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[2023] ZAFSHC 376
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Litabe v Di Thabeng Wholesale Fuel Supply (Pty) Ltd and Others (434/2022) [2023] ZAFSHC 376 (9 October 2023)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
no
434/2022
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
In
the matter between:
MICHAEL
NKEPE
LITABE
Applicant
and
DI
THABENG WHOLESALE FUEL SUPPLY (PTY) LTD
1
st
Respondent
CHANE-INGE
BEUKES
2
nd
Respondent
COMPANIES
AND INTELLECTUAL PROPERTIES
COMMISSION
3
rd
Respondent
CORAM:
DAFFUE et DANISO JJ
HEARD
ON:
8 JUNE 2023
DELIVERED
ON:
9 OCTOBER 2023
JUDGMENT
BY:
DAFFUE J
ORDER
1.
The decision of 6 January 2022 taken at an alleged shareholders’
meeting of the first respondent is reviewed,
declared invalid and
contrary to
section 71
of the
Companies Act 71 of 2008
and set aside;
2.
The first respondent is directed to reinstate the applicant as a
director of the first respondent;
3.
The first respondent shall pay the applicant’s costs of the
application on a party and party scale, excluding
the wasted costs
occasioned by the postponement on 3 October 2022 which shall be borne
by the applicant.
JUDGMENT
INTRODUCTION
[1]
A former director of a company has been removed as a director of that
company during a shareholders’ meeting. The dispute to be
adjudicated is whether the removal was effected by the majority
shareholder on a properly constituted shareholders’ meeting. An
issue that could have been dealt with swiftly and on a narrow
basis
has been dragged out over more than a year. In the process several
side issues have been addressed which did not contribute
to the
adjudication of the real dispute.
THE
PARTIES
[2]
The applicant is Mr Michael Nkepe Litabe, a major male person
residing
in Clocolan, Free State Province. He was not only employed
as a truck driver of his employer, the first respondent, but he is
the
owner of a 26% shareholding in the first respondent. He was also
a co-director of the first respondent until his alleged unlawful
removal during a shareholders’ meeting.
[3]
The first respondent is Di Thabeng Wholesale Fuel Supply (Pty) Ltd, a
company with registered office situated at [...] P[...] B[...]
Street, Clocolan. The second respondent is Ms Chane-Inge Beukes,
an
adult female and co-director of the first respondent. I shall refer
herein after to the first respondent as Di Thabeng and to
the second
respondent as Beukes when I refer to them individually. They will be
referred to as the respondents when the occasion
demands it, bearing
in mind that the third respondent, the Companies and Intellectual
Properties Commission (the CPIC), is not
contesting the relief
sought.
THE
RELIEF SOUGHT
[4]
The applicant seeks the following relief in his notice of motion:
‘
1.
Reviewing and setting aside the removal of the applicant as director
of the first respondent
and to declare same as invalid and contrary
to
section 71
of the
Companies Act 71 of 2008
.
2.
In the alternative to paragraph 1 above, reviewing and setting aside
the removal
of the applicant as director of the first respondent on
the basis that it offence (sic) the doctrine of legality.
3.
Ordering the first respondent, acting through the second respondent,
to reinstate the applicant
as the director of the first respondent.
4.
Directing the third respondent to reinstate and to record the
applicant’s name and details, as director of the first
respondent, on the third respondent’s records and systems.
5.
In the alternative to paragraph 4 above, and in the event the
third
respondent has not removed the applicant’s names and details as
the first respondent’s director, as at the date
of the grant of
this order, that the third respondent be ordered not to remove the
applicant’s names and details on the third
respondent’s
records and systems.
6.
Directing the first respondent, acting through the second respondent,
to furnish to the applicant certified copies of the following
documents:
6.1
the incorporation documents of the first respondent;
6.2
licence documents relating to the first respondent’s licence
operations
from Department of Mineral Resources and Energy;
6.3
first respondent’s latest Broad Based Black Economic
Empowerment (“BBBEE”)
compliance certificates;
6.4
first respondent’s shareholders’ agreement and share
certificate;
6.5
all audited financial statements of the first respondent between 2015
and 2022;
6.6
account statements of the first respondent from all banking
institutions that
first respondent has or had bank accounts at
between 2015 and 2022;
6.7
first respondent’s board resolutions between 2015 and 2022; and
6.8
the applicant’s employment contract, as an employee (driver),
of the first
respondent.
7
Ordering the first respondent to pay the costs of this
application on
a punitive scale of attorney and own client and such costs to include
costs occasioned by the employment of two
counsel.
