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[2023] ZAECQBHC 21
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Spectrum-Alert ITS (Pty) Ltd and Others v ABSA Bank Limited and Others (108/2023) [2023] ZAECQBHC 21 (31 March 2023)
SAFLII
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Certain
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Policy
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, GQEBERHA)
Case
No: 108/2023
In
the matter between:
SPECTRUM-ALERT
ITS (PTY) LTD
First Applicant
GRANVILLE
PETER MALGAS
Second
Applicant
MARTIN
BOOYSEN
Third Applicant
PHILLIP
ARENDS
Fourth
Applicant
WINSTON
HILTON VAN ROOYEN
Fifth Applicant
RUWAYNE
WILLIAMS
Sixth Applicant
CARDINAL
KIRIL
VENCENCIE
Seventh Applicant
and
ABSA
BANK LIMITED
First
Respondent
TERENCE
ALDRIDGE LANGTRY
Second
Respondent
CHRISTIAN
ARCHIBALD KING
Third Respondent
RICARDO
TROMP
Fourth Respondent
FAHEEM
WILLIAMS
Fifth Respondent
DINA
MAGDALENE DU PREEZ
Sixth Respondent
CLIFFORD
JOSEPH
Seventh
Respondent
CHRISTOPHER
HENRY SAMPSON
Eighth Respondent
KEENON
DERECK BARENDS
Ninth Respondent
DEON
TUMBY
DICK
Tenth Respondent
SONGEZO
MPANDA
Eleventh Respondent
MTUTUZELI
MADWARA
Twelfth
Respondent
and
NELSON
MANDELA BAY MUNICIPALITY
Applicant in the application
for leave to intervene
REASONS FOR JUDGMENT
BANDS
AJ:
[1]
This application, which concerns the corporate coup d’etat,
of
the first applicant company (“
the company
”), was
launched as an urgent application on 19 January 2023.
[2]
The company
hijacking occurred by the removal of the second to sixth applicant
directors
[1]
at a meeting
purporting to be a shareholders meeting, held on 18 October 2022, and
their replacement with the second to tenth respondent
directors (“
the
dissident directors
”).
The application was postponed on various occasions. By the time
the matter came before me on 21 February 2023,
the initial urgency
had dissipated on account of two prior orders of court, granted on 25
January 2023
[2]
and 10 February
2023,
[3]
(“
the
interim orders
”).
Neither of the interim orders, which were granted by agreement,
[4]
expressly pronounced on the issue of urgency and accordingly, insofar
as it was necessary to do so, the respective parties addressed
me on
the issue of urgency as well as on the merits.
[3]
Each of the
interim orders served to regulate the affairs of the company, pending
the outcome of the final relief; as well as to
regulate the further
conduct of the proceedings. The most pressing issues for
determination on an interim basis,
[5]
were: (i) the immediate release of funds, by the first respondent,
for the payment of the company’s employees’ bonuses;
which failure to pay had led to strike action; (ii) the payment of
the company’s employees’ salaries and shareholders’
compensation, as and when payment become due; (iii) the restoration
of control of the company’s business premises to the
second to
seventh applicants; and (iv) interdictory relief against the second
to twelfth respondents preventing
inter
alia
the interference of the day-to-day operations of the company; and the
harassment and intimidation of the company’s directors;
shareholders; or employees. The remainder of the relief sought
by the applicants,
[6]
concerned
the regularisation of the company affairs, and more particularly, the
composition of the board of directors and the restoration
of the
status quo ante.
[4]
In response, the second to tenth respondents launched
a counter
application (“
the respondents’ counter application
”)
in which they sought an order directing the first respondent to
comply with a purported resolution of the company’s
board of
directors, purportedly passed on 3 January 2023 by the dissident
directors (annexure “RES22” to the respondents’
counter application). The purported resolution related, in
part, to the management of the company’s bank account and
the
purported authority of the signatories thereto. Implicit in the
relief sought in the respondents’ counter application
is that
if I were to find that the meeting, held on 18 October 2022, was not
a shareholder’s meeting of the company, annexure
“RES22”
would be null and void and the counter application would fail.
In addition, the Nelson Mandela Bay Municipality
sought leave to
intervene in the applicants’ application on the basis that it
had a direct and substantial legal interest
in the matter.
[5]
On 24 March
2023, having been satisfied that the applicants’ application
was of sufficient urgency to have warranted approaching
the court in
the manner in which they did, I granted an order in favour of the
applicants,
inter
alia
,
declaring the purported decisions to remove the second to sixth
applicant directors and to elect the dissident directors at the
meeting, held on 18 October 2022, void
ab
initio
and of no force and effect. I further granted orders
dismissing: (i) the respondents’ counter application; and (ii)
the application for leave to intervene brought by the Nelson Mandela
Bay Municipality.
[7]
What
follows are my reasons for the order.
