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[2010] ZAGPJHC 89
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Elementone Limited v Modern Media Promotions (Pty) Limited and Others (968/2010) [2010] ZAGPJHC 89 (13 October 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE No.
968/2010
DATE:
13/10/2010
In the matter
between:
ELEMENTONE
LIMITED
...................................
Applicant
and
MODERN
MEDIA PROMOTIONS
(PTY)
LIMITED
…
First
Respondent
AFMED (PTY)
LTD
.............................................
Second
Respondent
CAXTON LIMITED
…........................................
Third Respondent
CAXTON AND CTP
PUBLISHERS
AND PRINTERS
LIMITED
.................................
Fourth
Respondent
TERRENCE
DESMOND MOOLMAN
Fifth
Respondent
____________________________________________________________
JUDGMENT
WILLIS J:
[1] The applicant
seeks access to certain documents in terms of the Promotion of Access
to Information Act, No. 2 of 2000 (“PAIA”).
There are two
reasons upon which the applicant relies in seeking this information.
The first is that the applicant wishes to sell
shares it holds in the
second, third and fourth respondent. The second is that the
applicant wishes to know the basis upon which
the fifth respondent
receives certain remuneration.
[2] The first,
second, third and fourth respondents all form part of what is
generally known as “the Caxton Group”.
The Caxton Group
is one of the leading commercial printers and publishers of
newspapers, magazines and other paper-based materials
in the country.
Its market capitalisation is about R6,5 billion. It employs over 5
000 people. Its turnover is of the order of
R4 billion per annum.
Last year, its after tax profits were just short of R500 million. The
Caxton Group is controlled by the fifth
respondent, Mr Terrence
Moolman. The applicant used to known as Argus Printing and Publishing
Company Limited. I think I may fairly
take cognisance of the fact
that “The Argus Group” was, for decades, a household name
in South Africa. In effect, Mr
Trengove
,
who appeared for the respondents, invited me to take such judicial
notice. Indeed, among my journalist friends the Argus Group
was
known as “Granny Argus”. Although the applicant is a
public company, it has been suspended from the Johannesburg
Securities Exchange and is expected to be delisted. The applicant
holds a minority stake in the Caxton Group, excluding the first
respondent. The applicant has close links with Allan Gray Limited, a
well-known investment company.
[2] A
diagram annexed to the respondents’ answering affidavit
indicates that the fifth respondent, Mr Moolman and his business
partner, Mr Noel Coburn, through their partnership known as Moolman
Coburn Partnership & Associates hold the majority and controlling
interest in all of the respondents. They own 100% of the shares in
the first respondent which, in turn holds just over 50% of the
shares
in the second respondent. The second respondent holds 68,77% of the
shares in the third respondent. The third respondent
holds 39.16 % of
the shares in the fourth respondent. Nevertheless, through a
combination of its control of the first respondent
and, via that, of
the second respondent and, via that, of the third respondent, Moolman
Coburn Partnership & Associates, together
with its direct
shareholding in the fourth respondent and a further indirect holding
through a company known as Caxton Share Investments
(Pty) Ltd
controls the fourth respondent.
[4]
The applicant owns just under 50% of the shares in the second
respondent, 12,77% of the shares in the third respondent and 17,18%
of the shares in the fourth respondent. The applicant’s
Achilles’ heel is that it holds a sliver under 50% of the
shares in the second respondent. On the other hand, the share
structure set out in paragraph [3] above obviously gives Mr Moolman
massive leverage throughout the Caxton Group such that he ultimately
controls it through the one-thousandth of a percent majority
which
the first respondent has in the second respondent. The first
respondent is, in turn, owned 1O0% by Moolman Coburn &
Associates.
[5]
When the applicant mooted the possibility of disposing of its
minority stake in the Caxton Group, it was told by various persons
acted on behalf of that group that “You can’t do so”.
