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[2021] ZAGPJHC 525
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Brikor Limited and Another v Parkin N.O. and Others (11622/2020) [2021] ZAGPJHC 525 (4 March 2021)
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO: 11622/2020
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
NO
DATE:
12 MARCH 2021
In
the matter between:
BRIKOR
LIMITED
First
Applicant
GARNETT
PARKIN
Second
Applicant
And
ELSIE
PARKIN
N.O
.
First Respondent
PHILIPPINA
MARIA MCDONALD N.O
.
Second Respondent
MARIA
NEWTON
N.O.
Third
Respondent
MATHYS
DE BRUIN
N.O.
Fourth
Respondent
JUDGMENT
ENGELBRECHT,
AJ:
1.
Enrolled before me for the
week of 1 March 2021 was an application for an
order that:
1.1.
the request of the first to fourth respondents (Respondents)
for a
shareholders
meeting to be convened to confirm the appointment of new directors
pursuant to the outcome of the Annual General Meeting
of the first
applicant (Brikor) of 9 October 2019 be set aside; and
1.2.
the request of the Respondents for a shareholders meeting to
be
convened
for the purpose of the removal of Mr. Allan Pellow, the second
applicant (Mr. Parkin) and Mr. AP van der Merwe (Mr. Van
der Merwe)
be set aside (the First Application).
2.
The relief was sought
under
section 61(5)
of the
Companies Act, 2008
, which
provides that a
company may apply to a Court for an order setting aside a
shareholders’ demand for a meeting in terms of
section 61(3)
on
the grounds that the demand is frivolous, calls for a meeting for no
other purpose than to reconsider a matter that has already
been
decided by shareholders, or is otherwise vexatious.
3.
I
directed that the First Application be heard on 4 March 2021.
4.
On 1
March 2021, Brikor and Mr. Parkin (Applicants) filed an application
seeking
postponement of the hearing, so that the matter to be set down for
hearing together with an application under case number
9390/2021 (the
Second Application). The basis for the application for postponement
was a material change in circumstances, a follows:
4.1.
The First Application, which was before me, related to
requests made
during
February 2020. It was launched on 20 May 2020.
4.2.
After the affidavits and heads of argument in the First
Application had
been
filed, Brikor held its Annual General Meeting of Shareholders on
6
November 2020 (2020 AGM). The first respondent (Ms. Parkin) was
unable to vote the shares of the Daniel Parkin Testamentary Trust
(Daniel’s Trust) as the 2020 AGM, because her co-trustee at the
time (Mr. De Bruyn) was not prepared to accede to the voting
as
proposed by Ms. Parkin in respect of the shares in Brikor held by
Daniel’s Trust.
4.3.
The outcomes of the 2020 AGM included that:
4.3.1.
Mr. Van der Merwe was no longer a director;
4.3.2.
Mr. Pellow was re-appointed as Chairman of Brikor’s Board
by a
majority vote of the shareholders; and
4.3.3.
the appointment of the directors whom the Respondents had sought to
have installed (Dr. Henry and Mr. Hornby) was
not
confirmed.
4.4.
At the 2020 AGM the shareholders also approved a resolution to
place
Brikor’s
authorized, but unissued shares under the control of Brikor’s
Board.
4.5.
This led to a further request on 9 February 2021 for a meeting
of
shareholders
of Brikor. At first Ms. Parkin proposed that the resolution of the
shareholders at the 2020 AGM be set aside. Then,
on 17
February
2021, she proposed that the resolutions be reconsidered and voted
again at the requested meeting.
4.6.
Pursuant to that request, the Applicants launched the Second
Application to
have the requests set aside under the provisions of
section 61(5)
of
the
Companies Act, 2008
, on 25 February 2021. The request for a
shareholders meeting in respect of the positions of Mr. Pellow, Dr.
Henry and Mr. Hornby
as directors of Brikor is now the subject-matter
of the Second Application, because the shareholders of Brikor voted
on the matter
at the 2020 AGM.
5.
The Respondents filed a
notice of intention to oppose the application for
postponement on
the same day. An answering affidavit deposed to by Ms. Parkin was
filed on 3 March 2021. The position of the Respondents
as set out
therein is that:
5.1.
the Second Application “
deals
with completely different issues to the
Current
Application presently before the Honourable Court and it is not
convenient for the two applications to be heard together”
;
and
5.2.
