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[2011] ZAGPPHC 102
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Axter Properties CC v Kalla and Another (48402/07) [2011] ZAGPPHC 102 (30 May 2011)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT
(HELD
AT PRETORIA)
Case
no. 48402/07
DATE:30/05/2011
In
the matter between:
AXTER
PROPERTIES
CC
........................................................................................
APPLICANT
and
YUSUF
SULEIMAN
KALLA
.........................................................................
1ST
RESPONDENT
DION
MBAYE
...............................................................................................
2ND RESPONDENT
JUDGMENT
PRELLER
J:
This
is an application for a spoliation order in respect of shop 1, 15C
Excelsior Street, Polokwane. It is common cause that the
applicant is
the owner of the complex in which the relevant shop is situated, but
just about everything else is in dispute.
Five
persons with the surname Kalla are the members of the applicant close
corporation. It is alleged that they are related but
it is not
disclosed what the relationship is. The applicant's business consists
entirely of managing and letting the shops comprising
the complex.
The
first respondent says that he and his late father were, since 1974,
the shareholders in a company that owned the building. The
company
was later converted to a close corporation and it is not disclosed
why, how and when the other four members acquired their
interest. It
is common cause that no association agreement as contemplated in
section 44
of the
Close Corporations Act, 1984
was in existence. The
first respondent is one of the two members that hold the biggest
interest (27 percent each) in the applicant
and his allegation that
the other members allowed him to manage the affairs of the applicant
until the events of May 2007 is not
seriously disputed.
On
19 May 2007 the applicant purported to hold a meeting of members and
to adopt a resolution in terms of which it was resolved
that the
first respondent would inter alia no longer be permitted to collect
rentals from tenants or to represent the applicant
in any way without
being authorised to do so by a "duly authorised resolution".
I say "purported" because the
respondents dispute that the
meeting had been validly convened. Moreover, one of the points
resolved was that a meeting of members
would be urgently called,
inter alia to "ratify this resolution" which, according to
the respondents, confirms that even
the applicant did not regard the
resolution as valid. As it is, not much turns on whether the
resolution was validly adopted on
that day or not.
A
further meeting was held on 30 June 2007 at which it was resolved to
approve and implement the resolutions of the previous meeting.
The
first respondent had been given notice of this meeting by a letter
received by him on 27 June and his attorneys were informed
thereof in
a letter faxed to them by the applicant's attorneys on the same day.
On 2 July the latter wrote to the applicant's attorneys
that the
notice of the meeting was invalid, as it had not allowed the first
respondent sufficient time before the meeting. That
letter does not
deal with the reasons why the date, time and venue of the proposed
meeting were not reasonably suitable to the
first respondent as
contemplated in
section 48(2)(a)
of the act. Of note is also the
statement by his attorneys that the first respondent is "..
.willing to abide by the decision
of the majority members...".
The first respondent, however, annexed a letter from his attorneys
dated 28 June to his answering
affidavit in which it is stated that
he had already in April made reservations to go on holiday from 29
June.
Mr.
N G D Maritz SC on behalf of the applicant, submitted that the first
respondent lives in Polokwane and that three days' notice
is
sufficient. In any event, he submitted, it is irrelevant whether he
received adequate notice of either of the two meetings,
because of
the provisions of
section 46(c)
of the act, which reads:
"(c)
differences between members as to matters connected with the
corporation's business shall be decided by majority vote
at a meeting
of members of the corporation;".
Because
the resolution had been adopted by members holding a combined
interest of 73 percent in the applicant, he submitted that
the
presence of the first respondent and his vote against those of the
others would not have prevented the resolution being adopted.
In
his answering affidavit the first respondent relies on the fact that
the other members had allowed him for many years to manage
the
affairs of the applicant on his own without
interference.
That, he said, constituted ".... a tacit and/or implied
agreement as referred
to
in
section 44(3).
. . of the act. . . which cannot unilaterally be
terminated by a group of such members.". He relied on that
implied agreement
and on
sections 46(a)
and
54
of the act for his
authority to permit the second respondent to obtain the services of a
locksmith to remove the lock and chain
on the door of the shop that
will be dealt with later.
I
shall deal but briefly with the remaining facts. After the applicant
terminated the first respondent's authority as set out above,
he
produced three lease agreements allegedly concluded by him on behalf
of the applicant with other tenants in the centre before
the
termination of his authority. Except for the name of the lessee, they
are identical to the one concluded with the second respondent.
All of
them were concluded on 1 April 2007 and were for a period of ten
years, commencing on 1 January 2007. The validity of those
agreements
are not relevant for present purposes but, for several reasons, they
look highly suspect to say the least.
The
second respondent, trading as Trio Trade, had sublet shop 1 to a
business known as Lucky House from May 2007. When the applicant
noticed that it did not receive rental from Lucky House for the month
of May, it informed the attorney acting for Lucky House that
the
first respondent's authority to represent the applicant had been
terminated and that the applicant would in future collect
the rent.
The applicant later received the rent from Lucky House for the months
June to August, and also agreed with them to extend
their occupation
to the end of September. Lucky House vacated the premises on 26
September and returned the keys to the applicant's
letting agent. The
door to the shop was further secured with a chain and lock. When the
respondents could not get access to the
shop, the first respondent,
relying on the implied agreement referred to, authorised the second
respondent to obtain the services
of a locksmith to open the lock.