Urgency
[6]
I recently
had occasion to recount the trite principles applicable to urgent
applications in
Ascon
Trading CC Trading as Ascon Civil Engineering v Wilson and
another,
[8]
which must be judged against the background of Rule 6(12) of the
Uniform Rules of Court. Pertinently, the question is whether
an
applicant, in urgent proceedings, has set out objective grounds, why
the matter is urgent and whether he or she has established
that
substantial redress cannot be obtained at a hearing in due course.
[7]
Not only is an applicant required to persuade the court
that
non-compliance with the Rules is justified on the grounds of urgency,
but he or she is also required to demonstrate that the
extent to
which he or she has sought to curtail the Rules, procedures, and time
periods, is justified in the circumstances.
[8]
An
applicant cannot content itself to merely sit back and delay the
assertion of his or her rights, and by doing so, create his
or her
own urgency. Such conduct does not amount to urgency justifying
the determination of the matter in accordance with
Rule 6(12).
[9]
[9]
As
previously stated, I formed the view that, on the facts of this
matter, the application was properly launched. The second
to
tenth respondent’s main contention in respect of urgency, apart
from their objection pertaining to the degree of urgency
and the time
periods selected by the applicants,
[10]
is that the second to sixth applicants had known about their
purported removal as early as 19 October 2022 and waited some three
months to launch the present proceedings.
[10]
Whilst it may be so that the second to sixth applicants were aware of
their purported removal on 19 October 2022, the validity of which
they have at all times disputed, it was business as usual for
the
applicants until 3 January 2023, when the dissident directors, with
the assistance of the eleventh and twelfth respondents,
forcibly took
over the company’s business premises.
[11]
Whilst such
a takeover is denied by the second to tenth respondents, the
explanation offered by them as to the events of 3 January
2023 is not
only inadequate but amounts to little more than a bald denial if
regard is had to the detailed allegations narrated
by the applicants
over some 20 paragraphs, many of which are left unanswered.
[11]
Moreover, the second to tenth respondents’ allegations
and denials, on their own version, are clearly untenable.
[12]
That Ms Heydenrych, a member of the first applicant’s senior
management,
would simply hand over the keys for the business premises
to the second to tenth respondents, voluntarily, after moments before
having refused them access to the building and contacting the police
for assistance, which facts are admitted by the second to
tenth
respondents, is in itself contradictory and far-fetched.
Significantly, it raises the question as to why Ms Heydenrych,
upon
leaving the premises, immediately attended upon the Mount Road police
station to open a criminal case against the second to
twelfth
respondents under CAS28/1/2023, which is not denied by the
respondents.
[13]
Equally
implausible is the second to tenth respondents’ explanation
that they simply attended upon the company’s business
premises
to hold a meeting, after having previously been refused access on 24
October 2022, and in circumstances in which they
did not hold keys
for the premises. The second to tenth respondents are decidedly
silent on: (i) the events which unfolded
from the time that they
entered upon the premises
[12]
to the time that the police arrived; (ii) what precipitated the
calling of the police by Ms Heydenrych; (iii) the verbal exchanged
between Ms Heydenrych and any or all of the second to twelfth
respondents; (iv) what meeting the dissident directors allegedly
planned on holding at the premises on the day in question; and (v)
whether such alleged meeting was in fact held.
[14]
To raise a
genuine dispute of fact,
[13]
which the second to tenth respondents have failed to do, it was
incumbent upon them to seriously and unambiguously address the
facts
that it wished to place in dispute. This is particularly so in
circumstances where the facts averred by the applicants
are such that
the second to tenth respondents necessarily possess knowledge of such
facts and are able to provide an answer thereto;
alternatively,
countervailing evidence, if such facts are not true or accurate.
[14]
I am satisfied as to the inherent credibility of the applicants’
factual averments regarding the events of 3 January
2023 and proceed
on the basis of the correctness thereof.
[15]
The inherent urgency was exacerbated, when it became known to Ms
Heydenrych,
whilst attempting to process the payment of the
employees’ bonuses on 10 January 2023, that the company’s
bank account
had been frozen by the first respondent. During
the period of 10 January 2023 and 12 January 2023, the applicants
engaged
with the first respondent in an endeavour to process the
payments, to no avail. As a result of the non-payment of the
employees’
bonuses, the employees embarked on strike action,
including the burning of tyres on a public road at the entrance of
the company’s
business premises.
[16]
I have previously detailed the most pressing issues, which fell for
determination
on an urgent basis, most of which were resolved by the
granting of the interim orders. The submission made on behalf
of the
second to tenth respondents that they were
ad idem
with
the applicants regarding the need for the payment of the employees’
bonuses and accordingly, that such need did not found
urgency, is not
born out from the papers before the court.
