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[2014] ZAGPJHC 403
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Kuhn v Up To Date Sales (Pty) Limited and Others (2011/36274) [2014] ZAGPJHC 403 (13 November 2014)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG LOCAL
DIVISION, JOHANNESBURG)
CASE NO: 2011/36274
DATE: 13 NOVEMBER 2014
In the matter between:
KUHN, CHRISTIAAN
FREDERICK
..............................................
Applicant
And
UP TO DATE SALES (PTY)
LIMITED
..............................
First
Respondent
LBCS TRADING 73 (PTY)
LIMITED
............................
Second
Respondent
BOTHA,
LOUIS
...................................................................
Third
Respondent
RAJZMAN, STEVEN
PAUL
............................................
Fourth
Respondent
BOTHA, LOUIS
RAJZMAN, STEVEN PAUL and
BOTHA, DE WET
NNO
......................................................
Fifth
Respondent
JOHAN GREYLING
RONEL YVONNE GREYLING
NNO
...............................
Sixth
Respondent
BOTHA, LOUIS
BOTHA, UYS
NNO
.........................................................
Seventh
Respondent
KOTZE, JOHANNES MARTIN
ABRAHAM
................
Eighth Respondent
LANDGREBE
W.H.K
.........................................................
Ninth
Respondent
SCHLEBUSCH, DIRK
N.O
...............................................
Tenth
Respondent
GREYLING,
JOHAN
....................................................
Eleventh
Respondent
JUDGMENT
BASSLIAN AJ:
[1] This application has a long and
protracted history which to a large extent, if not completely, has
been brought about by the
actions and inactions on the part of
Applicant.
[2] Owing to the fact that the court
file was mislaid and had to be reconstituted (possibly on more than
one occasion), notations
on the file as to what occurred on each
occasion that the matter was postponed as well as notes that I had
made are not available
to me and I am no longer able from memory to
recall precisely what the reasons were for each postponement.
Insofar as I am able
to recall, the reasons for the various
postponements included the fact that the court file was not in order
and/or complete, Applicant’s
representative wished to deal with
certain aspect which had not been dealt with and Applicant wished to
join a party to the proceedings.
None of the postponements were
brought about as a result of a request or fault on the part of the
Respondents.
[3] The events relating to the hearing
of the matter are as follows:
[3.1] The application was launched by
the Registrar of this Court on 22nd September 2011.
[3.2] On 25 October 2011, the First to
Seventh, Ninth and Eleventh Respondents (collectively referred to as
“the Respondents”)
served an answering affidavit together
with a counter-application.
[3.3] Applicant’s replying
affidavit and answering affidavit to the counter-application was
served on 2nd November 2011.
[3.4] The Respondents’ replying
affidavit in their counter-application was served on 16 November
2011.
[3.5] Insofar as I am aware, the matter
was first set down for hearing on the opposed motion roll for hearing
in the period of 29
November 2011 to 2nd December 2011.
[3.6] The matter came before me and I
entertained argument on the 1st and 2nd December 2011.
[3.7] At the hearing on 1 December
2011, I indicated to Applicant’s representative that some of
the relief sought in the notice
of motion did not seem to make sense.
Following on this, the parties agreed that Applicant would amend his
notice of motion but
that pending same, the merits of the application
would be argued before me, judgment in respect thereof to be reserved
pending
the amendment.
[3.8] Having concluded argument on 2nd
December 2011, the matter was postponed in order to afford Applicant
an opportunity to amend
his notice of motion.
[3.9] Some months after the matter was
postponed, confusion arose between the parties in regard to whether
Applicant had in fact
amended his notice of motion, Applicant
adopting the view that he had and Respondents contending that he had
not. This resulted
in Applicant having to comply with the provisions
of Rule 28 if he wished to proceed with the amendment.
[3.10] It was only on 2nd July 2012
that Applicant served his notice of intention to amend his notice of
motion in terms of Rule
28.
[3.11] Respondents delivered a notice
of objection to the proposed amendment in terms of Rule 28(3) on 16
July 2012.
[3.12] On 23 July 2012, Applicant
delivered an application in terms of Rule 28(4) for leave to amend
the notice of motion.
