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[2015] ZAGPJHC 232
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Monique Investments (Pty) Ltd v 167 Bree Street Newtown (Pty) Ltd and Others (2014/3306) [2015] ZAGPJHC 232 (10 April 2015)
REPUBLIC
OF SOUTH AFRICA
IN THE HGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO:
2014/3306
DATE:
10 APRIL 2015
In
the matter between:
MONIQUE
INVESTMENTS (PTY)
LTD
........................................................................
APPLICANT
And
167
BREE STREET NEWTOWN (PTY)
LTD
...............................................
FIRST
RESPONDENT
STAND
128 NEWTWON
(PTY)
..................................................................
SECOND
RESPONDENT
HURWUTZ,
BARNEY
.....................................................................................
THIRD
RESPONDENT
JUDGMENT
VAN
NIEKERK J:
[1]
The applicant seeks an order in terms of s 78(2)(d)(i) read with s
82(b) of the Promotion of Access to Information Act, 2000
(PAIA),
compelling the respondents to furnish copies of various documents
said to be relevant to the management of the affairs
of the first and
second respondents. The first and second respondents are private
bodies for the purposes of PAIA; the third respondent
is a director
of both entities. It is not disputed that the third respondent is in
control of the day to day running of the affairs
of the first and
second respondents.
[2]
The information that the applicant seeks to have disclosed includes,
inter alia
, the memoranda of incorporation, rules, records,
financial statements, notices and minutes, and the securities
registers. All of
these documents are the subject of a specific
disclosure regime established by
s 26
(1) of the
Companies Act, 71 of
2008
, in terms of which any person who holds or has a beneficial
interest in any securities issued by a profit company or who is a
member
of a profit company, may inspect and copy the relevant
records. The applicant relies on
s 26
as the foundation for its
right of access to these documents. The applicant further seeks
access to lists of all related-party
transactions conducted by the
first and second respondents since incorporation, and documents
proving authorisation of those transactions.
The founding affidavit
does not articulate any specific right on which the applicant’s
request for information is founded;
the papers suggest that the
applicant requires this information for the purpose of valuing its
shareholding in the first and second
respondents respectively, and
that the conduct of the third respondent in relation to the
management of the first and second respondents
has caused it concern.
[3]
The application is brought in a context where the relationship
between the applicant and the respondents has deteriorated over
a
period of years. The applicant, represented by one of its directors,
Pamensky, has sought since 2004 to obtain access to the
records and
books of the first and second respondents. For more than ten years,
Pamensky has expressed his dissatisfaction with
the third
respondent’s management of the first and second respondents.
Indeed, in March 2012, an application was filed in
this court for the
winding up of the second respondent on the basis that the
relationship between the third respondent and Pamensky
had broken
down irretrievably. The threat to bring the present application was
made as far back as 2006, but the applicant took
no steps to act on
this threat until 2013.
[4]
In view of the conclusion to which I have come, it is not necessary
for me to canvass this history in any detail. For
present
purposes, it is not disputed that the applicant submitted two
requests, prepared in terms of
sections 50
and
53
(1) of PAIA, which
were delivered in early December 2013. The respondents elected not to
accede to the requests, with the consequence
that thirty days after
submission, the respondents were deemed to have refused the requests.
The respondents do not dispute that
the applicant’s compliance
with the procedural requirements established by PAIA.
[5]
The respondents resist the relief sought by the applicant on the
basis that they have previously provided the applicant with
all of
the records under their possession and/or in their control and which
exist as recorded information, and that they have given
the
applicant’s representatives opportunities to conduct an
inspection of the books and accounts of the first and second
respondents. The respondents also contend that the applicant has no
right to the relief sought since it is not a holder of nor
does it
have a beneficial interest in any of the securities issued by the
first and second respondents, with the consequence that
it has no
locus standi
to obtain the relief that it seeks. Finally, the
respondents contend that the applicant has not made out a case for
the relief
sought since it has not demonstrated that the records to
which it seeks access are reasonably required for the exercise and
protection
of rights. (See
Clutchco (Pty) Ltd v Davis
2005 (3)
SA 486
(SCA) at 491 J to 492A, in which the court held that the
record sought must be reasonably required in the sense that it would
provide
a substantial advantage to the exercise of any right, or
where there is a need on the part of the requester for the record in
the
exercise or protection of any of its rights.)
