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[2014] ZASCA 177
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National African Federated Chamber of Commerce and Industry and Others v Mkhize and Others (805/13) [2014] ZASCA 177; [2015] 1 All SA 393 (SCA) (21 November 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 805/13
Reportable
In
the matter between
NATIONAL
AFRICAN FEDERATED CHAMBER
OF
COMMERCE AND INDUSTRY AND SEVEN
OTHERS
.....................................................................................
FIRST TO EIGHTH
APPELLANTS
and
VERONICA
PINKY NOMASWAZI MKHIZE
AND
SEVENTY OTHERS
......................................
FIRST
TO SEVENTY-FIRST
RESPONDENTS
Neutral
citation:
National African Federated
Chamber of Commerce and Industry v Mkhize
(805/13)
[2014] ZASCA 177
(21 November 2014)
Coram
:
Mpati P, Majiedt, Willis and Mbha JJA and Schoeman AJA
Heard:
3 NOVEMBER 2014
Delivered:
21 NOVEMBER 2014
Summary:
Interpretation of the provisions of the constitution of a voluntary
association – principles restated – to
be interpreted
like any other document – sensible and businesslike
interpretation is required – on application of these
principles
held that a purported meeting of the appellant’s council on 6
December 2012 had not been lawfully convened and
that the resolutions
taken at that meeting were invalid and of no force and effect.
ORDER
On
appeal from:
South Gauteng High Court,
Johannesburg (Monama J, sitting as court of first instance):
The
following order is made:
1.
The appeal is upheld.
2.
The order of the High Court is set aside
and substituted with the following order:
‘
(a)
It is declared that the purported meeting of the Council of the
National
African
Federated Chamber of Commerce and Industry on 6 December 2012 was not
lawfully convened and that all the resolutions passed
thereat are
invalid and of no force and effect.
(b)
The respondents are ordered, jointly and
severally, to pay the costs of the application, including the costs
of two counsel.’
3.
The respondents are ordered, jointly and
severally, to pay the appellants’ costs of appeal, including
the costs of two counsel.
4.
The respondents are ordered, jointly and
severally, to pay the appellants’ costs occasioned by the
application for leave to
appeal before the South Gauteng High Court
and the subsequent application to this Court for leave to appeal.
JUDGMENT
Majiedt
JA (Mpati P, Willis and Mbha JJA and Schoeman AJA concurring):
Introduction:
[1]
The first appellant, the National African Federated Chamber of
Commerce and Industry (NAFCOC), is an organisation at war with
itself. Its members have, not for the first time, split into two
factions. This internecine strife has culminated in a litany of
court
cases of which the present matter is one. The appellants appeal with
leave of this court against the dismissal of its application
in the
South Gauteng High Court, Johannesburg (Monama J). In that
application the appellants sought declaratory orders that a meeting
of the NAFCOC Council, which was to be held on 6 December 2012 (the
December 2012 meeting), had been unlawfully convened and therefore
invalid and that the resolutions passed thereat are invalid and of no
force and effect. It also sought an interdict restraining
the
respondents from convening a meeting of the NAFCOC Council.
The
parties
[2]
NAFCOC is a voluntary association, governed by a constitution. It was
established in 1964 for the economic empowerment of Black
businesspeople. NAFCOC is a federation, consisting of affiliated
sectoral members, corporate members, honorary members and any
other
individuals or associations admitted to membership. The 18 sectoral
affiliates are themselves also voluntary associations
– nine of
them represent the provinces and the other nine represent various
sectors of the economy. The second appellant,
Mr Lawrence Bhekinkosi
Mavundla (Mr Mavundla), was NAFCOC’s president until recently
(there is a dispute as to when exactly
his term of office ended, an
aspect to which I will revert shortly). The 3
rd
to 8
th
appellants are members of NAFCOC’s Executive Committee (Exco)
and of its Council.
[1]
The 3
rd
,
4
th
and 5
th
appellants withdrew their appeal shortly before the matter was heard.
The 5
th
appellant had deposed to the founding affidavit on behalf of NAFCOC
as its duly authorised representative, and on behalf of himself
and
the other appellants.
[3]
The 1
st
to 50
th
respondents are all signatories
to a notice purporting to requisition and convene the December 2012
meeting. The 51
st
to 71
st
respondents attended
the December 2012 meeting and voted in favour of the resolutions
there. They were joined as parties after
the December 2012 meeting
had been held. The 1
st
to 62
nd
, the 64
th
and the 68
th
to 71
st
respondents were all
represented by one set of counsel and these respondents were referred
to during argument as ‘the main
respondents’. The 63
rd
and the 65
th
to 67
th
respondents were
represented by another set of counsel. Those respondents were
referred to in argument as ‘the Mpumalanga
respondents’.
Where necessary, I shall adopt this nomenclature in the judgment. In
the founding affidavit, Mr Sekwano Gilbert
Mosena (Mr Mosena), the
erstwhile 5
th
appellant, describes the respondents as
‘rebels’ or, in the case of the 1
st
to the
50
th
respondents, as ‘members of the parallel NAFCOC
Council’. All of the respondents are allegedly aligned to the
Leaf-Hlongwane
faction while the appellants are Mavundla (the 2
nd
appellant) loyalists. Mr Michael Edward Leaf is the Chief Executive
Officer of NAFCOC Investment Holding Company Limited (NAFHOLD)
and Mr
Khesane Johannes Hlongwane is its Chairman. NAFHOLD was incorporated
during October 1994 as an investment holding company
with the
objective of acquiring business and investment opportunities for
NAFCOC and its members. Its sole shareholder is the National
African
Federated Chamber of Commerce Investment Trust (the Trust). The Trust
effectively funds NAFCOC by making discretionary
distributions to it
in order to fund its expenses. NAFHOLD holds numerous valuable
assets, including investments in Uthingo (which
runs the national
lottery) and Phumelela (a large operator in the horseracing
industry). During 2009 NAFHOLD disposed of an investment
in Tsogo
Investment Holding Company for the considerable amount of R1.2
billion.