[3.13] Once affidavits had passed in
the Rule 28(4) application, the matter came before Ms Acting Judge
Kolbe who determined that
since I was still seized with the matter,
it was I who should entertain the 28(4) application.
[3.14] Thereafter the parties appeared
before me for purposes of arguing the Rule 28(4) application as
follows:
[3.14.1] On 15 November 2012 when the
matter was postponed, costs reserved;
[3.14.2] On 11 February 2014, when the
application was struck from the roll, Applicant being ordered to pay
the wasted costs including
the costs of Senior Counsel. The matter
had also been set down for 3 December 2012 and although there was no
appearance on that
day, the wasted costs were reserved.
[3.14.3] On 13 May 2013, the
application was again postponed, Applicant was ordered to pay the
costs including the costs of Senior
Counsel.
[3.15] On 24 January 2014, the matter
once again came before me and certain issues referred to hereunder
were raised and debated.
By agreement, both parties submitted
additional heads of argument to me in about February 2014, relating
to the aspects raised
by me.
[3.16] Applicant’s attorney only
delivered the court file to me some months after I had received the
additional heads of argument.
[4] I have not delivered judgment in
respect of either the Rule 28(4) application or in respect of the
merits of the main application.
For reasons as will appear from what
is recorded hereunder, there is no need for me to do so.
[5] Applicant’s notice of motion
consists of 13 pages. In both its original form as well as the
intended amended form, it
is difficult to comprehend the exact nature
of what actions Applicant suggests should be instituted by First and
Second Respondents.
This is so as Applicant has not in his founding
affidavit, read with the annexures thereto, furnished sufficient
details with regard
to what he claims are the various causes of
action that First and/or Second Respondents have against the other
Respondents named
in the notice of motion.
[6] In prayers 1 and 2.1 of the notice
of motion, Applicant seeks leave in terms of Section 165(5)(a)(ii) of
the Companies Act 71
of 2008 (“the Act”) to institute
various actions in the name of the First and Second Respondents
respectively against
the named other Respondents. For purposes of
this judgment, I shall assume that Applicant intended to refer simply
to sub-section
165(5) of the Act.
[7] The relief sought by Applicant
centres around actions that he states should be instituted by First
and Second Respondents respectively
against various of the other
Respondents for payment of varying amounts as well as certain other
relief. No purpose will be served
in my burdening this judgment by
repeating what is claimed. I shall, however, deal with the various
claims hereunder.
[8] In the course of hearing argument
in relation to the Rule 28(4) application on 24 January 2014 I
raised the following issues
and requested the parties’
representatives to address same, namely:
[8.1] Whether by virtue of the
judgments of Willis J and the judgment delivered by me involving the
same or substantially the same
parties relating to the appointment of
certain directors and the holding of certain directors meetings,
which were declared to
be invalid and set aside, Applicant had
complied with the provisions of Section 165(2) of the Act by serving
his demand letters,
“FA1”, “FA2” and “FA3”
to the founding affidavit on the two Respondents. At that stage the
directors whose appointments were declared to be invalid and set
aside, purported to act as directors of First and Second Respondents.
What concerned me was whether Applicant had, in the circumstances,
delivered his demand letters to the two Respondents as neither
of
their boards was properly constituted.
[8.2] Whether, since the causes of
action/debts relied on by Applicant to be brought in the names of
First and Second Respondents
respectively and which appear on the
face of it to have accrued in excess of 3 years prior to the
institution of the proposed actions
such claims had not in any event
already prescribed in terms of the Prescription Act 68 of 1969 (“the
Prescription Act&rdquo
;).
PRESCRIPTION
[9] In terms of Section 165(5) of the
Act:
“A person who has made a demand
in terms of sub-section (2) may apply to court for leave to bring or
continue proceedings
in the name and on behalf of the company, and
the court may grant leave only if –
(a) the company –
(i) has failed to take any particular
step required by sub-section (4);
(ii) appointed an investigator or
committee who was not independent or impartial;
(iii) …
(iv) …
(v) …
and
(b) the court is satisfied that –
(i) the Applicant is acting in good
faith;
(ii) the proposed or continuing
proceedings involve the trial of a serious question of material
consequence to the company; and
(iii) it is in the best interests of
the company that the Applicant be granted leave to commence the
proposed proceedings or continue
the proceedings, as the case may
be.”