8
Further, and/or alternative relief.’
THE
LITIGATION HISTORY
[5]
The applicant’s notice of motion was issued on 1 February 2022
and
served on 10 February 2022. Having considered that his review
application was served late, a notice of motion, dated 10 February
2022, was also filed in terms whereof condonation was sought for the
alleged late filing of the review application. The condonation
application does not require any further attention as the applicant
was under the misapprehension that
ss 71(5)
of the
Companies Act 71
of 2008
applied. That sub-section deals with the situation where a
company’s board of directors makes a determination about the
suitability
of a director of the company in terms of
ss 71(3)
which
is not the case in this instance. The respondents filed
their answering affidavit on 14 April 2022 to which the
applicant
responded on 19 August 2022, hopelessly out of time.
[6]
The application was initially set down by the respondents for hearing
on 3 October 2022 as the applicant failed to take the initiative in
this regard. On that date it was removed from the roll, costs
to
stand over for later adjudication. On 20 September 2022 and prior to
the hearing an email was circulated to all the parties.
Certain
queries were raised. I quote:
‘
Good
day,
This
review application has been allocated to Daffue and Daniso JJ.
I have been requested by Daffue J to communicate with
you and trust
to receive your written responses and compliance not later than
Friday, 23 September 2022:
1.
The application papers have not been properly indexed, paginated
and
bound in the appropriate order. The applicant’s attorney
is directed to rectify the matter, making use of plastic
ring
binders.
2.
The applicant submits that
section 71(3)(b)
of the
Companies Act is
not applicable and reliance is placed on
section 71(8)
(see
inter
alia
paragraph 27 of the founding affidavit) and in light hereof
applicant is called upon to make detailed submissions as to why this
court has jurisdiction to review in accordance with
section 71(5)
and
why the matter was not referred to the Companies Tribunal in
accordance with
section 71(8)(c).
0
cm; line-height: 150%">
3.
The notice of motion is in the form required for review applications
in terms of
Rule 53
and apparently as a result thereof the matter has
been set down on a Monday before two judges in accordance with the
practice directives
of this court, instead of on a Thursday on the
usual opposed motion court roll. On the basis that a review
application is
dealt with, the parties’ heads of argument
should have been filed 15 and 10 days before the hearing
respectively. No
heads of arguments have been filed by both
parties and their submissions in this regard are required. The
matter shall not
be entertained in the absence of detailed written
heads of argument.
I
am looking forward to receive your responses on/or before Friday, 23
September 2022.’
During
the hearing on 3 October 2022 and over and above the written queries
communicated to the parties, their attention was also
drawn to the
fact that Beukes’ shareholding in Di Thabeng was in contention
and should be properly addressed.
[7]
On 7 March 2023 the respondents
filed a supplementary affidavit by Ms Anouchka van Zyl
pertaining to
the alleged shareholding of Beukes in Di Thabeng. Thereafter their
legal representative set the matter down for hearing
on 20 April
2023. This caused a reaction from the applicant’s legal
representatives. On 4 April 2023 a notice of motion was
filed in
terms whereof the applicant sought leave to file a further affidavit,
referred to as a fourth affidavit. In this affidavit
the applicant
dealt with his complaint to the Broad Based Black Economic
Empowerment Commission (the BBBEE Commission), as well
as a complaint
to the Companies Tribunal. The BBBEE Commission has not adjudicated
the complaint, whilst the Companies Tribunal
indicated that it did
not have jurisdiction to entertain the complaint. On 20 April 2023
the matter was postponed to 8 June 2023,
the applicant to pay the
wasted costs.
[8]
On 8 June 2023 the matter again
came before me and my colleague, Daniso J, whereupon the
following
order was made in chambers by agreement:
‘
1.
The applicant’s further affidavit dated 28 March 2023 is
accepted, no order as
to costs in the application for leave to file
this affidavit.
2.
The applicant shall substitute his heads of argument on/or before
12
June 2023.
3.
The first and second respondents shall file their supplementary
heads
of argument, if any, on/or before 15 June 2023.
4.
The parties shall stand by their heads of argument and agree
that the
judges shall determine the matter based on the papers and that oral
argument is dispensed with.
5.
Today’s costs shall be costs in the cause.’
[9]
It needs to be pointed out that
contrary to the query raised as long ago as 20 September
2022, the
applicant’s attorneys failed to ensure that the papers were
timeously and properly indexed, paginated and bound.
This occurred
only late the afternoon of 7 June 2023, a day before the hearing.