The
issues
[4]
The central issue for determination is whether the December 2012
meeting was lawfully convened. If not, all resolutions emanating
from
it are invalid and of no force and effect. The main resolutions
passed thereat are the election of a new President (purportedly
to
replace Mr Mavundla) and the removal of the 3
rd
to 8
th
appellants from the NAFCOC Exco for a variety of reasons which need
not be repeated here. Mr Mavundla’s position as NAFCOC
President also requires determination since it has a direct bearing
on the outcome of the case.
[5]
The interpretation of the NAFCOC constitution, as its governing
instrument, is key to the determination of the central issue.
But, as
will presently appear, even the question of which constitution
applies, was a bone of contention between the parties.
The
background factual matrix
[6]
A poorly drafted constitution and an apparent pot of gold in NAFHOLD
have seemingly fuelled the fires of the battle within NAFCOC.
The two
factions accuse each other of unlawfully setting up parallel
structures with the sole objective of gaining control over
NAFCOC. At
the epicentre of this battle is control of the NAFCOC Council, the
organisation’s supreme decision-making body.
There are also
accusations back and forth concerning the one or the other faction’s
alleged unlawful misappropriation of
NAFCOC’s moneys. And there
are serious allegations of numerous acts of malfeasance having been
committed by various individuals
in this unseemly battle. It is
hardly surprising then that not only has this resulted in an
unnecessarily prolix record (strongly
deprecated by the high court
and rightly so), but there are also wide ranging disputes of fact on
the papers. The appellants sought
final relief in the high court but,
for the reasons that follow, it is not necessary to resolve these
factual disputes. In essence,
the material facts are either common
cause or have not been seriously disputed.
[7]
The appellants were duly elected as Exco members in 2009. Save for Mr
Mavundla’s disputed position, there is unanimity
between the
parties that the other appellants were office bearers and NAFCOC Exco
and Council members at the time of the notice
of the meeting (6
November 2012) and of the December 2012 meeting itself. This is an
important common cause fact to which I shall
revert shortly.
[8]
Notice of the December 2012 meeting was given on 6 November 2012 to
Council members via an electronic mail message from a NAFHOLD
employee, Ms Dianne Ingram. Attached to the message was a letter on a
NAFHOLD letterhead from a Mr M. Liphosa with the notice attached.
In
relevant part the notice reads as follows:
‘
Notice
of a special meeting of the Council of NAFCOC (“the meeting”)
1.
The meeting has been convened on the
requisition of the majority of Council members, whose signatures are
appended hereto . . .’
As
stated above, the December 2012 meeting was aimed at filling Mr
Mavundla’s disputed vacant position and the removal of
the 3
rd
to 8
th
appellants as Exco members. The resolutions were
passed unanimously. But there was an important and material judicial
intervention
prior to the December 2012 meeting. The appellants
launched the present application, as a matter of urgency, for
declaratory and
interdictory relief on a final, alternatively
interim, basis. The appellants were not able to have their case heard
before the
December 2012 meeting. They did, however as a consequence
of the urgent application, procure an order by agreement on 4
December
2012 before Mojapelo DJP, designed to preserve the status
quo pending the hearing of the application. In relevant part this
order,
in terms whereof Mojapelo DJP postponed the application to 29
January 2013, reads as follows:
‘
The
resolutions listed in the notice of the special meeting of the
Council of the First Applicant [NAFCOC] to be held on 6 December
2012
and any other resolution adopted at that meeting is
suspended
and will not be implemented pending the hearing of the matter
[on
29 January 2013]
’
(my emphasis).
[9]
The appellants consequently amended their application to provide for
the changed circumstances. They sought the declarators
and interdict
mentioned in para 1 above. As stated, they also joined the 51
st
to 71
st
respondents. At the hearing they abandoned the
interdictory relief and persisted only in seeking the declarators. In
dismissing
the application, Monama J made several key findings, which
I discuss next.
The
judgment of the high court
[10]
The high court held that:
(a)
the appellants had placed reliance solely on the 2011 NAFCOC
constitution and that, in a “[Damascan] conversion”
the
appellants had recast their case by invoking the 2008 NAFCOC
constitution in their replying affidavits;
(b)
The effect of the order of Mojapelo DJP on 4 December 2012
[2]
was to render the prayers for declaratory relief moot and that the
only remaining aspect for adjudication was the interdictory
relief;
(c)
The NAFCOC President’s term, unlike that of the rest of the
Exco members which was four years, was only three years and
had
expired on 4 November 2012; and
(d)
The “Chairperson of the Council” had the requisite
constitutional powers to convene and preside over Council meetings
and the December 2012 meeting was thus “properly called and
properly conducted its affairs according to the constitution.”
The
respondents disavowed any reliance on the findings and underlying
reasoning of Monama J, save to a limited extent in respect
of (c) and
(d) above. This is hardly surprising. The learned Judge regrettably
misconstrued and seriously misdirected himself on
several aspects
which I find convenient to deal with now.