[10] In terms of the sub-section, the
Court is only entitled to grant leave to bring or continue
proceedings as envisaged therein
if it is satisfied that the
requirements set out therein have been met. In this regard:
[10.1] The requirements of sub-section
165(5)(2)(i) to (v) are clearly not conjunctive and accordingly it is
sufficient if an applicant
shows the presence of one or more of the
named factors. In this regard, Applicant relies on sub-section
165(5)(2)(a)(ii), namely
that the Ninth Respondent who was appointed
by First and Second Respondents to investigate the matters raised by
him in his demand
letters was not independent and impartial. For
purposes of this judgment and without finally deciding thereon, I
will assume that
Applicant succeeded in discharging the onus that he
bore of showing that Ninth Respondent was not independent and/or
impartial.
[10.2] On the other hand, sub-section
165(5)(b) requires that all three named factors must be present in
order for the Court to
be satisfied that the sought after order
should be granted.
[11] If a Court is not satisfied that
all three elements specified in sub-section 165(5)(2)(b) have been
shown, it cannot issue
the order envisaged in Section 165 of the Act.
It was for this reason that I raised the issue of prescription as if
the proposed
claims that First and Second Respondents are to
institute have prescribed as against the proposed Defendants/debtors,
it cannot
be said that the granting of the order “is in the
best interests of the (First and Second Respondents)”. For the
granting
of the order to be in the best interests of First and/or
Second Respondents it must, on at a prima facie basis, be shown that
the
claims are enforceable against the proposed Defendants/debtors
and that there is some prospect of succeeding in the action/s.
[12] In the additional heads of
argument presented on behalf of Applicant, one of the issues raised
relates to the provisions of
Section 17
of the
Prescription Act which
provides that:
“17(1) A court shall not of its
own motion take notice of prescription.”
[13] This is so in relation to an
action or application between a creditor and a debtor. The
application before me is not between
a creditor and a debtor and
accordingly the said provision is not of application. As is required
of me, in terms of Section 165(5)(2)(b)
of the Act, before granting
an order I am required to be “satisfied” that it is in
the best interests of the First
and Second Respondents. A Court and
accordingly I cannot be satisfied in circumstances where it is
apparent from the papers that
the proposed claims have prescribed as
in such circumstances it cannot possibly be in the best interests of
the two Respondents,
as, for example, not only would they face the
prospect of not succeeding in the proposed actions but would also be
faced with enormous
attorney and client costs as well as the costs of
the intended Defendants.
[14] In the demand letters, “FA1”,
“FA2” and ”FA3” to the founding affidavit,
relied on by
Applicant, it is stated a number of times that “Lest
it be contended that this claim may be prescribed, you are referred
to
Section 12(3)
of the
Prescription Act.” From
this it is
apparent that Applicant and his legal representative were alive to
the issue at least by the time that the letters were
addressed.
There is nothing in Applicant’s papers to indicate that the
provisions of
Section 12(3)
of the
Prescription Act are
or even might
be of application. From the Respondents’ affidavits and
documents it appears that there is no prospect of
either First and/or
Second Respondent being able to rely on the provisions of
Section
12(3)
of the
Prescription Act.
[15
] Applicant has not, whether in the
papers before me or after the issue was raised by me, placed any
facts before me that indicate
even on a prima facie basis that the
running of prescription against the proposed debtors was delayed as
provided for in terms
of the
Prescription Act. Not even
in
Applicant’s additional heads of argument is this addressed. In
the absence thereof, I must accordingly assume that no
basis for such
a claim exists and that the prescribed three year period is of
application. It goes without saying that the bringing
of the
application by Applicant does not interrupt prescription against the
proposed debtors.
[16] In prayers 1.1.1 and 1.1.2 of the
notice of motion, it is envisaged that First Respondent institute
action against Fifth Respondent
for payment of R45 000,00 per month
for 12 months and R49 500,00 per month for the following 12 months.
No dates are given either
in the notice of motion or the founding
papers to indicate when these payments should have been made.