[17]
Contrary to
such assertion, the second to tenth respondents, in their answering
affidavit, continuously sought to lay blame on the
second to sixth
applicants for the non-payment of the bonuses;
[15]
and adopted the stance that the applicant directors lacked the
necessary authority to seek the release of the funds from the first
respondent, which fell within the purview of the second to tenth
respondents’ authority.
[18]
Despite this latter allegation, the second to tenth respondents did
not
contend that they had engaged with the first respondent for this
purpose. Significantly, there exists no indication, whatsoever,
that the second to tenth respondents would have acceded to the
payment of the bonuses, but for the launch of this application on
an
urgent basis. To the contrary, the second to tenth respondents’
papers demonstrate an attitude of laxity regarding
such payment, in
which they aver that payment will be attended to upon finalisation of
the dispute relating to the directorship
of the company, which
dispute they contend ought to have been brought in the ordinary
course.
[19]
For the above reasons, I was satisfied that the application was of
sufficient
urgency to warrant the abridgment of the time periods in
accordance with those set out by the applicants.
[20]
I now turn to consider the validity of the purported shareholders
meeting.
Meeting
of 18 October 2022
[21]
The issue central to these proceedings, is the validity of the
meeting
held on 18 October 2022. The factual background leading
up to the purported shareholders meeting is narrated by the second
applicant in the applicants’ founding affidavit. What
follows is a summary of these facts.
[22]
Subsequent to a failed attempt by the company to host a shareholders
meeting during July 2022, the company, during September 2022,
appointed a local attorney, practicing in Gqeberha, as the company
secretary to “
assist with the preparation, advices and
attending to the meeting of shareholders.
” The
company secretary thereafter prepared a document termed “
Notice
to Shareholders Regarding Shareholders Resolutions
.”
Ex facie
the notice, its purpose was to,
inter alia,
(i)
inform the company’s shareholders that a meeting of
shareholders was planned for 12 October 2022, at the Feather Market
Hall, at 09h00; (ii) that the directors of the company had decided to
allow for further proposed resolutions to be submitted by
shareholders on or before 27 September 2022; (iii) the procedure for
the submission of the further proposed resolutions; and (iv)
that the
formal notice of the shareholders meeting would be distributed to the
shareholders shortly. There is no evidence,
nor suggestion, on
the papers that the notice was ever disseminated by the company
secretary to the shareholders. To the
contrary, it is apparent
that as of 2 October 2022, the company secretary did not have the
email addresses of all the directors,
nor those of the shareholders.
Nothing turns on this.
[23]
On 28
September 2022, the company secretary transmitted an email to Ms
Heydenrycht; the second applicant; the eleventh respondent;
and one
other recipient, whose identity is not disclosed, in which he
recorded that “…
due
to further matters that were not resolved by the Board and the
Regional Taxi Council facilitators, the meeting will now take
place
on 18 October 2022 at 09h00. The venue will remain the Feather
Market Centre Hall.
”
Thereafter, at 22h51 on 2 October 2022, the company secretary
transmitted an email to several of the company’s
directors with
a link to the notice of the meeting, and a draft shareholders pack
for the shareholder’s meeting, which was
divided across three
emails, transmitted at 22h51; 22h55; and 22h57, respectively.
The company secretary requested the recipients
to forward a copy of
the documents to the directors, who had not been copied in on the
email,
[16]
and to favour him
with the shareholders email addresses. The company secretary
further recorded that delivery of hard copies
of the documents would
be facilitated on the morning of 3 October 2022. According to
the applicants, the majority of the
company’s shareholders are
elderly persons and are not technologically advanced. As a
result, any documents disseminated
electronically had to be followed
up with hard copies.
[24]
Prior to
the board of directors having approved the draft agenda and the
shareholders pack, which was incomplete, the company secretary
created a WhatsApp group,
[17]
and via this platform, disseminated the documents to the
shareholders.
[25]
When this came to the attention of the second applicant, on 3 October
2022, he sent a voice-note on the WhatsApp group informing the
shareholders that the notices were unauthorised and that they should
be ignored. He thereafter contacted the company secretary to
express his disapproval as to the premature and unauthorised
dissemination of the notice of meeting. This elicited a
response via email, from the company secretary on the same day.
In addition to recording the above impasse, he further recorded that
he was of the understanding that he had a mandate to send
the notice
to the shareholders timeously and indicated that 3 October 2022 was
the last day for the delivery of the notice. He
proposed a
meeting, with the Regional Taxi Council being present, to review the
situation, which had arisen, and ultimately resigned
on 12 October
2022. I pause to mention that at the time of his resignation,
only one shareholder had received a hard copy
of the necessary
documentation for the shareholders meeting.
[26]
Following his resignation, the applicants contend that the company’s
board of directors immediately met and resolved that the shareholders
meeting could not go ahead on 18 October 2022 in that: (i)
there was
no longer a company secretary; (ii) the necessary documentation could
not be delivered to all the shareholders timeously;
(iii) all the
requirements regarding the proposed resolutions had not been met; and
(iv) the contents of the shareholder packages
were not in order.