[11]
First, as I have stated, the appellants had abandoned the
interdictory relief at the hearing and had pressed ahead, apparently
with considerable vigour, with their pursuit of declaratory relief.
And the consensual order made by Mojapelo DJP was not only
designed
to preserve the status quo and to reserve the appellants’
rights, but in truth and in fact had the effect of doing
so, until
the final determination of the
lis
between the parties. The finding by Monama J that that order had
rendered the declaratory relief moot is a grave misdirection.
[3]
[12]
Second, while it is true that the appellants had primarily based
their case on the 2011 constitution, they had expressly and
unequivocally added a second string to their bow by invoking the 2008
constitution as an alternative basis for their contentions
in their
founding papers. They came to court on the alternative basis that,
even if the 2008 constitution is found to be of application,
they
were nonetheless still entitled to relief due to non-compliance with
that constitution. It is well established that a litigant
may plead
in the alternative, although he or she or it may not adduce evidence
on alternative bases. In the end, counsel for all
the respondents
rightly conceded that the high court was wrong in its finding in
10(a) above and the matter was argued on the 2008
constitution. The
findings set out in 10(c) and 10(d) are at the heart of this matter
and require fuller deliberation. A useful
starting point is the
relevant provisions of the 2008 constitution.
The
NAFCOC governing structure as contained in the 2008 constitution
[13]
It bears repetition that the 2008 constitution is hardly a model of
clarity. It is perplexingly contradictory on key aspects
and most
importantly, bewilderingly unclear on important issues of governance.
It was not difficult at all for the parties to advance
completely
different interpretations of the material provisions. The point is
best illustrated by the fact that the two groups
of respondents were
able to attach differing interpretations to a key clause, for reasons
that will become evident later. But this
is what is before us and we
are called upon to decide the issues as best we can. As this case
concerns the question whether or
not a NAFCOC Council meeting has
been validly convened the primary focus will be on the provisions
concerning meetings. But ancillary
related provisions concerning
membership, definitions and the like also require consideration.
[14]
As stated, NAFCOC is a federal body with three classes of membership.
Its highest decision–making structure is the Council
which is
dealt with in clause 28. Clause 28.2 makes it clear that the Council:
(a)
is NAFCOC’s supreme decision–making body;
(b)
determines NAFCOC policy;
(c)
has the power to approve the admission of members to NAFCOC;
(d)
shall facilitate the establishment of subsidiary NAFCOC chambers;
(e)
shall perform any other related function for the benefit and interest
of NAFCOC.
The
Council consists of 72 members, ie four delegates from each of the 18
constituent affiliate members. In instances where, for
example, the
constitution must be amended, the constituent affiliate members may
delegate up to 10 members to a Council meeting.
[15]
In terms of clause 28.4.4:
‘
Council
meetings shall be held at such times and places
as
the President may determine
; provided
that Council shall meet no less than FOUR (4) times in each calendar
year’ (my emphasis).
The
appellants rely heavily on this clause for their case. For their
part, the main respondents’ principal contentions are
based on
clause 17.1 which, under the heading ‘Calling of meetings’,
reads:
‘
The
Executive Committee and/or Council may, whenever it deems fit,
convene other General Meetings.
They
shall also convene a General Meeting on a requisition thereto by a
simple majority of members.
’
(my
emphasis – this is the part on which the main respondents
rely).
The
Mpumalanga respondents, in turn, rely on the common law for their
contentions on this central issue. I shall discuss these different
contentions shortly. Before I do so and to add to the conundrum, it
is necessary to consider the position of the ‘Chairperson
of
the Council’. The main respondents’ case is that, having
been duly requisitioned by ‘a simple majority of
members’
as envisaged in clause 17.1, the ‘Chairperson’ had
convened the December 2012 meeting, as he was constitutionally
empowered to do.
[16]
It is striking that such a designation, ‘Chairperson of the
Council’ is nowhere to be found in the 2008 constitution,
not
even in clause 28 where one would have expected to find it, dealing
as it does with, inter alia, the composition of the Council.
It does
not appear in clauses 29 or 30 which list the members of the NAFCOC
Exco (which is responsible for the day to day administration
of the
organisation’s affairs) and regulate their elections and terms
of office and set out the functions and responsibilities
of the
various office-bearers. The Exco consists, in terms of clause 29.1,
of the President, Deputy-President, First Vice-President,
Second
Vice-President, Treasurer, Secretary General, Assistant Secretary
General, three additional Council members and the Chief
Executive
Officer (CEO), elected by these office bearers.
[17]
The deponent to the main answering affidavit, Mr Douglas Stewart Duma
Makanda (Mr Makanda) describes himself as the ‘duly
elected
chairperson of the NAFCOC council’. He asserts that he has, in
that capacity, duly convened the December 2012 meeting
upon the
requisition of a simple majority of NAFCOC’s Council members,
in terms of clause 17.1 above. This ‘simple
majority of council
members’ is alleged to be the 1
st
to 50
th
respondents. Mr Makanda concedes that there are ‘certain
ambiguities in the language used in the 2008 constitution’,
but
he says they ‘can be resolved through a purposive
interpretation’. According to him the ‘chairperson of the
council’ is elected to that position for a period of four years
by the Council in terms of clause 29.6.1. He says that the
‘chairperson’ is not a member of Exco, but ‘he or
she is simply the designated representative of the council
when it is
not in session and the only power that the chairperson may exercise
outside of a meeting of the council (save for specially
delegated
powers) is to call a meeting thereof’. The reference to clause
29.6.1 is incomprehensible since that clause reads
as follows:
’
29.6.1
Both the Council and the Executive Committee members shall be elected
for a period of 4 (FOUR) years
’
.