When the applicant asked why it could not do so, it was
told “Because
the matter is governed by certain agreements”. When the
applicant asked to be shown these documents the
Caxton Group replied,
“We won’t”.
[6]
Relations between Mr Van der Merwe, the chairperson of the applicant
and Mr Moolman, the fifth respondent, have soured considerably.
[7]
The applicant claims that, underlying the first reason for bringing
the application is the fact that, without access to the
documents in
question, it has no way of knowing what its rights and obligations
are and therefore cannot enter into serious negotiations
with any one
in order to dispose of its interests. It is not disputed that the
applicant may wish to dispose of its interests in
the Caxton Group.
Mr Moolman, on behalf of the Caxton Group, says, however, that the
applicant is bringing the application for
an ulterior purpose and
that the real reason for the application is to “break up the
Caxton Group” and to wrest control
thereof from the fifth
respondent. As this allegation appears in the answering affidavit,
the court cannot go behind this by reason
of the
Plascon
Evans
rules.
1
I cannot, in all the circumstances of this case, go so far as to find
that the Caxton Group’s
version raises fictitious disputes of fact, or is palpably
implausible, or far-fetched or so clearly untenable that I should be
justified in rejecting it on the papers before me. Mr
Trengove
,
who appeared on behalf of the respondents, a
lso
argued that the application was an attempt to harass and intimidate
the Caxton Group and that it was a mere “fishing expedition”.
In this regard, he relied heavily on decision of the Supreme Court
of Appeal (‘the SCA”) in
Unitas
Hospital v Van Wyk.
2
[8]
Insofar as the second reason for the applicant’s bringing of
the application is concerned, Mr
Harris
,
who
appeared for the applicant, argued that it would appear from certain
documentation that is indeed to hand that certain payments
to the
fifth respondent by the fourth respondent have been made and will
continue to be made to the fifth respondent without there
being an
underlying
causa
.
The difficulty for the applicant is that this was not the case which
the applicant made out in its founding affidavit. Moreover,
Mr
Trengove
relied
strongly on the SCA decision in
Clutchco
(Pty) Ltd v Davis
3
to
argue that the provisions of PAIA should not be used to obtain
information which could be obtained by using the machinery of
the
Companies Act and the common law to protect shareholders. Mr
Trengove
submitted that these kinds of queries could be raised at an Annual
General Meeting. He also submitted that in this regard the applicant
was definitely engaging in a “fishing expedition”. In all
the circumstances, the case of the applicant is far too “thin”
for it to succeed on this basis of the application.
[9]
Mr
Trengove
furthermore
argued that the applicant was, in any event, time-barred in bringing
the application by reason of the order in
Brümmer
v Minister for Social Development
.
4
It is common cause that if the application had to be brought within
30 days of a request for information having been refused the
applicant has been out of time but that if the relevant period is 180
days it is not. In
Brümmer’s
case the Constitutional Court held that the 30-day period in section
78 (2) of PAIA was unconstitutional. In (g) of the order of
the
Constitutional Court it stipulated that pending amending legislation
by Parliament or for a period of 18 months from 13 August
2009, which
occurs first a period of 180 days was to be “read into”
section 78 (2) in lieu of 30 days.
Mr
Trengove
submitted,
however, that in (f) of the order of the Constitutional Court it
suspended the declaration of invalidity of the 30-day
provision for a
period of 18 months. Accordingly, so the argument went, the 30 day
period remained of force and effect. In (j)
of the Constitutional
Court’s order, however, it stipulates that:
“
T
he
declaration of invalidity will apply to and govern all future
requests for information and to all pending applications launched
under
section 78
(1) of the
Promotion of Access to Information Act 2
of 2000
which, at the time of this order, have not yet been finally
determined by judgment delivered at first instance or on appeal or by
settlement duly concluded
”.
I
am satisfied that, whatever else the Constitutional Court intended by
(f), it could not have intended that a 30 day period rather
than a
180 day period remained applicable for 18 months after the date of
its order. My finding is that the applicant is therefore
not
time-barred.