However, it is apparent
from paragraphs 1.2.1 to 1.2.2.2 of “FA1”
that same would have arisen during the period 2006 to 2008.
Prescription
in terms of the
Prescription Act would
have commenced
running on the date that each payment became payable. Even if an
order had been granted on 2nd December 2011 and
having regard to the
procedure that had to be followed before summons could be issued, a
period of 3 years would have elapsed and
the claims would have
prescribed.
[17] In prayer 1.1.3 the sum of R583
853,34 is alleged to be payable by Fifth Respondent to First
Respondent being the “nett
present value of the balance of the
purchase price” of a certain building (paragraph 1.3.3.8 of
“FA1”). Paragraph
1.2.1 of “FA1” states that
the building in question giving rise to the balance of the purchase
price was sold in 2006
and transferred 2 years later, i.e. 2008. For
the reasons recorded in paragraph 16 above, this claim has also
prescribed.
[18] In prayers 1.1.4 to 1.1.8 the
action/s sought to be instituted in the name of First Respondent
against Fifth Respondent is/are
for the setting aside of the
acquisition by Fifth Respondent of shares in First Respondent in
terms of Section 38(1) of the Companies
Act 61 of 1973 together with
repayment of the sums of R504 941,00, R380 000,00 and all dividends
paid by First Respondent to Fifth
Respondent as a result of the
acquisitions of the said shares, it being alleged that the
acquisition of the shares took place during
2006. These claims had
clearly prescribed by the time the application was launched and for
that reason as well as the reasons
set out in paragraph 16 above,
these claims have prescribed. With regard to the dividend repayment
claim, insofar as dividends
were paid to Fifth Respondent within the
past 3 years, as such a claim/s would have been ancillary to the
claim to a declaration
of illegality regarding the acquisitions, same
would have been extinguished by prescription.
[19] In prayer 1.2, it is alleged that
Third Respondent is indebted to First Respondent in the sum of R500
000,00, Third Defendant
having paid such amount to himself and
Closeprops 12 CC out of First Respondent’s funds during 2006.
This claim arose some
5 years before the application was launched and
for that reason as well as having regard to what I state in paragraph
16 above
this claim has similarly prescribed.
[20] In prayer 1.3 it is alleged that
Fourth, Seventh and Eighth Respondents are indebted to First
Respondent in the sum of R1 800
000,00 “being the total of the
profit they earned by the sale of their shares in Grove 250 (Pty)
Limited which profit belonged
to and should have been received by the
first respondent.” In paragraph 3.8 of “FA1” it is
alleged that the
shares were sold in 2008. For the reasons as
recorded in paragraph 16 above, this claim has similarly prescribed.
[21] In prayer 1.4 it is alleged that
Third and Fourth Respondents and one De Wet Botha are indebted to
First Respondent in the
sum of R805 295,84 in respect of certain
debts “illegally written off as losses incurred by the first
respondent”.
In paragraph 4.2 of “FA1”, it is
alleged that this occurred in 2006. Once again a period well in
excess of 3 years
had passed by the time the application was launched
and for this reason as well as for the reasons set out in paragraph
16 above,
this claim has prescribed.
[22] In paragraph 1.5 it is alleged
that Fourth Respondent is indebted to First Respondent in the sum of
R381 150,00 “which
was unlawfully paid to him by the first
respondent ostensibly in terms of severance package in October 2010”.
This claim
would have prescribed in October 2013 and certainly had
prescribed by the time Applicant was ready to argue the Rule 28(4)
application
on 24 January 2014.
[23] The alleged indebtedness by Third
and Fourth Respondents to First Respondent as set out in prayer 1.6
is stated to have arisen
from a collision that occurred on 27 April
2010. This claim would have prescribed by April 2013. There is no
indication either
in the founding affidavit or the demand letters
that Santam Insurance Company Limited made a payment to First
Respondent in response
to a claim lodged against it by First
Respondent in respect of damage to First Respondent’s vehicle.
In any event, the claim
had prescribed by 24 January 2014 when
Applicant was ready to argue the Rule 28(4) application.