[18]
This aspect is further complicated by the appellants’ response
to Mr Makanda’s aforementioned averments. They say
the
constitution makes no provision for such a position and that the
Council has ‘created’ a position of ‘Chairperson
of
the Provinces’ in order to placate Mr Makanda and that they
have gratuitously permitted him to chair some meetings of
Council.
This cavalier approach regrettably appears to be symptomatic of how
NAFCOC’s affairs are being run.
[19]
The only place in the constitution where mention is made of a
‘Chairperson of the Council’ is in clause 29.8.9.1
which
reads:
‘
The
Chairperson of the Council and the Executive Committee shall have an
ordinary vote as well as the casting vote
’
.
This
clause is perplexing, since it is out of kilter with the rest of the
constitution. As stated, nowhere in the constitution is
such a
position established. I think the appellants are correct when they
suggest that this is but one of a plethora of drafting
errors and
that the clause, when read in context, can only be referring to the
President of NAFCOC whose functions, in terms of
clause 29.8.1.3
includes the responsibility to ‘chair all meetings of NAFCOC,
Council, the Executive Committee and the Annual
General Meeting’.
It is also conceivable that the drafters of the constitution intended
simply to provide that the official
who chairs a Council meeting
would have an ordinary as well as a casting vote. There was no
intention to create a position such
as ‘Chairperson of the
Council’ in the clause.
I
am not persuaded:
(a)
that the 2008 constitution creates a
position of ‘Chairperson of the Council’ and, as a
result,
(b)
that Mr Makanda has any constitutional
powers in that purported capacity.
I
shall revert to this finding presently. I consider next the correct
interpretation of clause 17.1, thereafter the Mpumalanga respondents’
reliance on the common law and then the central question, namely who
is constitutionally empowered to convene a meeting of the
Council of
NAFCOC and under what circumstances.
[20]
In respect of clause 17.1 (cited above), Monama J held that the
clause is ‘wide enough to include the chairperson of
the
council’. He further held that ‘. . . . [regard] being
had [to] the structures of [NAFCOC], every constituent part
is
clothed with authority to call and preside over the meeting’.
This finding is, with respect, clearly wrong. Absent the
clear,
unequivocal establishment of that position and in view of the
unambiguous provisions dealing with the establishment of the
NAFCOC
Exco and its Council, there is no legal basis to find that there is a
NAFCOC office bearer known as ‘the Chairperson
of the Council’
created by the 2008 constitution and even less that such a phantom
office bearer can exercise any constitutional
powers on behalf of
NAFCOC. One would have expected such an office bearer to have been
defined in the definitions clause (clause
11) as is the case with all
other office bearers (clauses 11.1.18 – 11.1.22) and to have
been included in the list of Exco
members set out in clause 29.1.
‘Office bearers’ is defined in clause 11.1.16 as
‘collectively, members of the
Executive Committee’. The
unavoidable conclusion is that such a position does not exist in the
2008 constitution.
[21]
It is trite that the constitution of a voluntary association together
with all the rules or regulations collectively forms
the agreement
entered into by that association’s members.
[4]
The constitution must be interpreted in accordance with the ordinary
rules of construction applying to contracts in general.
[5]
This requires giving effect to the plain language of the document,
objectively ascertained within its context.
[6]
In the course of interpretation, preference should be given to a
sensible meaning over ‘one that leads to insensible or
unbusinesslike results or undermines the apparent purpose of the
document’.
[7]
[22]
In applying these principles, it is plain that clause 17.1 refers to
general meetings of the general NAFCOC membership and
not to general
meetings of the NAFCOC Council.
[8]
The main respondents’ reliance on this clause is misplaced.
Clause 17 deals with the ‘calling of meetings’. Clause
17.1 refers to ‘other general meetings’ that can in my
view only mean general meetings of NAFCOC members other than
the
annual general meeting of NAFCOC, which is dealt with in detail in
clause 14. The 2008 constitution pertinently distinguishes
between
general meetings of all NAFCOC members and Council meetings. The
latter is stipulated in clause 28.4 (‘Meetings of
the Council’)
which, in turn, falls under the heading to clause 28: ‘The
Council of NAFCOC’. Counsel for the
main respondents had
considerable difficulty explaining to us why the requisitioning and
convening of a Council meeting would be
located in such a peculiar
place as clause 17.1 and not, as one would expect, in clause 28.4.
This distinction is fortified by
clause 20.1 which, in dealing with
the conduct of NAFCOC’s affairs, provides that the Exco ‘may
exercise all such powers
of NAFCOC as are not, by this constitution,
required to be exercised by
the
Council in General Meeting
. . . .’ (my emphasis). There is, in addition, clause 21.1
which, in dealing with the delegation of NAFCOC’s powers
to the
Exco, provides that such delegation shall occur ‘[s]ubject to
any other provision in this constitution, and subject
to any
resolution of
a
General Meeting or a Council Meeting
’
(my emphasis). Finally and conclusively, clause 11.1.12 defines
‘General Meeting’ as ‘a general meeting
convened
for all members of NAFCOC
entitled to attend and vote at general meetings in terms of this
constitution. . . .’ (my emphasis).
