About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2011
>>
[2011] ZASCA 90
|
|
Ukwanda Leisure Holdings (Pty) Ltd v Street Spirit Trading 92 (Pty) Ltd (414/10) [2011] ZASCA 90 (30 May 2011)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 414/10
In the matter between:
UKWANDA LEISURE
HOLDINGS (PTY) LTD
..................................................
Appellant
and
STREET SPIRIT TRADING
92 (PTY) LTD
....................................................
Respondent
Neutral citation
:
Ukwanda Leisure Holdings v Street Spirit Trading
(414/10)
[2011] ZASCA 90
(30 May 2011)
Coram:
CLOETE,
HEHER, MAYA, SNYDERS JJA and PETSE AJA
Heard:
11 May 2011
Delivered:
30 May
2011
Updated:
Summary:
Company –
liquidation – application for –
locus standi
–
‘member’ – what must be alleged and proved;
‘creditor’ – applicant relying on tacit
term of
shareholders’ agreement – not proved to be necessary to
conclusion of the agreement.
____________________________________________________________________________________
ORDER
On appeal from:
North Gauteng High Court (Pretoria)
(Ranchod AJ sitting as court of first instance):
The appeal consequently
succeeds. The following order is made:
1. The appeal is upheld
with costs.
2. The order of the court
a quo is set aside and replaced with an order in the following terms:
‘
The
application is dismissed with costs.’
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (CLOETE, MAYA,
SNYDERS JJA AND PETSE AJA concurring):
[1]
The respondent, Street Spirit Trading 92 (Pty) Ltd, applied to the
North Gauteng High Court for the winding-up of the appellant,
Ukwanda
Leisure Holdings (Pty) Ltd, on the ground that that company was
unable to pay its debts,
1
or, in the alternative, that it was
just and equitable that it should be wound up.
2
In both instances Street Spirit
relied on its alleged status as a creditor of the company.
3
In this Court its counsel submitted
that it was also a member for the purposes of relying on the just and
equitable ground.
[2] The learned judge
(Ranchod J), who heard the application, found that the applicant had
established that it was indeed a creditor.
He held that Ukwanda was
indebted to it in respect of the repayment of a loan of R3.5 million
and that the company was unable to
pay its debts. He also concluded
that shortage of capital meant that the
respondent was unable to
achieve its stated objective of developing leisure properties and
resorts and that justice and equity required
its winding-up. He
accordingly made an order placing Ukwanda under final winding-up. The
appeal against that order is brought with
leave of the court a quo.
[3]
As Street Spirit’s
locus
standi
to bring the
application as a creditor or member is in my view decisive of the
appeal I shall deal first with those issues.
Was Street Spirit a
creditor?
[4] It was common cause
that its status as a creditor depended upon proof of the existence of
a tacit term in a written agreement
concluded on 21 November 2007
(‘the shareholders’ agreement’). The parties to the
agreement were Street Spirit,
Ukwanda, Before the Wind Investments
300 (Pty) Ltd and Blue Nightingale Trading 707 (Pty) Ltd. In the
agreement Street Spirit was
called ‘Vuwa’ and Before the
Wind, ‘Quattro’, apparently with reference to their
holding entities. The
parties agreed to utilise a dormant company,
Ukwanda, the main object of which would be to acquire and hold
majority shares in
leisure property developments and related assets
as investments. Of an authorised share capital of R1000 divided into
1000 shares
of R1 the initial shareholders, Street Spirit, Before the
Wind and Nightingale, would each be issued with 150 shares.
[5] The finances of
Ukwanda were addressed in clause 5 of the agreement which provided:
‘
5.1
The board shall from time to time determine the amount of funding
necessary in order to allow the company to conduct, promote
and
expand the business successfully.
5.2
It is recorded that the initial shareholders have, prior to the
entering into of this agreement formed an alliance (“the
alliance”) to seek funds for the business of the Company from
outside sources but-
5.2.1
It is recorded that Vuwa has been issued shares subject to it making
a loan to the company in an amount of R6 000 000 (six
million rands)
(“Vuwa loan”).
5.2.1.1
Vuwa will make the loan contemplated in 5.2.1 to the Company by way
of 24 (twenty four) equal monthly instalments in an
amount of R250
000 (two hundred and fifty thousand rands) into the trust account of
Veneziano Incorporated, Standard Bank Castle
Walk, Account number:
411373749 or such other bank account as nominated by the Board to
Vuwa in writing;
5.2.1.2
The first instalment of the monies due as contemplated in clause
5.2.1.1 will be paid upon signature of this agreement.
The second
instalment will be due and payable on the last business day of the
month during which the first instalment was made.
All subsequent
instalments will be due and payable on the last business day of the
month following the date upon which the previous
payment had become
due and payable.
.
. .
5.2.4
The Vuwa loan (or any part thereof) will only be repayable to Vuwa,
subject to 5.2.7 and only after the lapse of the 24 (twenty
four)
month period contemplated in 5.2.6.
5.2.5
Vuwa will, through its alliance with various Financial Institutions
procure finance to the Company and any of its subsidiaries
and or any
company under the Control of the Company upon the terms and
conditions acceptable to the entity to whom the finance
is granted
and;
5.2.6
the total of the finance to be procured by Vuwa as contemplated in
5.2.5 is to be concluded over a period of 24 (twenty four)
months
calculated from the effective date and subject thereto that the
Company present projects to the prospective financier of
which the
profit forecasts contained in the feasibility studies conducted by
appropriate professionals are deemed acceptable to
the financiers.