“
Whilst
the application in regard to Van der Merwe has become moot,
that does
not render the Current Application moot, inter alia in this regard
the resolution sought to remove Garnett and and Pellow
as directors
and to appoint Mattheyse, Hornby and Greeff as directors remain
extant”
.
6.
The answering affidavit in
the postponement application quotes large tracts
from an
affidavit filed in proceedings in another application under case
number
6549/2020,
seeking an order that Brikor be interdicted from utilizing, for
purposes of any acquisition, the authorized but unissued
shares in
Brikor pending the outcome of an action instituted by Ms. Parkin in
her personal capacity and in her capacity as trustee
of Daniel’s
Trust pending removal of Mr. De Bruyn as trustee. It deals with
events surrounding the 2020 AGM, and Mr. De Bruyn’s
refusal to
act jointly with Ms. Parkin.
7.
The
conclusion reached is that:
7.1.
“
The
issues in the Current Application are not related to the issues
which will
be tested in the Second Application. In addition, the answering
affidavit in the Second application has not yet been
finalised and it
is simply not possible for the Court in these circumstances to
determine whether it is convenient for the two
matters to be heard
together”
;
and
7.2.
“
The
Current Application is ready for hearing and should be disposed
of.
Postponing the matter would only serve to make the task of the Judge
who eventually deals with the matters more onerous. The
issue in the
Current Application is whether the proposed resolutions are frivolous
and vexatious. It is submitted that there is
no need for that issue
to be heard with the Second Application where a resolution based on
completely different facts will be before
the Court”
.
8.
Moreover, the submission
is made that “
the
right of a shareholder to exercise
any
particular resolution should be determined as soon as possible”.
Asserting
more than a year’s delay since the request for the shareholders
meeting,
it is said that the Respondents have a right for the resolutions to
be dealt with, and therefore that the First Application
should be
dealt with as soon as possible.
9.
The reply in the
postponement application was filed later in the day on 3 March
2021. The
Applicants set out the ways in which the issues raised in the First
Application and the Second Application are inter-related.
Essentially
the response is that:
9.1.
The request for a meeting, in February 2020, to confirm
the
appointment
of Mr. Hornby was overtaken by the 2020 AGM: the appointment was
voted on and was not confirmed by the shareholders.
The February 2021
request is to reconsider the vote in respect of Mr. Hornby. The
appointment of Mr. Hornby is therefore an issue
in the Second
Application and no longer in the First Application.
9.2.
The February 2020 request for a meeting to remove Mr. Pellow
was
overtaken
by the 2020 AGM. Mr. Pellow’s position was considered at the
2020 AGM and the shareholders voted in favour of his
re-appointment.
The February 2021 request is a request to reconsider the vote. That
is now the subject of the Second Application.
9.3.
The February 2020 request for a meeting to remove Mr. Van der
Merwe as a
director of Brikor has become moot, because he resigned by not making
himself available for re-election at the 2020 AGM.
9.4.
A meeting has already been held in respect of the request to
remove
Mr.
Parkin and appoint Mr. Mattheyse as director of Brikor - the 2020
AGM.
10.
At the commencement of argument before me,
Mr. Kaplan, who appeared for
the
respondents, submitted that, upon consideration of the reply, the
Respondents accepted that the only live issues arising from
the First
Application were the proposed removal of Mr. Parkin and the
appointment of Mr. Mattheyse as directors of Brikor.
11.
The postponement application was argued at some length.
12.
In essence, Mr. Joubert SC, who appeared for the Applicants made the
point
that
the matter covered in the First Application would cast a shadow
forward to the matters to be considered in the Second Application,
and that the events that followed the institution and exchange of
papers in the First Application would cast an illuminating light
on
the consideration of the remaining live issues in the First
Application. For that reason, he argued, it would be convenient
for
the Court to hear the matters together. He proposed that this Court
place strict time limits on the prosecution of the Second
Application
in order to address any concern that the postponement application is
being abused as a dilatory tactic to prevent the
Respondents from
exercising their rights under the
Companies Act, 2008
, and in
particular the
section 61(3)
obligation of the Board of Directors to
call a shareholders meeting when demand is made for it.
13.
Mr. Kaplan’s position was that, even
if the matters remaining for decision in
the
First Application were now far more limited than at the outset, the
Respondents were entitled to have their resolution considered,
given
the mandatory language employed in
section 61(3).
Distilled to its
essence, Mr. Kaplan’s submission is that the request for a
meeting concerning the limited matters of Mr.