I
am therefore driven to the conclusion that clause 17.1 concerns the
requisitioning of a general meeting of the NAFCOC membership
by a
simple majority of NAFCOC members. It did not and could not have
formed the constitutional basis for the convening of the
December
2012 meeting. The next aspect for consideration is the Mpumalanga
respondents’ reliance on the common law.
[23]
In an ably presented argument which at first blush appeared quite
attractive, counsel for the Mpumalanga respondents invoked
the common
law on the basis that neither clause 28.4.4 (on which the appellants
rely) nor clause 17.1 (on which the main respondents
rely) find
application in the present case on the central issue. We were urged,
generally, to give effect to the plain wording
of the constitution
through the application of a purposive approach.
[9]
In respect of the central issue, the argument went like this: neither
clause 28.4.4 nor clause 17.1 applies to the requisitioning
and
convening of the December 2012 meeting; in fact the constitution is
silent on this aspect, hence the common law applies. Clause
28.4.4
does not envisage the requisitioning of a Council meeting, since it
constitutionally prescribes a minimum of four Council
meetings per
year. All that the President is empowered to do in terms of clause
28.4.4 is to determine the times and the venues
of these meetings.
Clause 17.1 concerns general meetings of the NAFCOC membership. The
manner of the requisitioning and convening
of other Council meetings
(ie other than those stipulated in clause 28.4.4) is not provided for
in the constitution. On the common
law authorities the December 2012
meeting was duly convened by a majority of legitimate Council members
(on the Mpumalanga respondents’
version, since there is a
material dispute of fact on this aspect) and there was no need to
have approached the President in this
regard. Counsel placed reliance
primarily on
Lewin
[10]
,
Osman
v Jhavary
[11]
and
Padayichie
v Pavadai
[12]
for these submissions.
[24]
Upon closer analysis the argument loses much of its lustre. It is, as
I will presently demonstrate, sound only in respect of
the
requisitioning of Council meetings, but not in respect of its
convening. We were referred to part of an extract from a minority
judgment by Steyn JA in
Cape
United Sick Fund Society v Forrest.
[13]
But when read in full and in context, the dictum goes no further than
to confirm the well-established principle that one must first
and
foremost find the powers and functions of an association’s
organs in its constitution.
[14]
In the present matter the Mpumalanga respondents argue that it is
appropriate to turn to the common law since the constitution
is
silent on the central issue for consideration. The following passage
from
Lewin
,
relying on
Jonker
v Ackerman en andere
[15]
was cited in support of the proposition:
‘
An
annual general meeting which has been called by the secretary of a
club,
in
the absence of any provision in the constitution
that this could be done by the committee only, is just as valid as
one which has been called or authorized by the committee.’
[16]
(my emphasis).
Reliance
was also placed on
Osman
at 358. In that case this court held
that there are compelling grounds to read into the trust deed of the
Grey Street Mosque an
implied term that 15 or more regular
worshippers should have the authority to call a meeting of the
congregation to pass certain
resolutions in circumstances where the
defendant trustees had refused to do so, despite having been
requisitioned to convene the
meeting. Lastly, we were referred to
Padayichie
where the court held that the members of the
Johannesburg Melrose Shri Siva Subrahmanyar Temple (a voluntary
association) were
entitled to call a special general meeting
themselves in circumstances where the duly empowered authorities (one
trustee, the secretary
and the president) refused to heed a
requisition for such meeting to be held. For the reasons that follow
these authorities do
not assist the Mpumalanga respondents on the
common cause facts in this case. They are either distinguishable on
the facts and/or
the law or they find no application on the present
facts.
[25]
It is important, in the context of the facts of the case before us
and for purposes of deciding the central issue, to distinguish
between the requisitioning and the convening of a NAFCOC Council
meeting. In the former instance there is a call for a meeting
to be
held and in the latter, a meeting is called. This distinction is
decisive of the central issue before us. The 2008 constitution
makes
no mention anywhere of the requesting or requisitioning of Council
meetings. It does so, however, as I have found above,
in respect of
general NAFCOC members’ meetings in clause 17.1. Where it is
silent in respect of the requisitioning of Council
meetings the
common law rules may indeed be used to remedy that shortcoming. I
think it is self – evident that in any organisation
members
should have the power to request a meeting of the organisation or of
its decision-making structures. But this is not the
question to be
decided here. The issue for determination is whether the December
2012 was lawfully convened. I discuss next, in
brief, the authorities
cited above, against the backdrop of the central issue.
[26]
The extract from
Lewin
,
quoted above, must be understood in terms of the proviso which I have
highlighted in the text. The common law cannot supersede
the express
provisions of a constitution. We must be satisfied that the
constitution is indeed silent on the question of who is
entitled to
convene Council meetings, before that authority finds application.
That is not the case here. Clause 28.4.4 is plain
and unambiguous
that such power vests in the President. I will discuss in due course
whether the President was still in office
at the relevant time and,
if not, whether the Deputy President was constitutionally empowered
to convene a Council meeting. It
was suggested during argument on
behalf of both sets of respondents that such an interpretation of
clause 28.4.4 would make it
unnecessarily difficult, and even
impossible, to have Council meetings convened. For this submission
reliance was placed on
Government
Workers’ Union v de Vries
.
[17]
This submission has no merit, in fact the interpretation propounded
by the respondents (relying on clause 17.1 and the common law
respectively) would lead to that result. The notion that a group of
members of either NAFCOC in general or of the Council in particular,
even a majority thereof, can convene Council meetings is simply
unworkable in practice. It can conceivably lead to chaos and
disorder.