[10]
The parties have now complied with the order of 8
June 2023 by filing substituted and/or supplementary heads
of
argument. It needs to be mentioned at this stage that, contrary to
the observation in the email of 20 September 2022, the respondents’
initial heads of argument were indeed filed timeously with the
registrar, but these were never sent through to the presiding judges.
THE
COMMON CAUSE FACTS
[11]
Di Thabeng was registered on 28 July 2015
[1]
.
Initially, Beukes’ late father, Mr Pieter Jacobus du Toit (who
passed away in July 2021) was the sole director and shareholder
of Di
Thabeng. The applicant became a co-director on 13 December 2018.
Prior to his death, the late Mr Du Toit relinquished his
position as
director in favour of his daughter.
[2]
She was appointed as director on 18 May 2021 and he resigned on 25
June 2021.
[12]
On 21 January 2021 the late Mr Du Toit and
applicant provided an Ultimate Beneficial Ownership declaration
to
Mercantile Bank.
[3]
Therein
they recorded that the late Mr Du Toit held 74% ownership interest
(shares) in Di Thabeng and the applicant 26%.
The applicant’s
shareholding of 26% in Di Thabeng is uncontested, but as will be
shown later herein, the same does not apply
to the remaining 74%
shareholding.
[13]
Notice was given of Di Thabeng’s directors’
meeting to be held on 15 October 2021,
inter alia
to discuss
the removal/dismissal of applicant as director. The applicant and his
legal representative requested certain documents
as a result the
meeting did not proceed. At that stage a charge sheet was also
prepared on behalf of Di Thabeng, indicating the
reasons why the
applicant should be removed as director in terms of
s 71
of the
Companies Act. Hereafter
correspondence ensued between the legal
representatives,
inter alia
in an apparent attempt to settle
the disputes between the parties, but to no avail.
[14]
On 20 December 2021 the applicant was given notice
of a shareholders’ meeting to be held on 6 January
2002 on the
Zoom virtual platform. The applicant was afforded an opportunity to
give reasons why he should not be removed as director
of Di Thabeng.
The applicant and his legal representative joined the meeting via
Zoom, but withdrew at a stage where after a resolution
was taken by
Beukes as the alleged majority shareholder to remove the applicant as
director with immediate effect.
[4]
ISSUES
IN DISPUTE
[15]
The following issues are in dispute:
a.
whether the applicant is entitled to approach the court with
an
application for review, either in terms of the doctrine of legality,
or the common law, especially bearing in mind the respondents’
version that
ss 71(1)
and
71
(2) of the
Companies Act do
not provide
for a review procedure as is the case in respect of board decisions
in terms of
ss 71(5)
which is not applicable
in casu
;
b.
whether Beukes is a shareholder of Di Thabeng and whether she
as the
majority shareholder was entitled to remove the applicant as
director;
c.
whether applicant is entitled to an order to be furnished with
the
documents set out in the notice of motion; and
d.
the appropriate costs order.
STATUTORY
PROVISIONS AND AUTHORITIES PERTAINING TO THE REMOVAL OF DIRECTORS
[16]
First and foremost, it is apposite to quote
s 71
of the
Companies Act, dealing
with the removal of directors, in full.
It reads as follows:
’
71
Removal of directors.
(1)
Despite anything to the contrary in a company’s Memorandum of
Incorporation or rules, or any agreement between a company
and a
director, or between any shareholders and a director,
a director
may be removed by an ordinary resolution adopted at a shareholders
meeting
by the persons entitled to exercise voting rights in an
election of that director, subject to subsection (2).
(2)
Before the
shareholders
of a company may consider a resolution
contemplated in subsection (1)—
(a)
the director concerned must be given notice of the meeting and the
resolution, at least equivalent to that which a shareholder
is
entitled to receive, irrespective of whether or not the director is a
shareholder of the company; and
(b)
the director must be afforded a reasonable opportunity to make a
presentation, in person or through a representative, to the
meeting,
before the resolution is put to a vote.
(3)
If a company has
more than two directors
, and a shareholder or
director has alleged that a director of the company—
(a)
has become—
(i)
ineligible or disqualified in terms of
section 69
, other than on the
grounds contemplated in
section 69(8)(a)
; or
(ii)
incapacitated to the extent that the director is unable to perform
the functions of a director, and is unlikely to regain that
capacity
within a reasonable time; or
(b)
has neglected, or been derelict in the performance of, the functions
of director,
the board
, other than the director concerned,
must determine the matter by resolution, and may remove a director
whom it has determined to
be ineligible or disqualified,
incapacitated, or negligent or derelict, as the case may be.
