence of substantial redress in an
application
in due course. The rules allow the court to come to the
assistance of a litigant because if the latter were to wait for the
normal
course laid down by the rules it will not obtain substantial
redress.
[7] It is important to note that the
rules require absence of substantial redress. This is not equivalent
to the irreparable harm
that is required before the granting of an
interim relief. It is something less. He may still obtain redress in
an application
in due course but it may not be substantial. Whether
an applicant will not be able obtain substantial redress in an
application
in due course will be determined by the facts of each
case. An applicant must make out his cases in that regard.
[8] In my view the delay in
instituting proceedings is not, on its own a ground, for refusing to
regard the matter as urgent. A
court is obliged to consider the
circumstances of the case and the explanation given. The important
issue is whether, despite the
delay, the applicant can or cannot be
afforded substantial redress at a hearing in due course. A delay
might be an indication that
the matter is not as urgent as the
applicant would want the Court to believe. On the other hand a delay
may have been caused by
the fact that the Applicant was attempting to
settle the matter or collect more facts with regard thereto.
1
[9] It means that if there is some
delay in instituting the proceedings an Applicant has to explain the
reasons for the delay and
why despite the delay he claims that he
cannot be afforded substantial redress at a hearing in due course. I
must also mention
that the fact the Applicant wants to have the
matter resolved urgently does not render the matter urgent. The
correct and the crucial
test is whether, if the matter were to follow
its normal course as laid down by the rules, an Applicant will be
afforded substantial
redress. If he cannot be afforded substantial
redress at a hearing in due course then the matter qualifies to be
enrolled and heard
as an urgent application. If however despite the
anxiety of an Applicant he can be afforded a substantial redress in
an application
in due course the application does not qualify to be
enrolled and heard as an urgent application.
[10] In this matter the Applicants
have explained that despite receiving the notice of the meetings the
Second Applicant was travelling
and no one else could depose to the
affidavit. An attempt was even made for their attorney to meet him in
some other countries
outside South Africa.
[11] In addition thereto, despite the
delay, it is clear that the matter remains urgent. The Respondents
intend to hold a meeting
whereby important decisions are to be
discussed. It is clear that if the Applicants were to wait and bring
the matter in the normal
course they will not be able to be afforded
substantial redress at a hearing in due course. The horse would have
bolted out of
the stable by then.
[12] In the circumstances I am
satisfied that the matter is sufficiently urgent to be enrolled and
heard as an urgent application.
INTERIM
INTERDICT
[13] An interim interdict is a court
order preserving or restoring the status quo pending the
determination of rights of the parties.
It is important to emphasize
that an interim interdict does not involve a final determination of
these rights and does not affect
their final determination. In this
regard the Constitutional Court said the following:
2
“
An
interim interdict is by definition 'a court order preserving or
restoring the status quo pending the final determination of the
rights of the parties. It does not involve a final determination of
these rights and does not affect their final determination.'
The
dispute in an application for an interim interdict is therefore not
the same as that in the main application to which the interim
interdict relates. In an application for an interim interdict the
dispute is whether, applying the relevant legal requirements,
the
status quo should be preserved or restored pending the decision of
the main dispute. At common law, a court's jurisdiction
to entertain
an application for an interim interdict depends on whether it has
jurisdiction to preserve or restore the status quo.
”
3
[14] The requirements for the granting
of an interim interdict are well known. The decisions are legion. The
requirements are the
following: a
prima
facie
right, a well
grounded apprehension of irreparable harm if the interim relief is
not granted and the ultimate relief is eventually
granted, that the
balance of convenience favors the granting of an interim relief, and
that the applicant has no other satisfactory
remedy.
4
In this regard Holmes JA
5
said the following:
“
The granting of an interim
interdict pending an action is an extraordinary remedy within the
discretion of the Court. Where the
right which it is sought to
protect is not clear, the Court's approach in the matter of an
interim interdict was lucidly laid down
by INNES, J.A., in Setlogelo
v Setlogelo,
1914 AD 221
at p. 227. In general the requisites are –
(a) a right which, 'though prima
facie established, is open to some doubt';
(b) a well grounded apprehension of
irreparable injury;
(c) the absence of ordinary remedy.
In exercising its discretion the
Court weighs, inter alia, the prejudice to the applicant, if the
interdict is withheld, against
the prejudice to the respondent if it
is granted. This is sometimes called the balance of convenience.