[6]
I deal first with the respondents’ contention that the
applicant lacks
locus standi
to bring the present application.
As I have indicated, the applicant relies on
s 26
(1) of the
Companies Act to
justify its access to those records not concerned
with the related-party transactions with which it is concerned. It
does so on
the basis that at the time the requests were sent, it was
the registered owner of 25 percent of the issued share capital of the
first and second respondents respectively, and that it has since
become the registered owner of 50 percent of the issued share
capital
of the second respondent.
[7]
The respondents deny these averments. They aver that the applicant
was never the owner of 50% of the share capital in the second
respondent, and that in any event, during 2012, after the filing of
the application for liquidation and in the course of a meeting
and
subsequent correspondence between the parties’ legal
representatives, an agreement was reached in terms of which the
third
respondent would acquire Pamensky’s shareholding in both
the first and second respondents (and those of certain
entities that
he represented) for a total amount of R900 000, on the basis that the
third respondent would not proceed with the
application for
liquidation. The respondents aver that for the agreement to be
implemented, it was necessary for certain of the
entities that held
shares in the first respondent to be reinstated after their
de-registration, so as to allow the relevant resolutions
to be
passed.
[8]
It is not disputed that the parties agreed that the respondents’
attorney would draft the relevant agreement and instruct
the auditors
to transfer the shares against payment of the purchase price. For
reasons that are not fully apparent, those agreements
were never
signed. It is also not disputed that during September 2012, and on
the basis that agreement had been reached regarding
the acquisition
by the third respondent of the shares held by the applicant in the
first and second respondents, the third respondent
instructed the
auditors to transfer the shares held by the applicant to him, and
that the auditors carried out this instruction.
An extract from the
securities register of both the first and second respondents is
annexed to the answering affidavit, and reflects
the third respondent
as the sole shareholder of both entities as at 3 September 2012. The
applicant avers that the third respondent
had no authority to
instruct the auditors to transfer the shares of the first and second
respondent into his own name, and that
to the extent that the
securities registers were amended to reflect the third respondent as
the sole shareholder, they fail accurately
to reflect the actual
shareholding in the first and second respondents and fall to be
rectified.
[9]
But for any settlement agreements in terms of which the third
respondents would acquire all of the applicant’s shares
in the
first and second respondents (and those of other entities over which
Pamensky had control), it is not disputed that the
applicant was a
shareholder in both the second and third respondents. The respondents
contend that there was agreement on the
merx
and the price,
and that in the absence of any condition to the effect that there
would be no agreement unless and until all of
the terms were reduced
to writing, there is a binding agreement between the parties. They
aver that by virtue of the settlement
agreements concluded between
the parties, albeit not implemented, the applicant disposed of its
shareholding in the first and second
applicant and that given the
subsequent transfer of shares to the third respondent, the applicant
is no longer a party in respect
of which
s 26
of the
Companies Act
confers
rights of access to information or any right to make a
request made in terms of
s 50
(1) of PAIA.
[10]
The applicant, in short, contends that the settlement agreements
remain inchoate and that it remains a shareholder of the first
and
second respondents. As I have indicated, the applicant consequently
seeks to have the transfer of the shares to the third respondent
set
aside and the securities register rectified.
[11]
I am not in a position, on the papers before me, to determine what
amounts to a factual dispute as to the nature and content
of the
discussions between the parties and their respective legal
representatives and whether they had the result of a valid and
binding agreement in terms of which the applicant would dispose of
its shareholding in the first and second respondents. What I
have
before me is the securities registers of both the first and second
respondents, which indicate that prior to the request in
terms of
PAIA served by the applicant and prior to the filing of this
application, the third respondent was the sole shareholder
of both
the first and second respondents.