[27]
Accordingly,
on 14 October 2022, the second applicant, issued a formal notice of
cancellation
[18]
of the
meeting to the shareholders, the validity of which was challenged by
the second to tenth respondents.
[19]
The applicants contend that notwithstanding the above, the second to
tenth respondents proceeded to convene a purported shareholders
meeting on 18 October 2022, during which the second to sixth
applicant directors were removed and replaced by the dissident
directors.
[28]
The second to tenth respondents, save for a bald denial, do not
challenge
the facts upon which the applicants rely. Instead,
they contend in their answering affidavit, without laying a factual
basis
therefor, that the shareholders meeting was properly convened
“
in accordance with the requirements of the Act
”
by the company secretary, to whom such duty had been outsourced.
The entire basis for such contention is recorded
at paragraph 97.4 of
the second to tenth respondents’ answering affidavit, which
reads as follows:
“
The
Second to Tenth Applicants, having outsourced the duty of convening
the shareholders meeting of 18 October 2022, cannot be heard
to
complain, it is submitted, that certain minutiae related to the
typical holding of a shareholders meeting were not to their
liking,
such as the fact that there was no longer secretary. A meeting
of shareholders is precisely that and cannot be made
subject to or
controlled by a Board of Directors of a Company of which they are
shareholders. A meeting properly convened
cannot be cancelled,
at the whim of the Board of Directors. In particular, I submit,
to purportedly cancel a scheduled meeting
properly convened
.”
[29]
More than
this, the second to tenth respondents do not say, in relation to the
factual allegations put up by the applicants, in
the absence of
which, the contention that the meeting was properly convened amounts
to no more than a broad conclusion.
[20]
I am accordingly not satisfied that a genuine dispute of fact arises
on the papers regarding the events leading up to the
meeting on 18
October 2022, which facts are in any event supported by the objective
documents attached to the applicants’
founding affidavit.
Accordingly, whether or not the meeting was properly convened, needs
to be determined on the basis of
the correctness of the facts set out
by the applicants.
[30]
In terms of
section 61(1) of the Companies Act 71 of 2008 (“
the
Act
”),
the board of a company, or any other person specified in the
company’s Memorandum of Incorporation (“
MOI
”)
or rules, may call a shareholders’ meeting at any time.
Moreover, in terms of section 61(3) of the Act, the
board of the
company, or any other person specified in the Company’s MOI,
must call a shareholders meeting if one or more
written and signed
demands for such a meeting are delivered to the company, which is
subject to certain conditions in relation
to the demands.
[21]
What is clear in both instances, is with whom the authority vests to
call a shareholders meeting.
[31]
The
company’s MOI did not form part of the papers before me, nor
was it suggested that the MOI gave authority to any person
other than
the board to call for such a meeting. In
D
Frenkel Ltd v Liquidators Susman Jacobs & Co Ltd
,
[22]
to which I was referred by the applicants’ counsel, it was held
that in legal proceedings, in the absence of evidence to
the
contrary, the court will presume that a secretary who convenes a
meeting has been authorised accordingly by the directors.
On
the facts of this matter, to which I have referred, I am not
satisfied that the company secretary, at the relevant time, had
the
necessary authority to convene the shareholders meeting given that
the notice of the meeting and the draft agenda and shareholders
pack
were disseminated to the shareholders prior to the board of
director’s approval.
[32]
In the absence of such authority, the meeting is rendered invalid,
entitling
the applicants to an order that the purported decisions to
remove and elect directors at the meeting held on 18 October 2022 are
void
ab initio
and are accordingly of no force and effect.
[33]
If I am incorrect in this finding, I am in any event of the
considered
view that the meeting was invalid for want of proper
notice to the shareholders in accordance with section 62(1) of the
Act, which
requires the company to deliver a notice of the
shareholders meeting, in the prescribed manner, to
all of the
shareholders
. The purpose of giving notice is
self-evident. All registered shareholders have an interest in
the running of the company
and are entitled to be present and to
fully participate in the proceedings. In the absence of the
MOI, which may or may not
prescribe the manner in which the notice of
the shareholders meeting is to be given, and in the absence of any
evidence to the
contrary, I must accept the applicants’ version
that notice of the meeting was to be disseminated not only
electronically
to the shareholders, but also via hardcopy, given the
age of the main constituency of the shareholders. Barring what
I have
set out above, this was not done, rendering the meeting
invalid.
[34]
In light of the aforesaid finding, it is not necessary to determine
the
further allegations upon which the applicants rely for their
contention that the meeting was invalid.