Moreover and in any event, it flies directly in the face of
clause 28.4.4.
[27]
It is important to remind oneself that the present matter is not a
situation such as the one that existed in
Osman
and in
Padayichie
, above. There the members had requisitioned a
meeting (of the congregation of the Mosque and for a special general
meeting of the
Temple members respectively) and they were turned down
by those in authority. It is necessary to briefly consider the facts
in
those cases.
[28]
In
Osman
the management of the affairs and property of the
Grey Street Mosque in Durban was regulated by a trust deed. It
provided that
the trust was to be managed by a board of nine
trustees, five of whom would form a quorum to transact the trust’s
business.
The nine original trustees were appointed in the trust deed
which provided, inter alia, that in the event that five or more
trustees
resign or retire either individually or
en bloc
, the
remaining trustees shall
ipso facto
cease to hold office and
their positions would become vacant. The trust deed was, however,
silent on how the nine vacancies were
to be filled. The trust deed
determined the manner in which meetings of the congregation were to
be convened. One such instance
was by virtue of clause 19 which
required the trustees to call a meeting on a requisition signed by
not less than 15 regular worshippers
which states the business for
which the meeting is required. In the event that the trustees fail to
heed the requisition within
the time specified, the requisitioners
may themselves give 14 days’ notice to the members of the
congregation and may then
proceed with the business at that meeting.
The plaintiff, who was a member of the congregation, and his
associates were appointed
in 1937 as trustees at a meeting called by
15 members of the congregation, after five trustees had retired or
resigned (thus resulting
in all nine trustee positions becoming
vacant). This meeting was convened by the 15 congregants after the
remaining trustees refused
to heed the requisition calling for a
meeting. The plaintiff and his associates sought a declaratory order
that they were the lawful
trustees. To this the defendant trustees
successfully excepted in the Provincial Division, inter alia on the
basis that they had
been validly appointed as trustees during the
1933, 1934 and 1935 annual general meetings on the basis of an
implied term that
the remaining four trustees could appoint them,
despite having ceased to hold office.
[29]
It is against this factual backdrop that this court upheld the appeal
and disallowed the exceptions. In the course of doing
so Tindall JA,
writing for a unanimous court, held that there are strong grounds to
read into the trust deed an implied term that
in the circumstances 15
or more regular worshippers should have the authority to call a
meeting of the congregation. The judgment
must be understood in the
context that:
(a)
there were no trustees lawfully in office;
(b)
the trust deed was silent as to how the trustees’ vacancies
were to be
filled;
and
(c)
in the resulting legal stalemate the
purportedly appointed defendant
trustees declined the 15
congregants’ request for a meeting to be held.
Osman
is thus clearly distinguishable from the present
matter and reliance thereon is misplaced.
[30]
In
Padayichie
there was a similar factual situation in that
those empowered to do so, had failed to call a special general
meeting within 14
days, as requisitioned by the applicant and others.
That case is similarly distinguishable on the facts.
[31]
To summarize: neither clause 17.1 nor the common law find application
in this case – meetings of the NAFCOC Council can
be convened
only by the President in terms of clause 28.4.4. That is not to say
that members are not permitted in law to call for
or to requisition
such meetings, an aspect which is not before us. The ‘Chairperson
of the Council’, a phantom office
bearer, had no power to
convene a meeting of the NAFCOC Council.
Was
the NAFCOC President or his deputy constitutionally empowered to
convene the December 2012 meeting?
[32]
It is not necessary to consider and decide the material factual
disputes as to whether or not the 1
st
to 50
th
respondents were legitimate Council members at the time. The
preceding finding is decisive of the central issue before us. But
I
deem it necessary to consider briefly the legal position relating to
the President (Mr Mavundla) and the Deputy President (Mr
Skhosana,
the 3
rd
appellant) at the relevant time (ie November and
December 2012). Clause 29.1 lists the Exco members and it includes
the President
(clause 29.1.1.1). The term of office of all Exco
members (ie including the President) is four years (clause 29.2.2 –
‘Members
of the Executive Committee shall be elected once in
every four year period at a Council meeting to be held within 60
(sixty) days
from the date of expiry of term of office of the
Executive Committee’). Clause 29.6.1 confirms this: ‘Both
the Council
and the Executive members shall be elected for a period
of 4(four) years’. It is significant that immediately following
on
this clause, the next clause, 29.6.2 reads: ‘No person shall
be President of NAFCOC for more than 2(two) consecutive terms
of
office’.
[33]
But clauses 29.2.2 (read with clause 29.1.1.1) and 29.6.1 are at
variance with clause 23.7.5 which reads: ‘the President
shall
be elected to hold office for a period of three (3) years and this
shall be limited to two (2) consecutive or combined terms
of office.’
The
first two clauses appear under the general heading to clause 29
‘Executive Committee’ and under the specific headings
to
clause 29.1 ‘Composition of the Executive Committee’ and
to clause 29.6 ‘Term of office’ respectively.
Clause
23.7.5 appears under the heading to clause 23 ‘Election of
President’.