The foregoing considerations are
not individually decisive, but are interrelated; for example, the
stronger the applicant's prospects
of success the less his need to
rely on prejudice to himself. Conversely, the more the element of
'some doubt', the greater the
need for the other factors to favour
him. The Court considers the affidavits as a whole, and the
interrelation of the foregoing
considerations, according to the facts
and probabilities; see Olympic Passenger Service (Pty.) Ltd. v
Ramlagan,
1957 (2) SA 382
(D) at p. 383D - G. Viewed in that light,
the reference to a right which, 'though prima facie established, is
open to some doubt'
is apt, flexible and practical, and needs no
further elaboration.
”
[15] Where the right is clear
“…
the remaining questions are whether the applicant has also shown:
(a) an infringement of his right
by the respondent; or a well-grounded apprehension of such an
infringement;
(b) the absence of any other
satisfactory remedy;
(c) that the balance of convenience
favours the granting of an interlocutory interdict.”
6
[16] In this case the Applicants seek
an interim interdict pending the determination of an application
seeking to declare the Second
and Third Respondents as delinquent
directors and removing them and replacing them as directors. They
also seek alternative remedies
thereto. The interim relief that they
seek is that the Respondents should not proceed with the directors’
meeting that was
to be held at Brits on 14 September 2011 or
arranging for a board of directors of the First Respondent to take
certain resolutions.
[17] There is a dispute about whether
the First Applicant has a right to nominate a director to fill in the
vacancy. It cannot be
said then that it has established a clear
right.
[18] The question therefore is whether
it has established a prima facie right. The approach to be adopted in
considering whether
an applicant has established a prima facie right
has been stated to be the following:
7
“
The accepted test for a
prima facie right in the context of an interim interdict is to take
the facts averred by the applicant,
together with such facts set out
by the respondent that are not or cannot be disputed and to consider
whether, having regard to
the inherent probabilities, the applicant
should on those facts obtain final relief at the trial. The facts set
up in contradiction
by the respondent should then be considered and,
if serious doubt is thrown upon the case of the applicant, he cannot
succeed.
”
8
[19] It is common cause that the First
Applicant is the shareholder in the First Respondent. The Second
Applicant is one of the
directors of the First Respondent. The
meetings that the Applicants seek to be stopped from being held
intend to discuss issues
relating to the directorship of the Second
Applicant, the change of the offices and use of a certain accounting
system. The Applicants
seek to deal with the conduct of the Second
and Third Respondents and also remedy the situation which occurred
when one of the
directors nominated by the First Applicant resigned.
[20] The allegations made by the
Respondents do not throw serious doubt upon the case of the
Applicant. They aver that at the time
of coming into operation of the
Companies Act, 71 of 2008
, there was no vacancy in the board of
directors of the First Respondent. They then aver that as a result
thereof it is only a general
meeting of the shareholders which has
the power to decide whether the number of directors should be
increased. On the other hand
the Applicants aver that there is no
inconsistency between the First Respondent’s shareholders’
agreement and the Act.
They further allege that a Court has the power
to appoint or remove a director.
[21] I do not have to decide the right
of the parties at this stage. I leave that for determination in the
second leg of the application.
[22] At this stage I am satisfied
that the Applicants have a
prima
facie
right as a
shareholder and a director of the First Respondent to have the Second
Respondent remain a director of the company until
lawfully removed.
They have a right to institute the proceedings they seek to
institute. It cannot be disputed that the Respondents
are threatening
the aforesaid right. It cannot be denied that if the Applicants are
not granted the relief that they seek the Respondents
will hold a
meeting and the results will interfere with the rights of the
Applicants. I am also satisfied that if the aforesaid
meeting goes
ahead and decisions are taken the Applicants will suffer irreparable
harm. It will be like attempting to unscramble
a scrambled egg to
reverse the decisions that will be taken. I am also satisfied that
the balance of convenience favors the granting
of the interim order.
The Applicants will suffer prejudice if the interim interdict is not
granted and the meeting takes place
and decisions are taken. On the
other hand the Respondent will suffer a mere delay if the interim
interdict is granted.
[23] It is important to note that the
proceedings that the Applicants seek to institute will include the
decisions that the Respondents
seek to take at the meeting that is
sought to be interdicted. There are strong prospects of succeeding in
getting a director appointed
into the board of the First Respondent
to represent the First Applicant. The Applicants have no other remedy
except the interim
relief that they seek.
[24] The Respondents further urge that
this Court has a discretion to refuse to grant an interim interdict
even if the Applicants
have satisfied the requirements for the
granting of such relief. I do not agree. The discretion referred to
by the courts in relation
to granting of an interim relief is not the
wide discretion in its true sense. It is a limited discretion in
relation to the question
of the balance of convenience. The Supreme
Court of Appeal explained this issue as follows
9
:
“
That a Court has a
discretion whether or not to grant a temporary interdict has often
been said. We were, however, not referred
to any case in which an
appeal in respect of an interim interdict was dealt with on the basis
that the Appeal Court could not interfere
except on the restricted
grounds suggested by the respondents. As far as the Appellate
Division is concerned, the authority which
I have been able to find
goes the other way. Thus, in Messina (Transvaal) Development Co Ltd v
South African Railways and Harbours
1929 AD 195
at 215-16 Curlewis
JA said:
'In an application for an interim
interdict pending action, the Court has a large discretion in
granting or withholding an interdict.