(4)
Before the board of a company may consider a resolution contemplated
in subsection (3), the director concerned must be given—
(a)
notice of the meeting, including a copy of the proposed resolution
and a statement setting out reasons for the resolution, with
sufficient specificity to reasonably permit the director to prepare
and present a response; and
(b)
a reasonable opportunity to make a presentation, in person or through
a representative, to the meeting before the resolution
is put to a
vote.
(5)
If, in terms of subsection (3), the board of a company has determined
that a director is ineligible or disqualified, incapacitated,
or has
been negligent or derelict, as the case may be, the director
concerned, or a person who appointed that director as contemplated
in
section 66(4)(a)(i)
, if applicable, may apply within 20 business days
to a court to review the determination of the board.
(6)
If, in terms of subsection (3), the board of a company has determined
that a director is not ineligible or disqualified, incapacitated,
or
has not been negligent or derelict, as the case may be—
(a)
any director who voted otherwise on the resolution, or any holder of
voting rights entitled to be exercised in the election
of that
director, may apply to a court to review the determination of the
board; and
(b)
the court, on application in terms of paragraph (a), may—
(i)
confirm the determination of the board; or
(ii)
remove the director from office, if the court is satisfied that the
director is ineligible or disqualified, incapacitated,
or has been
negligent or derelict.
(7)
An applicant in terms of subsection (6) must compensate the company,
and any other party, for costs incurred in relation to
the
application, unless the court reverses the decision of the board.
(8)
If a company has fewer than three directors
—
(a)
subsection (3) does not apply to the company
;
(b)
in any circumstances contemplated in subsection (3), any director or
shareholder of the company may apply to the Companies Tribunal,
to
make a determination contemplated in that subsection; and
(c)
subsections (4), (5) and (6), each read with the changes required by
the context, apply to the determination of the matter by
the
Companies Tribunal.
(9)
Nothing in this section deprives a person removed from office as a
director in terms of this section of any right that person
may have
at common law or otherwise to apply to a court for damages or other
compensation for—
(a)
loss of office as a director; or
(b)
loss of any other office as a consequence of being removed as a
director.
(10)
This section is in addition to the right of a person, in terms of
section 162
, to apply to a court for an order declaring a director
delinquent, or placing a director on probation.’ (my emphasis)
[17]
In
Steenkamp
and Another v Central Energy Fund Soc Ltd and Others
[5]
(Steenkamp)
the court emphasised that
ss 71(1)
and
71
(2) deal only with
shareholders’ meetings, whereas
ss 71(3)
to
71
(7) deal
primarily with meetings of a company’s board of directors in
the case where the company has more than two directors
which is not
applicable
in
casu
.
As mentioned in
Steenkamp
,
a company’s shareholders, acting at its shareholders’
meeting, have a wider discretion to remove directors than does
the
company itself, acting through its board of directors. This is
apparent from the wording of
ss 71(3)
which is not find in
ss 71(1)
and
71
(2). There may obviously be cases where the shareholders are of
the view that a director should be removed for the reasons mentioned
in
ss 71(3)
, but they do not have to find any such grounds before
they are entitled to remove a director.
[18]
If a company has less than three directors,
ss
71(8)
applies. In such a case a determination of whether there is
cause for the removal of a director cannot be left to the board, but
must be referred to the Companies Tribunal. Di Thabeng’s board
of directors did not deal with the removal of applicant as
was
Beukes’ initial idea, bearing in mind the notice of a
directors’ meeting to be held on 15 October 2021. The removal
was dealt with at an alleged shareholders’ meeting. It was not
required to refer the matter to the Companies Tribunal as
the
applicant initially believed to be the case.
[19]
It is apparent from
ss 71(1)
and
71
(2) that a company’s
shareholders may remove a director by an ordinary resolution adopted
at a shareholders’ meeting.
The director must be given notice
of the meeting and the resolution to be taken and such director must
be afforded a reasonable
opportunity to make a presentation before a
resolution is put to the vote. There is a clear distinction
between the removal
of a director by the company’s shareholders
on the one hand and where the board of directors seeks the removal.
This difference
is acknowledged by Matojane J in
Miller
v Natmed Defence (Pty) Ltd and Others
[6]
.
The learned judge went further in stating the following
[7]
:
‘
[36]
Where shareholders seek the removal of a director,
s 71(1)
does not
require shareholders to provide the director concerned with a
statement setting out the reasons for the proposed resolution,
as is
the case where the removal is by directors. The legislature has
deliberately preserved the right of the majority shareholders
to
remove a director whom they no longer support. Directors serve at the
behest of shareholders who elected them. The shareholders
can remove
them at will without having to provide reasons.’