Section 50(4)
of the
Companies Act
provides
that a securities register maintained in accordance with the
Act is sufficient proof of the facts recorded in it, in the absence
of evidence to the contrary. The securities registers, for present
purposes at least, are deemed to be presumptively valid and
prima
facie
proof of the facts contained therein, unless and until
rectification of the securities registers is ordered. To the extent
that
the applicant contends that the third respondent had no
authority to instruct the auditors to transfer the shares into his
name
and that the securities shares stand to be rectified, this is
not a matter that falls within the scope of the relief sought by the
applicant in the present proceedings. It is in any event not a matter
that is fully canvassed in the papers, certainly not to the
extent
that any proper factual findings might be made. The applicant’s
contention that the securities register stands to
be rectified on the
basis of a lack of authority is the subject of a terse averment to
this effect made in the replying affidavit
– there is simply no
evidence to the effect that when the third respondent instructed the
auditors to record the transfer
of the shares in the securities
register, that he had no authority to do so. Until such time as the
applicant files a substantive
application to rescind or otherwise set
aside the transfer of the shares and secure the rectification of the
securities registers,
it seems to me that the applicant cannot be
considered to be the holder of any securities in the first and second
respondents or
the holder of any beneficial interest in them. The
applicant is accordingly not entitled to rely, as it does, on
s 26(1)
of the
Companies Act to
secure an order in terms of
s 82(b)
of PAIA
for access to the documents listed in paragraphs 1.1 to 1.9 and 2.1
to 2.9 of the notice of motion.
[12]
Turning next to those documents that are not specifically the subject
of access under
s 26
(1) of the
Companies Act (i.e
. those referred to
in paragraphs 1.10, 1.11. 2.10 and 2.11 and which refer to lists
sought of related-party transactions conducted
by the first and
second respondents respectively and supporting authorisations), it is
incumbent on the applicant to identify the
right or rights to be
exercised or protected, for which purpose the record is required. In
this regard, the applicant records in
the founding affidavit that it
has ‘for some time’ been concerned about the management
of the affairs of the first
and second respondents and in particular,
that the first and second respondents had related-party dealings with
a number of companies
in which the third applicant had an interest.
These are recorded as the ‘substantial basis of concern about
the manner in
which the affairs of the second and third respondent
have been conducted’. The basis on which access to the records
concerned
is sought amounts to the applicant’s wish to
determine whether the affairs of the first and second respondents
have been
conducted in accordance with the applicable regulatory
provisions.
[13]
It follows from the findings above that the dispute between the
parties as to the sale and transfer of shares in the second
and third
respondents is not a matter that the court is entitled or ought
appropriately to resolve in the present circumstances,
and that the
securities registers must be held for present purposes at least to be
presumptively valid, that for present purposes
at least, the
applicant no longer has any rights in relation to the management of
the affairs of the first and second respondents
that it may seek to
advance. Unless and until any transfer of the shares from the
applicant to the third respondent is set aside
and the securities
registers rectified, there can be no cogent foundation to the
applicant’s request for information relating
to any
related-party transactions whether for the purpose of valuing the
shares the applicant claims to hold in the first and second
respondents or in relation to the consequences of what it contends to
be mismanagement by the third respondent of the affairs of
the first
and second respondents.
Section 50
(1) contemplates the existence of
a right which the requester seeks to advance or protect, and which is
causally connected to the
records sought. In the absence of the right
that an applicant seeks to assert, there can be no entitlement to any
record that the
applicant contends is required to exercise or protect
that right. At the time that the applicant filed its request for
access to
the records it seeks, it was for present purposes no longer
a shareholder in either the first or the second respondent, and thus
not the holder of any rights
qua
shareholder in respect of
either of those entities, nor did it acquire or continue to hold any
rights arising from the management
of their affairs.
[14]
Given the conclusion to which I have come on the applicant’s
standing in relation to the substantive relief that it seeks,
it is
not necessary for me to decide whether there is any basis for the
applicant’s access to that category of information
falling
outside of
s 26
of the
Companies Act, or
whether the prior access to
information that the respondents contend that they have granted to
the applicant constitutes a valid
ground for their refusal to comply
with the applicant’s request made under
s 50(1)
of PAIA.
I
make the following order:
1.
The application is dismissed, with costs, including the costs of two
counsel where so employed.
VAN NIEKERK J
ACTING JUDGE OF
THE GAUTENG LOCAL DIVISION
JOHANNESBURG
Attorney for the
applicant: Stan Fanaroff & Associates
Counsel
for the applicant: Adv J Meiring
Attorney
for the respondents: Fluxmans Attorneys
Counsel
for the respondents: Adv A Subel SC
Date
of Hearing: 5 March 2015
Date
of Judgment: 10 April 2015