[24] In prayer 1.7 it is sought that
the First Respondent institute action against Third Respondent for
payment of four amounts
in respect of Pay As You Earn income tax as
same was not deducted from payments made to Third Respondent thus
exposing First Respondent
to penalties and interest arising
therefrom. The income tax years stated to be involved are the years
2007 to 2010. Any claim
for the 2007 and 2008 tax years had
prescribed by the time the application was launched. For the reasons
recorded in paragraph
16 above as well as 26 below, any claim in
respect of the 2009 and 2010 tax years, have also prescribed.
[25] In paragraphs 1.7.5 to 1.7.9, it
is alleged that Third Respondent is indebted to First Respondent in
various amounts paid by
First Respondent on behalf of Third
Respondent to the named parties. No dates are furnished in the
notice of motion or in the
demand letters and the founding affidavit
is silent with regard thereto. Applicant had the duty and onus of
showing that instituting
these actions (and indeed all of the
actions) was in the best interests of the First Respondent and by not
furnishing the information
has failed to discharge the onus. I can
only assume having regard to the dates of the other indebtednesses,
that these have also
prescribed.
[26] In prayer 1.8, Applicant claims
that Fourth Respondent is indebted to First Respondent for Pay as You
Earn income tax not paid
during the tax years 2008 to 2011 in respect
of which First Respondent would face penalties and interest. The
claim in respect
of the 2008 tax year prescribed before the
application was launched. By the time the application in terms of
Rule 28(4) came before
me on the 24th of January 2014 and I received
the parties’ additional heads, the claims in respect of the
2009, 2010 and
2011 tax years had prescribed. Even if I had given
judgment in the matter in favour of Applicant on 24 January 2014,
having regard
to the procedure that had to be followed before
institution of an action against Fourth Respondent by First
Respondent, the claim
for the tax year ending February 2011 being the
last of the four claims, would have prescribed. The other three
claims prescribed
somewhat earlier.
[27] I will deal with the relief sought
in prayer 1.9 hereunder.
[28] In prayer 2.1, Applicant claims
that Second Respondent has a claim against Third Respondent the sum
of R1 116 757,00. No details
are given, however, in Annexure “FA2”
it is stated that the said amount is owing to the Second Respondent
by Third
Respondent “as reflect in your annual financial
statement as at 31 December 2009, being money loaned and advanced by
you
to Mr Botha.” From what is before me, it is not possible
to determine when the loan was made, however, assuming the most
favourable date for Applicant, namely 31 December 2009, the claim
would have prescribed on 31 December 2012. Even if I had given
judgment in favour of Applicant on 2nd December 2012, having regard
to the procedure to be adopted in order to institute action
against
Third Respondent, this claim would have prescribed in any event and
had certainly prescribed by the time the application
in terms of Rule
28(4) finally came before me on 24 January 2014.
[29] I deal with prayers 3 to 6
hereunder.
[30] From the above it is apparent that
a period in excess of 3 years has passed between the arising of the
alleged causes of action/debts
that Applicant seeks an order in terms
of Section 165 of the Act to institute actions against the named
Respondents in the names
of First and Second Respondents.
Accordingly, on the papers before me and on the face of it, all of
the above claims relied on
have prescribed in terms of the
Prescription Act.
[31
] I have considered the heads of
argument presented by the parties’ legal representatives and am
not persuaded that my reasoning
is flawed.
[32] In the result, Applicant has not
shown on a prima facie basis that First and Second Respondents have
potentially enforceable
claims against the various Respondents which
he states the two Respondents have claims against.
REMAINING PRAYERS
[33]
[33.1] In prayer 1.9, Applicant seeks
an order that First Respondent’s directors rectify First
Respondent’s share register
as well as the CM42 in respect of a
share transaction in terms of which the Sixth Respondent purchased
shares in First Respondent
allegedly for the sum of R3 700 000,00 but
reflected in the share register and CM42 as R2 700 000,00. This is
dealt with in paragraph
3 of “FA3”.
[33.2] In response the Respondents
attach as Annexures “LB36(1)” to “LB36(5)”
copies of 5 share certificates
issued in favour of the Sixth
Respondent. Three of these certificates relate to shares in First
Respondent and two of them in
Second Respondent. Each certificate is
in respect of 1,500 shares, the nominal amount reflected on each
certificate being R413,333
per share.