In
opposition of the applicant's claim for a spoliation order, the
second respondent relies on the authority of the first respondent
to
represent the applicant and also alleges that he exercised control
over the leased premises through his sub-lessee Lucky House
until the
end of September when he personally took occupation. There is a third
defence that is not expressed very clearly but
seems to be that the
applicant voluntarily gave him occupation (presumably by virtue of
the lease agreement concluded with first
respondent representing the
applicant), alternatively that the applicant had attempted to
spoliate him and that he ".... at
most contra-spoliated the
applicant by re-taking possession instanterT.
The
last-mentioned defence can be disposed of instanler: irrespective
whether Lucky House was the lessee or sub-lessee of the applicant
or
the sub-lessee of the second respondent and who occupied the premises
through a sub-tenant, Lucky House returned the key to
the applicant's
letting agent and not to either of the respondents, thereby giving
possession and occupation of the premises to
the applicant. The
second respondent could therefore not have been spoliated. Nor could
his removal of the lock and chain have
been a counter-spoliation:
both respondents carefully refrain from disclosing the date on which
the chain and lock were removed
and it is not even possible to say
that it happened on the same day. A classical example of a
counter-spoliation would be where
a bag-snatcher grabs a handbag from
a lady and she promptly grabs it back. The second respondent
discovered the lock and chain
on the door probably hours or perhaps
even days after they had been placed there. He then contacted the
first respondent, who told
him to contact a locksmith. One has no
idea how long it took the locksmith to get to the premises. The
removal of the lock could
never have been a counter-spoliation.
It
is clear that the applicant had been in peaceful and undisturbed
possession of the premises. Even if the first respondent was
still
lawfully entitled to represent the applicant and to decide who may
and who may not have occupation of its property, he did
not have the
right to take the law into his own hands and terminate the
applicant's occupation on his own. That spoliation was
committed by
the first respondent by making use of the second respondent.
Mr
Wagener SC on behalf of the respondents submitted that the first
respondent will escape liability if either the first respondent
actually had the authority to give him access to the premises on
behalf of the applicant, or if the second respondent did not know
and
it cannot be said that he ought to have known or to have enquired
whether the first respondent was perhaps not authorised to
deal with
the applicant's property. The second of the two alternatives is based
on the provisions of
section 54
of the act.
He
submitted firstly that the first respondent had the actual authority
to represent the applicant in this respect.. For this submission
he
relies on
sections 54
and
46
of the act.
Section 54
provides in
effect that any member of a close corporation has the power to bind
the corporation in an agreement with a third party,
unless that
member actually had no such power and the third party knew or ought
to have known that the member has no such power.
In terms of
section
46
every member is entitled to participate in the carrying on of the
business of the corporation and they all have equal rights to
represent the corporation in the carrying on of its business. He
submitted that in the absence of a properly executed association
agreement in terms of
section 46
which removes that power, any member
has the power to bind the corporation. According to the submission,
neither of the two resolutions
amounts to an association agreement
and his powers in terms of
section 46(a)
and (b) are not affected.
That
argument loses sight of the provisions of
section 46(c)
, in terms of
which differences between members connected with a corporation's
business shall be decided by majority vote at a meeting
of members. A
hypothetical example will illustrate the point: suppose that the five
members decide to sell a motor vehicle belonging
to the corporation
and that member A will do the necessary. If it had then been open to
each of the other four members to sell
the vehicle to a purchaser of
his own, relying on his powers in terms of
section 46(a)
and (b), the
result will be chaotic. The powers granted to members by subsections
(a) and (b) must clearly be executed subject
to a majority decision.
In addition there was the undertaking by the first respondent's
attorney in his letter of 2 July in which
he undertook to abide by
the decision of the majority.
Mr
Wagener further submitted that the authority to manage the business
of the applicant that the first respondent had enjoyed since
1987
could not be revoked unilaterally by the other members.
That
can with respect to Mr. Wagener never be the case. A decision by
members can never be irrevocable and a decision taken by a
majority
can never be said to have been taken "unilaterally". In the
context the submission would mean that the revocation
of a previous
decision must be unanimous, for which there is no support in the act.
It
was common cause during argument that unless the second respondent
knew or had reason to suspect that the first respondent did
not have
the authority to represent the applicant, he was entitled to act on
the permission give to him by the first respondent
to open the door
forcibly. Mr Maritz submitted that the second respondent actually had
the requisite knowledge by virtue of a summons
that had been served
on the tenant of shop 4 on 8 June. The lessee of that shop was the
second respondent, although the tenant
was, ex facie the summons, an
entity with a different name. Together with the summons a letter was
served informing the tenant
that the first respondent no longer had
the authority to collect rent or represent the applicant. There was
furthermore the fact
that the two respondents were represented by the
same attorney, which makes it likely that the second respondent
should have been
informed of developments.
There
is considerable force in these submissions, and in addition there is
the fact that since May he did not receive any rentals
from his
purported sub-tenant, Lucky House. The second respondent did not
disclose the terms of his agreement with Lucky House,
but theirs
seems to have been a monthly tenancy. Lucky House gave notice of its
intention to vacate the shop at the end of August
and subsequently
arranged to extend its occupancy by a further month. For him to have
planned to take occupation of the shop at
the end of September, he
must have been in contact with Lucky House and must have been
informed by them of developments. If he
did not actually ask Lucky
House why he received no rent for four months he must have known the
reason and therefore also that
the first respondent could not validly
have given him permission to open the lock on the door of the shop. I
accordingly find that
in taking possession of the shop forcibly, the
second respondent committed a spoliation.
In
the result I make an order in terms of prayers 2 and 3 of the notice
of motion.
F
G PRELLER
JUDGE
OF THE HIGH COURT