Parkin’s removal
and Mr. Mattheyse’s appointment should not be held to ransom
because there has been further requests
for a meeting to consider
resolutions proposed by the same shareholder.
14.
In the course of argument, both counsel
referred me to the test for
consolidation
of actions under Uniform
Rule 11
, which rule also applies to
applications by virtue of the operation of Uniform
Rule 6(14).
In the
present case, there is no application for consolidation in the formal
sense before me; what is sought is simply a combined
hearing of the
two applications. However, it is true that the principles applicable
to consolidation are properly to be taken into
account.
15.
In the commentary on Uniform
Rule 11
in
Erasmus
Superior Court Practice
,
it
is
highlighted that the paramount test is “
convenience”
,
which also connotes “
appropriateness
in the sense that procedure would be convenient if, in the
circumstances of the case, it appears to be fitting and
fair to the
parties concerned”
.
Rail
Commuters’ Action Group v Transnet Ltd
2006 (6)
6 SA 8
(C)
at 88B, the Court was identified as one of the parties whose
convenience is to be brought into account. Nonetheless, if
“
substantial
prejudice”
to party were to flow from the consolidation, it must be refused,
even if the balance of convenience favours the grant of
consolidation.
16.
The question that arises, then, is whether
the Respondents can show
“
substantial
prejudice”
if the postponement were to be allowed. I think not.
17.
The only live issues, which had been raised
as early as February 2020, were
not
introduced by the Respondents for a vote at the 2020 AGM, where the
issue could have been disposed of. I am not persuaded by
Mr. Kaplan’s
argument that this was because the proposed resolutions were
lis
pendens.
As
Mr. Joubert SC points out, it had been open to the Respondents to
withdraw the request for a meeting in accordance with
section
61(6)(a)
of the
Companies Act, which
would have paved the way for
raising the matter at the 2020 AGM. But even if Ms. Parkin had not
withdrawn the request for the meeting,
that would not have stood in
the way of raising the removal of Mr. Parkin and the appointment of
Mr. Mattheyse, because the
section 61(5)
demand was for a meeting
that was to concern a variety of proposed resolutions. What was
lis
pendens
was not the proposed resolutions, but rather the demand for a
meeting.
18.
I have carefully considered the position.
The application for postponement
falls
to be granted. To my mind, the events subsequent to the exchange of
papers and the filing of heads in the First Application
cannot be
divorced from the issues raised in it. There is no merit whatsoever
to the contention that the matters raised are not
inter-related. To
expect this Court to entertain an application that, in part at least,
is concerned with matter that have become
moot and which, in any
event, will be revisited in one form or another in the Second
Application, is to expect it to waste valuable
Court time. It seems
to me that the matter covered in the two applications cannot be
evaluated in isolation. That is not to say
that the merits of the
First Application will not be
determined
in their own right, as Mr. Kaplan suggested. I agree with his
submission that the test whether the request covered by
the First
Application was frivolous or vexatious must be whether it had that
character at the time. However, that does not mean
that the
application ought not to be heard together with the second
application
19.
I am declining the invitation to set time
limits for the further conduct of the
Second
Application, since that matter is not before me. I do not consider it
appropriate to give directions in a matter that was
not allocated to
me for consideration. The parties are nevertheless urged to adhere to
the timelines as prescribed in the Uniform
Rules to secure the speedy
resolution of the matter.
20.
In the circumstances I make the following
order:
20.1.
The hearing of the application under case number 11622/2020 is
postponed to be set down for hearing together with application
under
case number 9390/2020;
20.2.
The costs occasioned by the postponement are reserved for
determination by the Court hearing the aforesaid applications.
MJ
ENGELBRECHT
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Electronically
submitted therefore unsigned
Delivered:
This judgement was prepared and authored by the Judge whose name is
reflected and was handed down orally on 4 March 2021.
It is published
electronically by circulation to the Parties/their legal
representatives by email and by uploading it to the electronic
file
of this matter on CaseLines. The date for hand-down is deemed to be 4
MARCH 2021.
Date
of hearing:
4 March 2021
Date
of judgment:
4 March 2021
Appearances
For
the applicants:
Adv. A.P Joubert
SC
Adv. N.J Horn
Instructed
by:
Werksmans Attorneys
For
the respondents: Adv. K.L
Kaplan
Instructed
by:
Bagraim Sachs Attorneys