Be this as it may, the provisions of PAIA do not apply to the relief
which I propose to grant.
[10]
It is clear to me, however, that the applicant has an understandable,
legitimate and unjustifiable grievance: it is intolerable
that a
shareholder in a company who wishes to dispose of its shares therein
is to be told that it cannot do so by reason of provisions
contained
in a document but the person seeking to prevent that disposition is
not prepared to disclose that document (or, at very
least, the
relevant provisions of thereof). A public company may, but a private
company must, restrict the right to transfer its
shares.
5
Besides, it is my understanding that the very rationale for holding
shares in a public company, apart from receiving dividends,
is to
have the right to sell those shares to whomsoever one wants at the
best possible price. I put it to counsel for both sides
that surely
it would make sense for me to order under “alternative relief”
that, other than as may be provided for
in the articles of
association of companies falling within the Caxton group, the
applicant may dispose of its shares to whomsoever
it pleases. Counsel
for the parties had an interesting response: they said that although
they would not agree to this, their respective
clients “could
live with that”. I asked the parties to consider a settlement
along these lines but they were unsuccessful.
Against the background
of events, I consider it right and proper and within my powers to
make such an order.
[11]
As the contending parties have been neither wholly unsuccessful nor
without vindication, it seems appropriate not to take any
order as to
costs in this matter.
[12] The following
order is made:
Subject to such
restrictions as may, at the present time, exist in the Articles of
Association of any of the second, third and
fourth respondents, the
applicant may dispose of its interests therein (i.e. the second,
third and fourth respondents) to whomsoever
the applicant may agree
thereto;
None of the
respondents may unreasonably withhold their consent to any such
disposition as provided for in paragraph (i) of this
order;
The
fifth respondent may, in respect of any such disposition, exercise a
right of first refusal, which right shall include the
right to do
so on behalf of whomsoever may agree with him accordingly;
The
right of first refusal aforesaid must be exercised within 30
calendar days of the fifth respondent being given notice of any
such
intended disposition.
DATED
AT JOHANNESBURG THIS 13
th
DAY OF OCTOBER, 2010.
N.P. WILLIS
JUDGE OF THE
HIGH COURT
Counsel
for the Applicant:
L..N.
Harris SC
(with
him,
R.M.
Pearse
)
Counsel
for the Respondents:
W.
Trenove SC
(with
him,
J.
Wilson
)
Attorneys
for the Applicant: Mervyn Taback Incorporated
Attorneys
for the Respondents: Fluxmans
Date
of hearing: 15 September, 2010
Date
of judgment: 13 October, 2010
1
Insofar as disputes of fact are concerned, the time-honoured rules
set out in
Stellenbosch
Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd
1957
(4) SA 234
(C)
at 235
E-G and as qualified in
Plascon-Evans Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634H-635C are to be followed.
T
hese
are that where an applicant in motion proceedings seeks final
relief, and there is no referral to oral evidence, it is the
facts
as stated by the respondent together with the admitted or undenied
facts in the applicants’ founding affidavit which
provide the
factual basis for the determination, unless the dispute is not real
or genuine or the denials in the respondent’s
version are
bald or uncreditworthy, or the respondent’s version raises
fictitious disputes of fact, or is palpably implausible, or
far-fetched or so clearly untenable that the court is justified in
rejecting that version on the basis
that
it obviously stands to be rejected. These rules have been
re-affirmed in innumerable cases. A recent example of some
prominence
was the case of
National Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA).
2
[2006] ZASCA 34
;
2006
(4) SA 436
(SCA) at paragraph
[21]
.
3
2005 (3) SA 486
(SCA) at paragraphs [17] and [18]
4
2009
(6) SA 623
(CC) at paragraph
5
See
Henochsberg
on the Companies Act
Vol 1, Issue 27, page 38