[20]
It is not necessary to consider the correctness of the learned
judge’s viewpoint that shareholders
do not have to give reasons
as is apparent from the aforesaid
dictum
.
Di Thabeng
,
through the actions of Beukes and her legal advisers, presented the
applicant with reasons for the proposed resolution to be taken
at the
shareholders’ meeting of 6 January 2021. The applicant was
afforded a reasonable opportunity to make representations.
He and his
legal representative attended the virtual Zoom meeting, but left the
meeting at a stage before any resolution was taken.
I conclude in
saying that if it is established through admissible evidence that
Beukes was a majority shareholder at the time,
the applicant cannot
insist to remain a director in circumstances where the trust
relationship between him and her as majority
shareholder has been
broken down irretrievably. It is the respondents’ case that the
applicant has committed serious offences
that has led to the eventual
decision to remove him as director. It is not required to say more in
this regard in light of my conclusion
arrived about Beukes’
shareholding in Di Thabeng. I deal with that issue later herein.
ACCESS
TO COURT
[21]
The respondents submitted that the doors of the
court were shut for the applicant who was not entitled to
the relief
sought. According to them he is at best only entitled to damages or
other compensation as provided for in
ss 71(9).
[22]
I am satisfied that this court may deal with the
review application, either based on the principle of legality,
or the
common law. Such right is afforded the applicant in accordance with s
34 of the Constitution, notwithstanding the absence
of an express
right to review the resolution by shareholders as provided for in
terms of ss 71(1) and (2) and the reference to
a claim for damages
and/or compensation in ss 71(9).
[8]
IS
BEUKES A SHAREHOLDER OF DI THABENG?
[23]
In order to adjudicate whether Beukes is indeed a
shareholder of Di Thabeng, it is apposite to deal with
the
legislation as well as the law of evidence. Firstly, I shall deal
with relevant statutory provisions. The following definitions
are
apposite
[9]
:
‘“
securities”
means
any shares, debentures or other instruments, irrespective of their
form or title, issued or authorised to be issued by a profit
company;
“
securities
register” means the register required to be established by a
profit company in terms of section 50(1);
“
shareholder”,
subject to section 57(1), means the holder of a share issued by a
company and who is entered as such in the
certificated or
uncertificated securities register, as the case may be;
“
shareholders
meeting”, with respect to any particular matter concerning a
company, means a meeting of those holders of that
company’s
issued securities who are entitled to exercise voting rights in
relation to that matter.’
[24]
All company records referred to in s 24 must be
accessible at or from the company’s registered office,
or if
not kept at the company’s registered office, a notice must be
filed by the company setting out the location at which
the records
can be obtained.
[10]
[25]
A share issued by a company is regarded as movable
property and is transferable in any manner provided for
or recognised
by the
Companies Act or
any other legislation.
[11]
It is trite that the transfer of shares contains several acts or
series of steps, to wit (a) agreement to transfer, (b) the execution
of a deed of transfer and eventually, (c) the registration of the
transfer.
[12]
[26]
Once the parties to the share transaction have
agreed on transfer and executed the deed of transfer, the
registration process as provided for in the
Companies Act must
be
complied with.
Section 51
reads as follows:
‘
Registration
and transfer of certificated securities
(1)
A certificate evidencing any certificated securities of a company-
(a)
must state on its face-
(i)
the name of the issuing company
;
(ii)
the name of the person to whom the securities were issued;
(iii)
the number and class of shares and the designation of the series, if
any, evidenced by that certificate; and
(iv)
any restriction on the transfer of the securities evidenced by that
certificate, subject to item 6(4) of Schedule 5;
(b)
must be signed by two persons authorised by the company’s
board
; and
(c)
is proof that the named security holder owns the securities, in the
absence of evidence to the contrary.
(2)
A signature contemplated in subsection (1)(b) may be affixed to or
placed on the certificate by autographic, mechanical or electronic
means.
(3)
A certificate remains valid despite the subsequent departure from
office of any person who signed it.
(4)
If, as contemplated in
section 50(5)
, all of a company’s shares
rank equally for all purposes, and are therefore not distinguished by
a numbering system-
(a)
each certificate issued in respect of those shares
must be
distinguished by a numbering system
; and
(b)
if the share has been transferred, the certificate must be endorsed
with a reference number or similar device that will enable
each
preceding holder of the share in succession to be identified
.