Where there is merely a
possibility, not a practical certainty, of interference or injury, as
in the present case, the Court will
be reluctant to grant an
interdict, especially if the party seeking the interdict will have
other means of redress and will not
suffer irreparable damage. And
the Court is entitled to and must regard the possible consequences,
both to the applicant and to
the respondent, which will ensue if an
interdict be granted or withheld.'
It is significant that, despite
emphasising the discretionary nature of the relief claimed, the
learned Judge did not, in the result,
decide the case on the limited
basis contended for in the present case. In fact he did not even
consider the question whether the
trial Judge had properly and
judicially exercised a discretion. Curlewis JA decided the matter
according to his own views of the
merits of the application and came
to the conclusion that 'no sufficient case for an interdict has been
made out' (at 216). Similarly,
in Goldsmid v The South African
Amalgamated Jewish Press Ltd
1929 AD 441
Curlewis JA, on this
occasion enjoying the concurrence of three of his Colleagues, went
into the merits of an appeal against the
refusal of an interim
interdict and concluded that 'the lower Court acted correctly in
dismissing the application' (at 446).
Much the same happened in Eriksen
Motors (Welkom) Ltd v Protea Motors, Warrenton and Another
1973 (3)
SA 685
(A). At 691C Holmes JA, who delivered the judgment of the
Court, stated that '(the) granting of an interim interdict pending an
action is an extraordinary remedy within the discretion of the
Court'. He then (at 691D-E) set out the requisites for an interim
interdict (on the authority of Setlogelo v Setlogelo
1914 AD 221
at
227) as follows:
'(a) a right which, "though
prima facie established, is open to some doubt";
(b) a well grounded
apprehension of irreparable injury;
(c) the absence of ordinary
remedy'.
At 691E he reverted to the Court's
discretion. In exercising its discretion, he said, a Court weighs,
inter alia, the prejudice
to the applicant if the interdict is
withheld against the prejudice to the respondent if it is granted
(the balance of convenience).
He then continued (at 691F):
'The foregoing considerations are
not individually decisive, but are interrelated; for example, the
stronger the applicant's prospects
of success the less his need to
rely on prejudice to himself. Conversely, the more the element of
"some doubt", the
greater the need for the other factors to
favour him. The Court considers the affidavits as a whole, and the
interrelation of the
foregoing considerations, according to the facts
and probabilities. . . .'
Despite the stress placed on the
discretionary nature of the Court's function, Holmes JA proceeded to
deal with the appeal by giving
effect to his own view on the merits
of the application for an interdict. His final conclusion (at 696E-F)
was that 'the affidavits
do not warrant the remedy of an interim
interdict' and that the Judge a quo 'was right in discharging the
rule nisi'.
See also Cassim and Others v Meman
Mosque Trustees
1917 AD 154.
It would seem to follow from the
above cases that the word 'discretion' was not used in a strict
sense. That this word is capable
of different meanings appears from
Media Workers Association of South Africa and Others v Press
Corporation of South Africa Ltd
('Perskor')
[1992] ZASCA 149
;
1992 (4) SA 791
(A) at
796H-I and 800C-G. In the present context the statement that a Court
has a wide discretion seems to mean no more than that
the Court is
entitled to have regard to a number of disparate and incommensurable
features in coming to a decision. This is also
the sense in which, I
take it, Schreiner J used the word 'discretion' in the following
oft-quoted passage from Transvaal Property
& Investment Co Ltd
and Reinhold & Co v SA Townships Mining & Finance Corp Ltd
and The Administrator
1938 TPD 512
at 521:
'No doubt the remedy by way of
interdict has been said to be unusual, . . . it is also described as
discretionary. . . . It seems
to me, however, that, apart from cases
of interim interdicts, where considerations of prejudice and
convenience are of importance,
the question of discretion is bound up
with the question whether the rights of the party complaining can be
protected "by
any other ordinary remedy" (Setlogelo's case,
1914 AD 221
, at 227).'
The Courts have not defined the
considerations which may be taken into account in exercising the
so-called discretion, save for
mentioning the obvious examples such
as the strength or weakness of the applicant's right, the balance of
convenience, the nature
of the prejudice which may be suffered by the
applicant and the availability of other remedies. Whilst this list is
not exclusive,
it does indicate what the relevant features are in an
application of this sort. I find it difficult to imagine that
considerations
which are entirely unrelated to these features could
be accorded weight in granting or refusing an application for an
interim interdict.