[34]
The appellants argue that clause 23.7.5 is simply one of the many
drafting errors which abound in the constitution and that
the
President’s term of office, like that of the rest of Exco, is
four years. I agree. Such an interpretation would be sensible
in the
overall structure of NAFCOC. Why, one might ask, should there be a
difference between the terms of office of the President
who, after
all, is an integral part of Exco, and the rest of Exco? I am not
persuaded by the main respondents’ argument that
the drafting
error is in fact to be found in clause 29.6.1 because Council and
Exco members are not ‘elected’ (the
word used in clause
29.6.1), but they are nominated by NAFCOC’s constituent
affiliates. This argument fails to explain why
there should be such a
discrepancy in the respective terms of office. It is also not
consonant with the structure of the document
as depicted in the
various headings referred to above. And lastly, it also loses sight
of the fact that it was common cause that
the present Exco was still
in office during November and December 2012. The same holds true for
the Mpumalanga respondents’
argument. They emphasized the
distinction between the position of the President of NAFCOC and the
President’s
ex officio
membership of Exco. But this begs
the very question. In clause 29.1.1 all 10 members of Exco are
referred to as ‘
ex officio
’ members of Exco. The
distinction contended for does not, to my mind, resolve the problem.
I am not persuaded that the President’s
term of office was
intended to be different to that of the rest of Exco, namely four
years. This being the case, it means that
Mr Mavundla was still in
office as the NAFCOC President at the time of issuing of the notice
in respect of the December 2012 meeting
and of the meeting itself.
The next issue I discuss briefly is the Deputy President’s
position.
[35]
Clause 23.1 envisages that there may be occasions when the office of
the President becomes vacant due to, for example, a normal
effluxion
of time where the President’s term of office expires or when
the President dies or vacates his or her office prior
to the expiry
of the term of office. Clauses 23.1.1 and 23.1.2 provide in these two
respective instances for elections to be held
by a majority of
Council members in attendance. Such election must be held not more
than one month after the office became vacant
(clause 23.1.1) and not
more than two months after such vacancy has arisen (clause 23.1.2).
It is inconceivable that, in such instances,
a large organisation
like NAFCOC can be without someone at the helm. Clauses 29.8.2.1 and
29.8.2.2 provide for that eventuality.
They read as follows under the
heading: ‘Functions of the Executive Committee and Office
Bearers’:
’
29.8.2
The Deputy President:
29.8.2.1
shall assist and, where necessary, deputise the President in respect
of his duties;
29.8.2.2
in the absence or inability of the President to perform his
functions, assume all responsibilities of the [President] .
. .’
The
Deputy President is clothed with the constitutional authority to act
in the President’s stead when that position is vacant.
I cannot
conceive any other ‘sensible or businesslike’
[18]
interpretation of these two clauses. The interpretation advanced by
the main respondents that clause 29.8.2.2 above means the physical
absence of the President is wholly untenable. It is an unnecessarily
strained interpretation of a plain, unambiguous clause which
must be
contextualised properly. The sensible interpretation has the result
that, even if Counsel are correct in their contentions
that the
President’s term of office is three years and that Mr Mavundla
was thus not in office when the December 2012 meeting
was purportedly
convened, the Deputy President, Mr Skhosana was the only other NAFCOC
office bearer who had the requisite power
to convene that meeting. On
the common cause facts neither Mr Mavundla nor Mr Skhosana had been
requested to convene the December
2012 meeting.
[36]
The main respondents contended that the appellants had, in any event,
failed to prove that any irregularity in the convening
of the
December 2012 meeting had caused them any prejudice in respect of
‘their civil rights and/or interests’. Counsel
relied on
Jockey
Club of South Africa and others v Feldman
[19]
and
Jonker
v Ackerman en andere
,
above
[20]
for this submission.
The contention was made with considerably less vigour during oral
argument than was the case in the written
heads of argument. This is
hardly surprising. The prejudice is self-evident. The appellants, as
office bearers of NAFCOC, acted
properly in ensuring that far
reaching decisions (filling the vacant President’s post which
turns out not to have been vacant
at all and replacing the most
senior office bearers in Exco) were only taken within the parameters
of the constitution. The potential
prejudice in a failure to do so is
abundantly clear. To borrow from Tindall JA in
Osman
:
[21]
‘
[u]nder
such circumstances it is obvious that the Court cannot refuse to
interfere on the ground that the dispute is a matter of
internal
management . . . . a situation has arisen which cannot be settled
without the intervention of the Court . . . .’
Moreover
and in any event, the authorities cited are against the main
respondents – they, and not the appellants, bore the
onus, as
the party seeking to preserve the irregularly held meeting, to show
that the irregularity had caused the appellants as
the complaining
party no prejudice. In
Feldman
, Tindall JA held as follows:
‘
In
respect of civil cases, a test has been formulated in various
decisions in Provincial Courts . . . where it was held that if
the
irregularity complained of is calculated to prejudice a party he is
entitled to have the proceedings set aside unless the Court
is
satisfied that the irregularity did not prejudice him. This, in my
judgment, is the correct test and we adopt it.’
[22]
And
in
Jonker
the
court (per Lichtenberg AJ) held as follows:
‘
From
the aforegoing it is, in my view, clear that the onus rests on an
applicant to show that the irregularity upon which he relies,
was
calculated to prejudice him in his civil rights or interests. If he
has discharged this onus, he would be entitled to have
the impugned
proceedings set aside by the Court. If the Court is however persuaded
by the respondent that the irregularity in question
did not prejudice
the applicant – and the last-mentioned onus is one that rests
on the respondent – then the application
must fail.’
[23]
The
court referred in this regard to
Feldman
and
to
Stephan
v Amalgamated Society of Woodworkers of South Africa.