[33.3] In paragraph 28 of Applicant’s
replying affidavit, he claims that the 5 certificates “show I
am correct”
and in paragraph 28.3 states “Each one is
stated to be for 1,500 shares at R413,33 each. This amounts to some
R620 000,00
each. If one multiplies this by the five companies, one
comes to R3 100 000,00 and not R4 100 000,00 in “RA5”
which
is the offer from the Sixth Respondent to buy the shares”.
[33.4] The three share certificates
referred to above are issued in respect of Up-to-Date Sales (Cape
Town) (Pty) Limited, Registration
No. 2007/015151/07, Up-to-Date
Sales (Pty) Limited, Registration No. 2001/008621/07 (First
Respondent) and Up-to-Date Sales Durban
(Pty) Limited, Registration
No. 2002/002813/07. The remaining two certificates are issued by
LBCS Trading 103 (Pty) Limited, Registration
No. 2005/020944/07 and
LBCS Trading 73 (Pty) Limited, Registration No. 2001/006286/07
(Second Respondent).
[33.5] Out of the five entities that
issued the 5 share certificates, only two of them are cited by
Applicant.
[33.6] On the papers before me, it
would appear that only 1,500 shares in First Respondent were issued
to Sixth Respondent. It
further appears that Applicant is somewhat
confused with regard to the shares in the various entities and has
assumed that all
five share certificates are in respect of shares in
First Respondent.
[33.7] Although it may well be that
First Respondent’s share register as well as the CM42 reflect
the incorrect amount in
respect of the purchase of the 1,500 shares
which would have amounted to R619 999,50, as well as the number of
shares held by Sixth
Respondent in First Respondent, there is
insufficient information before me to make an order in regard
thereto.
[33.8] As any error in First
Respondent’s share register and the relevant CM42 may have
arisen as a result of confusion with
regard to the various entities
with similar names to that of First Respondent, I would suggest that
the First Respondent’s
directors investigate same and if
necessary rectify its and the associated entities’ share
registers and the CM42.
[34] Prayers 3 to 6 would only be of
application if leave was granted to Applicant to bring the various
proceedings in the name
of First and/or Second Respondent.
RESPONDENT’S
COUNTER-APPLICATION
[35] In a counter-application, the
Respondents seek relief in relation to enabling Ninth Respondent to
conduct an investigation
and compile a report in terms of Section
165(4)(a) of the Act in relation to the Applicant’s demand
letters to both First
and Second Respondents. Having regard to what
I have stated above and having regard to my above findings,
conducting an investigation
at this stage would be of no value to
either the Applicant or the First and/or Second Respondents.
[36] In any event I am of the view that
Respondents did not make out a case for the relief they sought. In
this regard I refer to
what I have stated in paragraph 10.1 above.
CONCLUSION
[37] In view of my findings:
[37.1] there is no need for me to deal
with the Rule 28(4) application, the aspect raised by me as set out
in paragraph 8.1 above
or the main application;
[37.2] the main application must
accordingly fail;
[37.3] the counter-application must
also fail.
[38] As a guide to the Taxing Master in
relation to the costs order in respect of the Respondent’s
counter-application, I
indicate that only a small portion of the
papers dealt with the counter-application.
[39] I accordingly make the following
order:
1. The main application is dismissed.
2. The Respondents’
counter-application is dismissed.
3. The Applicant is to pay the
Respondents’ costs of the main application including the costs
of the Rule 28(4) application
and those costs which were reserved in
relation to 15 November 2012 and 3rd December 2012 all on a party and
party scale including
the fees of Senior Counsel where Senior Counsel
appeared.
4. The First to Seventh, Ninth and
Eleventh Respondents jointly and severally, the one paying the other
to be absolved, are to pay
the Applicant’s costs in relation to
their counter-application on a party and party scale.
BASSLIAN AJ
Date of hearing: 1 & 2 December
2011 and 24 January 2014
Date of judgment : 13 November 2014
Counsel for Applicant: Advocate K R
Lavine
Instructed by Eiser Kantor
And subsequently Mr Eiser
Counsel for First to Seventh, Ninth
and Eleventh Respondents: Advocate J Uys initially and then Advocate
J F Roos SC
Instructed by Eugene Marais Attorney