Finally, in regard to the so-called
discretionary nature of an interdict: if a Court hearing an
application for an interim interdict
had a truly discretionary power
it would mean that, on identical facts, it could in principle choose
whether or not to grant the
interdict and that a Court of appeal
would not be entitled to interfere merely because it disagreed with
the lower court's choice
(Perskor case at 800D-F). I doubt whether
such a conclusion could be supported on the grounds of principle or
policy. As I have
shown, previous decisions of this Court seem to
refute it.
In some Provincial Divisions a
different view has been adopted. See, for example, Beecham Group Ltd
v B-M Group (Pty) Ltd
1977 (1) SA 50
(T) at 58G-H and 60H-61A.
”
10
[25] The doubt raised by the Supreme
Court of Appeal in the abovementioned dictum has not been found to
have been misplaced. On
the contrary it seems to have been accepted
as authority that the discretion referred to in previous cases is not
the discretion
in its strict sense.
11
I also agree with this view. A discretion requires the exercise of a
value judgment and there may well be a legitimate difference
of
opinion as to the appropriate conclusion. If an applicant has
satisfied the requirements of the granting of an interim interdict
there is no room for a court to exercise a value judgment. In other
words a court has no discretion but to grant the relief sought.
[26] In this case the Applicants have
satisfied the requirements for the granting of an interim relief. I
do not have a discretion
but to grant the relief that they seek.
[27] The relief sought is directed
mainly against the Second and Third Respondents. It would be unfair
to saddle the First Respondent
with the costs of the application. The
Second and Third Respondents should pay those costs.
[28] In the result I make the
following order:
1. Pending the final determination of
the application in Part B of the Notice of Motion dated 6
th
September 2011, the Second and Third Respondents are interdicted and
restrained from:
1.1 Proceeding with the directors’
meeting of the First Respondent which had been convened to be held at
Brits at 10h00 on
14 September 2011 and whether at the time appointed
therefore or at all;
1.2 Requisitioning a meeting of the
Board of Directors of the First Respondent (“
the
company
”) in which
any resolution is to be tabled which impacts in any manner whatsoever
on:
1.2.1 the Second Applicant’s
directorship of the company;
1.2.2 the use of the company of the
Navision Accounting System;
1.2.3 the location of the registered
and administrative offices of the company; and
1.2.4 signatories on the bank account
of the company.
1.3 The Second and Third Respondents
are directed to pay the costs of this part of the application jointly
and severally the one
paying the other to be absolved.
__________________________
V.S
NOTSHE
ACTING
JUDGE OF THE HIGH COURT
Counsel
for the Applicant:
I.
Milts SC
C.L
Robertson
Attorneys for the
Applicants:
Messrs Paul
Friedman and Associates Incorporated
Counsel
for the Respondents:
C.
Van Der Merwe
Attorneys
for the Respondents:
Messrs
Smit and Mare Attorneys
Date
of the Hearing:
13
September 2011
Date
of Judgment:
23
September 2011
1
See: Nelson Mandela Metropolitan Municipality v
Greyvenouw
2004 (2) SA 81
(SE) at 94C–D;
Stock
v Minister of Housing
2007 (2) SA 9
(C) 12I–13A
.
2
In National Gambling Board v Premier, Kwa-Zulu Natal and Others
2002(2) SA 715 CC
3
At 730 - 731[49]
4
See: Eriksen Motors (Welkom) Ltd v Protea Motors Warrenton and
Another 1973(3)SA 685 (A)
Knox D Arcy Ltd v Jamison and Other
1996(4) SA 348 (A) at 361
5
In Eriksen Motors (Welkom) Ltd v Protea Motors Warrenton and
Another, supra, at 691.
6
Knox D'Arcy Ltd and Others v Jamieson and Others
1995 (2) SA 579
(W)
at 592 – 593.
7
In Simon NO v Air Operations of Europe AB and
Others
[1998] ZASCA 79
;
1999 (1) SA 217
(SCA).
8
At 228;
See also Webster v
Mitchell
1948 (1) SA 1186
(W) at 1189,
M
anong
& Associates (Pty) LTD v Minister of Public Works and Another
2010 (2) SA 167
(SCA) at 180.
9
Knox D'Arcy Ltd and Others v Jamieson and Others
[1996] ZASCA 58
;
1996 (4) SA 348
(A)
10
At 360 – 362.
11
Giddey NO v J C Barnard and Partners
[2006] ZACC 13
;
2007 (5) SA 525
(CC) at 534 –
535.