[24]
[37]
To summarise and in conclusion: the December 2012 meeting was
unlawfully convened since only the NAFCOC President Mr Mavundla
or,
in his absence, its Deputy President, Mr Skhosana, had the requisite
constitutional power to convene a NAFCOC Council meeting.
As a
consequence, all the resolutions passed at the December 2012 meeting
are invalid and of no force and effect. I deem it necessary
to
express my deep disquiet at the raging war within NAFCOC. Its
indisputably laudable objective of creating business opportunities
for historically disadvantaged businesspeople is being steadily
undermined by this battle for control of the organisation for
apparently opportunistic reasons. The flood of cases and concomitant
considerable legal costs will not solve the organisation’s
internal problems; on the contrary it will do inestimable harm and
very little, if any, good. One can only implore the protagonists
on
both sides to let sanity prevail and to put NAFCOC’s interests
first.
[38]
I issue the following order:
1.
The appeal is upheld.
2.
The order of the High Court is set aside and substituted with the
following order:
‘
(a)
It is declared that the purported meeting of the Council of the
National
African
Federated Chamber of Commerce and Industry on 6 December 2012 was not
lawfully convened and that all the resolutions passed
thereat are
invalid and of no force and effect.
(b)
The respondents are ordered, jointly and
severally, to pay the costs of the application, including the costs
of two counsel.’
3.
The respondents are ordered, jointly and severally, to pay the
appellants’ costs of appeal, including the costs of two
counsel.
4.
The respondents are ordered, jointly and severally, to pay the
appellants’ costs occasioned by the application for leave
to
appeal before the South Gauteng High Court and the subsequent
application to this Court for leave to appeal.
______________________
S
A MAJIEDT
JUDGE
OF APPEAL
APPEARANCES
For
Appellants: C E Watt-Pringle SC with P B J Farlam
Instructed
by: Edward Nathan Sonnenbergs, Cape Town
Matsepes
Inc,
Bloemfontein
For
1
st
– 62
nd
, 64
th
and
68
th
to 71
st
Respondents: K W Lüderitz SC with E Rudolph
Werksmans
Attorneys, Johannesburg
Symington
& De Kok, Bloemfontein
For
63
rd
, 65
th
– 67
th
Respondents:
A Subel SC with R Moultrie
Instructed
by: Garlicke & Bousfield Inc, La Lucia
Symington
& De Kok, Bloemfontein
[1]
The
3
rd
appellant, Mr Sonyosi Stephens Skosana, is NAFCOC’s Deputy
President; the 4
th
appellant, Mr Teme Emmanuel Letsoela, is its Treasurer General; the
5
th
appellant, Mr Sekwano Gilbert Mosena, is NAFCOC’s Secretary
General; the 6
th
appellant, Mr Churchill Mrasi, is NAFCOC’s Senior
Vice-President; the 7
th
appellant, Mr Daniel Kotze, is an additional NAFCOC Exco member, as
is the 8
th
appellant, Mr Chuma Shweni.
[2]
Referred
to in para 8 above.
[3]
Before
us counsel for the main respondents wisely abandoned their quite
startling initial support in their heads of argument for
the high
court’s finding set out in para 10(b) above.
[4]
Turner
v Jockey Club of SA
1974
(3) SA 63
3(A) at 644G – 645C;
Natal
Rugby Union v Gould
[1998] ZASCA 62
;
1999
(1) SA 432
(SCA) at 440 F – G.
[5]
Wilken
v Brebner & others
1935
AD 175
at 187.
[6]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) para 18.
[7]
Ibid.
[8]
In this regard counsel for the appellants found an unlikely ally in
counsel for the Mpumalanga respondents who also subscribe
to this
interpretation.
[9]
In this regard we were referred to
National
Credit Regulator v Opperman
2013
(2) SA 1
(CC) para 93.
[10]
Lewin A,
The
Law, Procedure and Conduct of Meetings,
5
th
ed, Juta Cape Town (1985).
[11]
Osman
v Jhavary
1939
AD 351.
[12]
Padayichie
v Pavadai NO and another
1994
(1) SA 662 (W).
[13]
Cape
United Sick Fund Society v Forrest
1956(4) SA 519(A).
[14]
At 533H: ‘It has not been seriously contested that the scope
of the functions of the numerous organs of this society is
determined, primarily if not exclusively, by its written
constitution. It is conceivable that the rules of the common law may
supplement the express terms of a corporation’s constitution,
but we have not been referred to any common law authorities
setting
forth any rule which would be applicable in this case’.
[15]
Jonker
v Ackerman en andere
1979(3)
SA 575 (O).
[16]
Lewin, op cit, at 9.
[17]
Government
Workers’ Union v de Vries
1949 (1) SA 1110
(W) at 1129.
[18]
Natal
Joint Municipal Pension Fund v Endumeni Municipality,
fn
6 above.
[19]
Jockey
Club of South Africa and others v Feldman
1942
AD 340
at 359.
[20]
Fn
15 above, at 603F-G.
[21]
Osman
v Jhavary
,
supra, at 361.
[22]
Jockey
Club of South Africa and others v Feldman,
supra
at 359.
[23]
Jonker
v Ackerman en andere
,
supra at 603F-G (own translation).
[24]
Stephan
v Amalgamated Society of Woodworkers of South Africa
126
CPD 402
at 406, per Fagan J: ‘The onus of showing that there
was no prejudice is on the respondent, according to the various
decisions,
one of which is [the] case of
Jockey
Club of South Africa and others v Feldman
1942 AD 340.
’