[35]
For the
reasons traversed above, and more particularly having regard to the
events of 3 January 2023, this being the takeover by
the dissident
directors, with the assistance of the eleventh and twelfth
respondents, coupled with my finding in relation to the
meeting of 18
October 2022, the applicants were entitled to the interdictory
relief,
[23]
which I granted at
paragraphs 4.1 and 4.2 of the order of court on 24 March 2023.
[24]
[36]
Seven points
in
limine
were raised by the second to
tenth respondents on the papers before court, in which I find no
merit. I turn to deal with these
briefly.
[37]
The first point
in limine
, regarding the lack of filing of a
certificate of urgency by the applicants, has been abandoned, with
the second to tenth respondents
having accepted that a certificate
was filed. The second point
in limine
raises the issue
of urgency. I have dealt with this above.
[38]
Regarding
the third point
in
limine
,
I do not agree with the second to tenth respondents that the
applicants’ failure to deal more fully, in their founding
affidavit, with the circumstances relating to the payment of the
funds to Ah Shene Attorneys or the correspondence to the attorneys
representing the Nelson Mandela Bay Municipality in respect of such
payment is “
so
crucial to the matter that the non-disclosure is material and the
application cannot properly be dealt with on the founding papers
as
they stand
.”
These issues, given that the matter was brought on notice to the
respondents,
[25]
were more
fully ventilated in the further papers filed in these proceedings, to
which I gave consideration. As alluded to
previously,
[26]
the monies paid over to Ah Shene Attorneys were insufficient to meet
the company’s obligations in respect of the payment
of the
employees’ bonuses, this being the aspect with which the second
to tenth respondents primarily took issue. Those
respondents,
who are entitled to an accounting in respect of the monies paid, are
not without their legal remedies.
[39]
The second to tenth respondents’ fourth point
in limine
pertains to the alleged non-joinder of the Nelson Mandela Bay
Municipality. I deal with this issue later in this judgment
when dealing with the application for intervention, suffice at this
stage to record that I do not agree that the Municipality has
a
direct and substantial interest in the subject matter of the
litigation between the applicants and the respondents and
accordingly,
the point
in limine
must fail.
[40]
The fifth point
in limine
pertains to the alleged misjoinder
of the company as the first applicant, which can only act as directed
by its board of directors.
The company was cited as the first
applicant, with the proceedings in its name on the basis of a
resolution taken by the second
to seventh applicants. Given my
finding in respect of the meeting on 18 October 2022, this aspect
requires no further comment.
[41]
The second to tenth respondents contend, by way of their sixth point
in limine
, that the relief sought in the notice of motion is
“
incorrect
”. In essence, the applicants, in
their founding affidavit refer to the relief being set out in two
parts in the notice
motion, part A and part B. However,
factually, this is not so. Consequently, the second to tenth
respondents aver that
they have been grossly prejudiced in the manner
in which the notice of motion and founding affidavit have been
drafted as they
are “
at a loss to precisely what procedure
the Applicants intend to follow and precisely what relief the
Applicants seek
”. On this basis, they request that
the matter to be dismissed. The applicants, in their replying
papers explain
the anomaly as follows. An original notice of
motion, with a part A and part B had been prepared prior to
approaching the
duty judge in chambers for a directive, with the
intention of moving for an initial order in terms of part A, which
addressed the
issue of the employees’ bonuses, on “
an
extremely urgent basis
”. When the duty judge refused
to hear the matter as proposed and instead directed that it be heard
on an ordinary motion
court day, the notice of motion was amended,
with the deletion of part A and part B.
[42]
On a reading of the papers, in context, together with the notice of
motion,
I do not hold the view that it is drafted in such a manner as
to cause prejudice to the second to tenth respondents. To the
extent that any such prejudice did exist, if any, such prejudice was
cured by the granting of the two interim orders, which served,
in
part, to direct the further conduct of the matter.
[43]
The seventh and last point
in limine
pertains to the manner of
service utilised by the applicants. Service of the application
(on all respondents) was originally
effected on the offices of the
second to tenth respondents’ attorney of record. The
second to tenth respondents raise
two issues. Firstly, that
their attorney of record had no mandate to accept service on behalf
of the second to tenth respondents
and no order for substituted
service existed. And secondly, that their attorney of record
did not, nor had they ever represented
the eleventh and twelfth
respondents. They accordingly seek, once again, that the
application ought to be dismissed for lack
of proper service. I
disagree.
[44]
From the papers before me, all parties cited received notice of the
proceedings,
with the first respondent electing to abide by the
decision of the court. The second to tenth respondents have, at
all times,
been fully legally represented in the proceedings.
Not only did they elect to oppose the applicants’ application,
but
they filed a counter application herein. By their own
admission, they have not suffered any prejudiced by the manner in
which
service was effected. The eleventh and twelfth
respondents did not enter the fray.
[45]
In support
of the submission that the dismissal of the application was the
appropriate order, I was referred to
Dada
v Dada.