(5)
Subject to subsection (6),
a company must enter in its securities
register every transfer
of any certificated securities, including
in the entry-
(a)
the name and address of the transferee;
(b)
the description of the securities, or interest transferred;
(c)
the date of the transfer; and
(d)
the value of any consideration still to be received by the company on
each share or interest, in the case of a transfer of securities
contemplated in
section 40(5)
and (6).
(6)
A company may make an entry contemplated in subsection (5) only if
the transfer-
(a)
is
evidenced by a proper instrument of transfer
that has been
delivered to the company; or
(b)
was effected by operation of law.’ (my emphasis)
[27]
A certificate in compliance with
ss 51(1)(a)
constitutes
prima facie
evidence of the shareholder’s
ownership. In the absence of evidence to the contrary, it becomes
conclusive proof. Any share
transfer must be registered by the
company by entering in the registrar of members not only the name and
address of the transferee,
but also the other information envisaged
in
ss 51(5).
For a transfer to be lawfully registered, a proper
instrument of transfer must be delivered to the company in accordance
with
ss 51(6).
In casu
, there is absolutely nothing presented
by the respondents to show that Beukes is the legitimate holder of
any shares in Di Thabeng.
The court has not been informed whether the
late Mr Du Toit sold or donated his shareholding to his daughter, or
what exactly was
the nature of the alleged transaction. Ms Van Zyl’s
affidavit, filed in support of the respondents’ case,
specifically
obtained after queries raised by the court, is of no
assistance. It does not lay in her mouth to say that the applicant
admitted
‘to the signing of the relevant documents.’ It
is not alleged that the applicant was a party to any agreement
between
the late Mr Du Toit and his daughter pertaining to the
transfer of his shares to her.
[28]
The minutes of the meeting of 18 May 2021 deal
only with the change in directorship, indicating that Beukes
would be
appointed as director from that date. This document was signed by the
late Mr Du Toit, applicant and Beukes.
[13]
As strange as it may sound, a further meeting was held on 25 June
2021, also dealing with a change in directorship. The minutes
thereof
reflect that the late Mr Du Toit would resign as director on that
day. This document was not signed by the applicant, but
only by the
late Mr Du Toit and his daughter.
[14]
Neither of the two documents serves as corroboration of a
shareholders’ meeting and/or an agreement between the late Mr
Du Toit and his daughter pertaining to an agreement to transfer, the
execution of the deed of transfer and the registration of the
transfer.
[29]
Matters are complicated by the three unsigned
documents that appear to be share certificates. The first
document
reflects that 50 shares were issued to Beukes on 25 June 2021, but
neither a director of Di Thabeng, nor anybody else
signed the
document.
[15]
Beukes indicated
in her affidavit that this was a mere typing error as it appears from
the remainder of the document that 74 shares
were in fact allocated
to her. As strange as it may sound, the next document
[16]
appears to be an unsigned share certificate in favour of the
applicant dated 17 December 2021 (it should be remembered that he
already obtained his shares in December 2018), indicating that he is
the holder of 26 shares. The third document
[17]
was apparently prepared to rectify the earlier error. In terms hereof
Beukes is indicated as the holder of 74% shareholding in
Di Thabeng.
Again, this document is meaningless insofar as it has not been signed
by anybody.
[30]
Ms Van Zyl indicated that certain original
documents had been lost due to water damage. She did not say
which
documents. If that was indeed the case, I would have expected Di
Thabeng to immediately arrange for duplicate copies, duly
certified,
to be obtained. There is also no indication as to the fate of the
securities register that was supposed to be kept at
the registered
office. Finally, and apparently in order to show that some kind of
agreement was entered into between the late Mr
Du Toit and his
daughter pertaining to the transfer of shares, Ms Van Zyl referred to
‘the relevant loan accounts due to
the deceased written against
the costs of the shares then owned by the Second Respondent.’
The document relied upon in support
of her version is not annexed as
alleged and could therefore not even be considered.
[18]
[31]
The applicant submitted that the documents
pertaining to share certificates and transfer of shares as well
as
the securities register should be kept by the CPIC. This is not
correct as is evident from the legislation referred to herein.
[32]
Beukes cannot say that the respondents were caught
by surprise. The applicant made it clear in paragraph
10 of his
founding affidavit, although referring to Beukes as a shareholder,
that he was ‘unable to discern what the second
respondent’s
shareholding in the first respondent is due to the fact that I have
never been furnished with the first respondent’s
shareholders
agreement and/or documents that evince the second respondent’s
shareholding in the first respondent.’
In paragraph 22 he
stated that the deceased died without furnishing him with documents
evidencing the second respondent’s
shareholding in the first
respondent. Consequently, he stated that he was ‘unable to
“
sure-footedly
” say what was the second
respondent’s shareholding in the first respondent’.