[27]
Dada
is not authority for such proposition. In
Dada
,
which concerned an action for divorce, and not an urgent application,
the plaintiff obtained a decree of divorce, by fraudulent
means,
without notice to the defendant. Accordingly, the order of
divorce was null and void
ab
initio
.
The circumstances of the present proceedings differ vastly from those
in
Dada
.
In any event, insofar as there was a departure from the ordinary
rules of service, the order granted by me on 24 March 2023
condones
such non-compliance.
[46]
Accordingly, for the above reasons, I found no merit in the points
in
limine
raised.
The
respondents’ counter application
[47]
Success by the second to tenth respondents in their counter
application,
was dependent upon a finding that the meeting had been
properly convened. Consequent upon my aforesaid finding, the
respondents’
counter application must fail.
[48]
The
relief
[28]
belatedly raised by
the second to tenth respondents in the heads of argument filed on
their behalf
[29]
is
incompetent on the papers before me.
Application
to intervene
[49]
It is
settled law that the joinder of a party to proceedings is only
required as a matter of necessity, and not of convenience.
The
substantial test is whether the party that is alleged to be a
necessary party has a direct and substantial interest in the
matter,
more commonly stated as a legal interest in the subject matter of the
litigation, which may be affected prejudicially by
the judgment of
the court in the proceedings concerned.
[30]
[50]
I do not intend to detail the Municipality’s submissions as to
why it contends to have a direct and substantial interest in the
matter, which will only serve to unduly burden this judgment.
Distilled to its essence, the applicants’ application concerns
an internal impasse relating to a private company, in which
the
Municipality does not have a direct and substantial interest.
This much is apparent from the Municipality’s recordal
that the
intended intervention was unlikely to introduce any cumbersome
material and or factual controversy; and that it intended
on abiding
by the decision of the court. That the Municipality has
outsourced the function of its municipal public transport
service for
a designated route to the company in terms of a service level
agreement, “
the Vehicle Operating Company Agreement
”,
is of no consequence.
[51]
The
Municipality, if granted leave to intervene, and in the event of a
finding in favour of the applicants, intended on seeking
an order
that the company be ordered to convene a shareholders’ meeting;
and that the company be directed to provide the
Municipality with a
full accounting in respect of the monies paid to Ah Shene Attorneys.
The Municipality has no
locus
standi
to seek an order requiring the company to convene a shareholders
meeting, which falls within the purview of the shareholders.
[31]
Insofar as the Municipality contends that there has been a breach of
the Vehicle Operating Company Agreement,
[32]
by the company, such issue falls outside the ambit of the present
proceedings and does not entitle the Municipality to an order
for
intervention. Significantly, the Municipality has failed to
indicate how the order sought by the applicants, which was
ultimately
granted by me, would or could prejudicially affect the legal
interests of the Municipality. This on its own is
dispositive
of the application for leave to intervene.
[52]
I accordingly dismissed the application for leave to intervene.
Costs
[53]
In the result, I dismissed the respondents’ counter application
and the Municipality’s application for leave to intervene with
costs. There existed no reason to depart from the usual
order
as to costs in either application.
[54]
Regarding
the applicants’ application, the respective legal
representatives, in argument, addressed me on the events, which
transpired at court on 24 and 25 January 2023, as well as on 9 and 10
February 2023, to which I gave due consideration.
[33]
[55]
Following the filing of the second to tenth respondents answering
affidavit
and the applicants’ replying affidavit on 24 January
2023, the parties reached agreement on the terms of the first interim
order late that afternoon. The first interim order, which was
ultimately granted the following day, on 25 January 2023, afforded
the applicants interim relief. So too did the second interim
order, granted on 10 February 2023. The manner in which
the
conduct of the proceedings was regulated on each occasion is apparent
ex facie
the interim orders.
[56]
The
reserved costs related only to 24 and 25 January 2023, and 10
February 2023. No provision was made, in the interim order,
dated 10 February 2023, for the reservation of the costs of 9
February 2023, on which date the applicants filed a notice in terms
of Rule 6(5)(d)(iii) in respect of the Municipality’s
application. In short, the applicants, in their notice, took
issue with the Municipality’s
locus
standi
and their failure to establish the necessary requirements for the
relief sought. I pause to mention that I do not agree that
the
Municipality was ambushed by the content of the notice.
[34]
I am of the view that the issues raised therein are issues which an
applicant is in any event required to be mindful of when
bringing
such an application, whether on an opposed or unopposed basis.
[57]
In determining the issue of costs, I was also mindful of my findings
regarding the urgency of the matter and the time periods adopted by
the applicants, in the circumstances of this matter; as well
as my
finding on the merits of the dispute, resulting in the applicants
being the successful litigants herein, all of which are
relevant.
[58]
I accordingly formed the view that the applicants are entitled to the
costs of the application, including the reserved costs referred to
above. No cost order was sought against the first respondent.