Although Beukes repeatedly stated
in her answering affidavit that she
is a 74% majority shareholding in Di Thabeng and that her late father
transferred his shareholding
to her, she was unable to produce any
documentation and/or inform the court why it was impossible to do.
Her legal representative
should have told her about the court’s
view when the matter was to be heard on 3 October 2022, but
notwithstanding that,
an affidavit was filed by Ms Van Zyl which was
not even confirmed under oath by Beukes. In his replying affidavit
the applicant
emphasised that no
iota
of evidence had been
placed before the court to demonstrate that Beukes was a 74%
shareholder in Di Thabeng.
[33]
The facts in this matter are clearly
distinguishable from those in
Transnet
Ltd v Newlyn Investment (Pty) Ltd.
[19]
In that case admissibility of oral evidence was not argued before the
court
a
quo,
but raised for the first time on appeal. Secondly, there was no doubt
about the existence of the addendum to the agreement between
the
parties. There was only one original addendum, which after having
been signed by the one party, was sent to the other party,
the
appellant in that case. The Supreme Court of Appeal held that
secondary
evidence
of a document in possession of the opposite party, the latter failing
to produce it, was allowed. In this case there is
not even the
slightest of evidence that an agreement was entered into between the
deceased and his daughter and/or even if there
was one, what were the
terms thereof. Furthermore, and equally important, the required share
certificate and securities register,
evidencing Beukes’ rights,
have not been presented to the court and her shareholding thus not
proven.
[34]
In
Principles
of Evidence
[20]
the authors refer to the two basic rules governing the admissibility
of a document: the original document must be produced and
the
document must be authenticated. They also deal with the admission of
secondary evidence in certain exceptional instances. Although
the
production of the original document remains a requirement in our law,
secondary evidence may be admitted if it is the only
means of proving
the document. Secondary evidence may be used in cases of exception to
prove the contents of a document in the
following
circumstances: (a) the document is lost or destroyed; or
(b) the document is in the possession of the
opposing party, or
(c) in possession of a third party; or (d) it is impossible
or inconvenient to produce the original;
or (e) it is
permitted by statute.
[35]
I have carefully considered whether the secondary evidence tendered
by Ms Van Zyl should be admitted, bearing in mind
the context and the
totality of the facts, but am satisfied that this secondary evidence
should be rejected. Consequently, the
respondents failed to prove
that a duly constituted shareholders’ meeting took place on 6
January 2022, the sole reason being
that they failed to prove that
Beukes is and was at all relevant times a shareholder – let
alone a majority shareholder –
of Di Thabeng.
THE
APPLICANT’S ENTITLEMENT TO DI THABENG’S DOCUMENTATION
[36]
The applicant seeks to be provided with certified
copies of a number of documents,
inter
alia
licence documents issued by the Department of Mineral Resources and
Energy, BBBEE compliance certificates, shareholders’
agreement
and share certificate and even his employment contract as an
employee. He relied on the judgment of Naidoo J in
Makanda
and Others v Afrinnai Health (Pty) Ltd and Another.(Makanda)
[21]
If it
is the applicant’s case that Di Thabeng, of which he is a
shareholder, has not received a licence from the Department
of
Mineral Resources and Energy, he could obtain that information from
the Department, if at all relevant. He has already laid
a complaint
with the BBBEE Commission and any certificates can be obtained from
that entity. If it is his case that he has been
unfairly dismissed as
an employee, he has the right to act in accordance with the
provisions of the
Labour Relations Act 66 of 1995
. The employment
contract may be relevant in those proceedings, but not here. The
respondents indicated that they provided the audited
financial
statements and bank accounts to the applicant and there is no reason
to reject their version in this regard as untenable
and false. In any
event, there is no reason for the applicant to obtain these
documents, including board resolutions, for the period
from 2015
until he became a director in December 2018. He has no entitlement to
the documents for the 2015, 2016, 2017 and 2018
financial years.
Also, once his status as director has been restored, he may deal with
the issue afresh at any subsequent directors’
meeting.
[37]
In light of the dispute of fact as to whether the
documents to which the applicant is entitled, have been
provided to
him and bearing in mind the irrelevance of the other documents
mentioned earlier, I am satisfied that the
Makanda
judgment is
distinguishable from the matter at hand. Consequently, the applicant
has not made out a proper case to be furnished
with the documents
required.
[38]
I do not intend to make any order pertaining to the reinstatement of
the applicant’s name in the records of the third
respondent.