The reference to respondents in the order of costs relating to the
applicants’ application is to the second to twelfth
respondents.
Given the crisp issue which fell to be determined,
I was not in agreement that the costs of two counsel was justified in
this case.
[59]
Having already granted the order herein, I need not make any further
order.
I
BANDS
ACTING
JUDGE OF THE HIGH COURT
Heard:
21 February 2023
Judgment
granted:
24 March
2023
Reasons:
31 March 2023
For
the applicants:
Ms
Crouse SC, together with Ms Masiza
Instructed
by:
Nkontso
& Co. Attorneys
For
the 2
nd
to 10
th
respondents:
Mr
Niekerk
Instructed
by:
DVL
Attorneys
For
the NMBM:
Mr
Moorhouse
Instructed
by:
Kuban
Chetty Attorneys
[1]
From the company’s board of directors.
[2]
Order of court granted by Smith J in the following terms:
“
1.
The matter is postponed for hearing on 9 February 2023, the date
having been set
in conjunction with the DJP of this Division.
2.
The Second to Tenth Respondents are jointly and severally ordered to
forthwith
refrain from any attempts to open or operate any bank
account with any bank account on behalf of the First Applicant prior
to
the hearing of the application.
3.
The First Respondent shall immediately upon receipt of this order,
transfer
the amounts reflected in Annexure A hereto, into the First
Applicant’s employees’ banking accounts as reflected
therein,
as payment of the First Applicant’s listed employees’
bonuses.
4.
Each of the parties’ (Second to Seventh Applicants and Second
to Tenth
Respondents) undertake not to partake in or instigate any
acts of violence is noted and forms part of the court order.
5.
The Nelson Mandela Bay Municipality may, if so advised, supplement
its application
to intervene by no later than 16h00 hours on 26
January 2023.
6.
The costs of 24 January 2023 and 25 January 2023 are reserved
.”
[3]
Order of Court granted by Botha AJ in the following terms:
“
1.
The opposed matter is postponed for hearing on 21 February 2023 on
the motion court
roll for hearing on that date, the date having been
set in conjunction with the DJP of this Division.
2.
The Second to Tenth Respondents are
jointly and severally ordered to forthwith refrain from any attempts
to open or operate any
bank account with any bank account on behalf
of the First Applicant pending the finalisation of the above matter.
3.
Each of the parties’
undertaking not to partake or instigate any acts of violence is
noted and forms part of the court order.
4.
During the interim period until the
finalisation of the hearing, the NMBM’s undertaking in terms
of the Vehicle Operating
Company Agreement to implement the
following action is noted and forms part of the court order:
4.1
To appoint an independent
administrator and/or employee of the NMBM to implement, administer
and oversee the operations and the
municipal transport services
which Applicant is failing to provide forthwith;
4.2
The NMBM, through its independent
administrator, will make use of all the operational employees of the
Applicant, which employees
will be remunerated at their normal
salaries as per their employment contracts with the Applicant.
5.
The Applicants will index and paginate by
close of business on or before Monday 13
th
February 2023.
6.
The Applicants will deliver supplementary
heads of argument on or before
12h00
on Wednesday 15
th
February 2023.
7.
The Second to Tenth Respondents and Nelson
Mandela Bay Municipality will deliver supplementary heads of
argument on or before
12h00 o'clock on Friday 17
th
February 2023.
8.
The costs of today are reserved.”
[4]
Albeit that the second to tenth respondents opposed the granting of
the postponement on 10 February 2023 and sought to proceed
with
their counter application.
[5]
This is apparent on a reading of the notice of motion, together with
the papers, notwithstanding the criticism levelled by the
second to
tenth respondents at the manner in which the applicant formulated
the relief sought in the notice of motion.
[6]
In the notice of motion, such relief was sought by way of a rule
nisi, returnable on 31 January 2023, this being one week after
the
original date of hearing. This was later overtaken by events,
given the interim orders.
6
“
1. The applicants’ non-compliance with the
Rules of the above Honourable Court relating to forms, time periods
and
service are condoned, and leave is granted to the applicants to
move this application as a matter of urgency in terms of the
provision of Rule 6(12) of the Uniform Rules of Court.
2.
The purported decisions to remove and elect directors at the meeting
held on 18 October
2022 are void ab initio and are accordingly of no
force and effect.
3.
The first respondent is ordered and directed to forthwith unfreeze
and/or release the hold
on the first applicant’s bank account,
with account number 4[...], held with the first respondent bank.
4.
The second to twelfth respondents are interdicted and restrained
from:
4.1
interfering unlawfully in the day-to-day operations of the
first applicant; and
4.2
collectively holding themselves out to be the first
applicant’s board of directors.
5.
The applicants are entitled to approach this Court on the same
papers, duly supplemented,
in the event that the respondents breach
the order contained in paragraph 4 of this order.
6.
The respondents are ordered to pay the costs of this application,
including the reserved
costs, jointly and severally, the one paying,
the other to be absolved.
7.
The respondents’ counter application is dismissed with costs.
8.
The application for intervention by the Nelson Mandela Bay
Municipality is dismissed with
costs.
9.
Reasons to follow.”
[8]
[2022]
JOL 57361 (ECP); and
Ascon
Trading CC t/a Ascon Civil Engineering v Wilson and Another
(3387/2022) [2023] ZAECQBHC 2 (17 January 2023), and the authorities
cited therein.
[9]
Lindeque
and Others v Hirsch and Others, In Re: Prepaid24 (Pty) Limited
(2019/8846) [2019] ZAGPJHC 122 (3 May 2019); and
Masipa
and Another v Masipa
(23224/2020) [2020] ZAGPPHC 214 (4 June 2020).
[10]
Which I found to be justified in the circumstances of this matter
for the reasons to which I turn.
[11]
But for a bald denial.
[12]
Together with the eleventh and twelfth respondents.
[13]
Plascon-Evans
Paints v Van Riebeeck Paints
1984
(3) 623 (AD) at 634I – 635A-C.
[14]
Wightman
t/a J W Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at paragraph 13.
[15]
The allegation that the payment of the bonuses ought to have been
made from the funds paid to Ah Shene Attorneys by the applicants
does not assist the second to tenth respondents. The amounts
set out in annexure A to the notice of motion exceed the funds
paid
to Ah Shene Attorneys, which is consistent with the explanation
contained in the applicants’ replying affidavit.
[16]
Given that the company secretary was not in possession of their
respective email addresses.
[17]
This being separate from the WhatsApp usually utilised by the board
of directors for the purposes of electronic communication
with the
shareholders.
[18]
That the applicants utilised the words “cancelled” and
“postponed” interchangeably, is of no consequence.
[19]
The contention being that once a shareholders meeting is properly
convened, it cannot be cancelled or postponed by the directors
in
that section 61 of the Act does not make provision for such a
cancelation; alternatively, postponement. Whilst I do
not
agree with this contention, it is not necessary for me to determine
this aspect given the finding to which I have arrived.
[20]
More particularly, the second to tenth respondents have failed to
present evidence of a single primary fact in support of the
aforesaid contention.
Rees
and Others v Harris and Others
2012 (1) SA 583
(GSJ).
See
also:
Swissborough Diamond Mines (Pty) Limited and Other v
Government of the Republic of South Africa and Others
1999 (2)
SA 279
(W).
See
also:
Radebe and Others v Eastern Transvaal Development Board
1988 (2) SA 785 (A).
[21]
See sections 61(3)(a) and 61(3)(b) of the Act.
[22]
1923 GWLD 182
at 184-185.
[23]
Which is final in nature.
In
Liberty Group LTD and Others v Mall Space Management CC
2020
(1) SA 30
(SCA) (1 October 2019), the Supreme Court of Appeal
recounted the requirements of a final interdict at paragraph 20,
which requirements
I found to be present on the facts of the present
proceedings:
“
[22]
The law in regard to the grant of a final interdict is settled. An
applicant for an interdict must show the clear right;
an injury
actually committed or reasonably apprehended; and the absence of
similar protection by any other remedy. It was
held by this
court in Hotz v University of Cape Town that once the
applicant has established the three requisite elements
for the grant
of an interdict the scope, if any, for refusing relief is limited
and that there is no general discretion to refuse
relief.”
[24]
Recorded in footnote 6 (
supra
).
[25]
And not
ex
parte
.
[26]
See footnote 14.
[27]
1977
(2) 287 (TPD).
[28]
In which the second to tenth respondents seek: (i) a full accounting
regarding the monies transferred to Ah Shene Attorneys;
and (ii) an
order of court directing the convening of a shareholders meeting.
In respect of the latter relief, no application
in terms of section
61(13) of the Act serves before me.
[29]
In the counter application.
[30]
Aquatur
(Pty)
Ltd v Sacks
1989
(1) SA 56
(A)
at 62A-F;
Bowring
N.O. v Vrededorp Properties CC
2007 (5) SA 391
(SCA) at paragraph 21;
Transvaal
Agricultural Union v Minister of Agriculture and Land Affairs
2005
(4) SA 212
(SCA)
paras 64-66).
[31]
Section
61(13) of the Act.
[32]
That
the Municipality is currently asserting its rights in terms of such
agreement, which was recorded, by agreement, in the order
granted by
Botha AJ, also does not create such an interest.
[33]
To the extent that I do not deal with each and every submission made
in argument in respect of costs, this should not be taken
to mean
that they were not considered by me. All submissions were
taken into account in exercising my discretion.
[34]
This being one of the reasons advanced by the Municipality for a
postponement of the application on 10 February 2023.