The applicant failed to indicate whether the third respondent had
already removed his name from its records. Consequently,
the required
relief may be totally superfluous.
COSTS
[39]
The applicant is substantially successful and
entitled to his costs, but he is not entitled to a punitive
costs
order. There is also no reason to grant the costs of two counsel. The
matter is not intricate at all. In an about turn in
the heads of
argument, the applicant sought a costs order against the second
respondent. He never sought an amendment of his notice
of motion and
also did not deal with this aspect in his affidavits. This court
cannot find that Beukes did not
bona fide
believe that she is
a 74% shareholder in Di Thabeng. The company had been incorporated by
her late father who had run it for several
years until he resigned as
director, whereupon she was appointed in his place. In my view and
contrary to what was submitted on
behalf of the applicant, there is
no reason why Di Thabeng, ie the first respondent, should not be
ordered to pay the applicant’s
costs of the application on a
party and party scale.
[40]
The costs of 3 October 2022 stood over for later
adjudication. None of the parties made any submissions
in this
regard. Although I mentioned in paragraph 3 of the aforesaid email
that no heads of argument had been filed by both parties,
this was
not correct as unknown to me at the time, the respondents’
heads of argument had in fact been filed with the registrar
on 19
September 2022. The applicant not only failed to ensure that the
papers were properly indexed, paginated and bound, but no
heads of
argument had been filed on his behalf. Therefore, he should be
ordered to pay the wasted costs of 3 October 2022.
ORDER
[41]
The following order is issued:
1.
The decision of 6 January 2022 taken at an alleged shareholders’
meeting of the first respondent
is reviewed, declared invalid and
contrary to
section 71
of the
Companies Act 71 of 2008
and set aside;
2.
The first respondent is directed to reinstate the applicant as a
director of the first respondent;
3.
The first respondent shall pay the applicant’s costs of the
application on a party and party
scale, excluding the wasted costs
occasioned by the postponement on 3 October 2022 which shall be borne
by the applicant.
JP
DAFFUE J
I
concur
NS
DANISO J
Counsel for the
Applicant:
Advv E Mokutu SC
and Y Ndamase
Instructed by:
Ntanjana Attorneys
c/o Moroka
Attorneys
BLOEMFONTEIN
Counsel for the 1
st
and 2
nd
Respondents:
Adv EG Lubbe
Instructed by:
Du Toit Inc
BLOEMFONTEIN
[1]
Founding affidavit: annexure MNL 1, p 27.
[2]
Answering affidavit: annexures CB 4 and CB 5, pp 115 & 116.
[3]
Founding affidavit: annexure MNL 2, pp 28 – 30.
[4]
Founding affidavit: annexure MNL 21, p 74.
[5]
(13599/2017)
[2017] ZAWCHC 107
;
2018 (1) SA 311
(WCC) (22 September
2017).
[6]
(18245/2019)
[2021] ZAGPJHC 352;
2022 (2) SA 554
(GJ) (24 August 2021) at para
29.
[7]
Ibid
para
36.
[8]
See
also
South
African Human Rights Commission v Standard Bank of South Africa Ltd
and Others
(CCT 291/21)
[2022] ZACC 43
;
2023 (3) BCLR 296
(CC);
2023 (3) SA 36
(CC) (9 December 2022) paras 27 - 29, 31, 32 & 35;
Agri
Wire (Pty) Ltd v Commissioner of the Competition Commission and
Others
(6600/2011)
[2012] ZASCA 134
;
[2012] 4 All SA 365
(SCA);
2013 (5) SA 484
(SCA)
(27 September 2012) para 19.
[9]
Section 1
of the
Companies Act.
[10
]
Section
25
of the
Companies Act.
>
[11]
Section
35
of the
Companies Act.
[12
]
In
Land Property Development Corporation (Pty) Ltd v Cilliers
1973
(3) SA 245
(A) at 251.
[13]
Answering affidavit: annexure CB4.
[14]
Answering affidavit: annexure CB5.
[15]
Answering affidavit: annexure CB1.
[16]
Answering affidavit: annexure CB2.
[17]
Answering affidavit: annexure CB3.
[18]
Paragraph 2.8 of her affidavit, referring to annexure CB40 which was
not attached.
[19]
2011
(5) SA 543
(SCA);
[2011] ZASCA 44
; 553/09 (29 March 2011).
[20]
Schwikkard et al, Principles of Evidence ,5th ed, 2023 Jutatstat
e-publications, ch 20 – p 464 and further.
[21]
(3590/2014)
[2015] ZAFSHC 6
(5 February 2015) paras 3 - 10.