The amount so procured by Vuwa will not be less than an additional
R200 000 000 (two hundred million rand). It
will be deemed that the
finance has been procured upon the conclusion of a final and binding
written agreement between the financial
institution and the lending
entity pertaining to the finance so procured and;
5.2.7
In the event of the total of the finance is procured by Vuwa as
contemplated in 5.2.5 during the period contemplated in 5.2.6
not
equalling the amount as set out in clause 5.2.6 then in that event
Vuwa irrevocably agrees that the monies loaned to the Company
as
contemplated in 5.2.1 and 5.2.2 be written off and or donated to the
Company.’
[6] The agreement was
effective from the date of signature.
[7] In accordance with
its loan obligation Street Spirit paid fourteen instalments of R250
000 each from November 2007 to December
2008. Thereafter it ceased to
make such payments. By the time Ukwanda’s answering affidavit
was filed in January 2010 more
than 24 months had passed since the
conclusion of the agreement and it was common cause that Street
Spirit had not procured finance
for the company of not less than R200
million as contemplated in clause 5.2.6. The consequence of clause
5.2.7 would, absent a
legal basis to nullify its effect, have been
that the Vuwa loan would have been written off and Street Spirit
would have ceased
to be a creditor of Ukwanda.
[8] However, in its
founding affidavit in the application, Street Spirit set up the
existence of a tacit term in the shareholders’
agreement which,
if proved, would both avoid the operation of clause 5.2.7 and entitle
it to recover the amount of the loan totalling
R3.5 million from
Ukwanda, thus rendering it a creditor of the company at the time it
launched its application.
[9] The factual basis for
the implication of the tacit term, as it appears from the founding
affidavit was, in summary, the following:
1. Clause 5.2 of the
agreement recorded that the shareholders had before entering into it,
formed an alliance to seek funds for
the business of the appellant
from outside sources.
2. At a time when the
Vuwa loan was being negotiated one De Beer on behalf of Jansk
International Ltd undertook that by the end
of April 2008 Ukwanda
would take transfer of shares amounting to 15 per cent of the
ordinary issued share capital of Acc-Ross Holdings
Ltd and derivative
instruments equating to 45 per cent of that share capital.
3. Because Acc-Ross was
well-established in the sphere of business in which Ukwanda was to
operate, the acquisition of the Acc-Ross
interest would be to the
advantage of the appellant in the market ‘to realise its
strategic objectives’.
4. The acquisition of the
Acc-Ross interest was to be financed by Jansk taking up shares in
Ukwanda at par value and the crediting
of the value of the Acc-Ross
investment to its loan account as a shareholder of Ukwanda. Jansk
formed a Cyprus-registered company,
Sedimo Investments Ltd, for the
purpose of subscribing for Ukwanda’s shares. The parties agreed
that Sedimo’s shareholding
would equate to 55 per cent of the
issued share capital of Ukwanda.
5. The transaction
described in the preceding subparagraphs was referred to in clause
8.1.1 of the shareholders’ agreement:
‘
8.1
Subject to the remaining provisions of this agreement,
notwithstanding anything to the contrary contained in the memorandum
and/or articles of association of the company for the time being,
unless otherwise agreed by the Shareholders, a shareholder (“selling
shareholder”) shall not::
8.1.1
save for any contemplated subscription of the unissued shares of the
company comprising a total of 55% (fifty five percentum)
of the total
authorized shares of the Company by a shareholder to be introduced by
de Beer, no shareholder shall during the restricted
period pledge,
cede or otherwise encumber and or sell any of its shares; and . . .
.’
Likewise, the transaction
was referred to in a letter given to the appellant by Jansk
simultaneously with the signature of the shareholders’
agreement. The letter, addressed by De Beer as ‘the authorised
representative’ of Jansk, to the appellant, is dated
21
November 2007 and was also annexed to the shareholders’
agreement. It reads as follows:
‘
This
document replaces the letter dated 12 September 2007, in reference to
the same content.
We
wish to confirm that all positions regarding the mark-to-market
movements on derivative instruments, proposed for transfer to
Ukwanda
Leisure Holdings (Pty) Ltd (subject to successful conclusion of
negotiations and any required regulatory approvals), will
be retained
and funded by Jansk International Limited.
We
further wish to confirm the proposed transfer (subject to the
conclusion of successful negotiations and any required regulatory
approvals) to Ukwanda of unencumbered physical shares amounting to
15% of the issued ordinary share capital of Acc-Ross Holdings
Limited
and unencumbered derivative instruments equating to control over a
further 45% of the issued ordinary share capital of
Acc-Ross
Holdings, i.e. the agreement will only become effective immediately
following such transfer.
We
endeavour to complete the proposed agreements for the transfers as
referred to above by the end of April 2008.
We
trust that you find this in order.’
The deponent to Street
Spirit’s founding affidavit described this letter as
‘confirming the proposed transfer’
of 15 per cent of the
ordinary shares of Acc-Ross and derivative instruments equating to a
further 45 per cent of its issued share
capital. De Beer, stated the
deponent, ‘wore numerous hats’ in the transaction, being
an authorised director of both
Sedimo and Jansk, a trustee of the
Quattro Trust and a shareholder of Acc-Ross, and the implementation
of the scheme was within
his control.
6. Furthermore, on 21
August 2007, ie three months before the Vuwa investment, the Quattro
Trust granted a written call option to
Ukwanda to purchase 139 785
717 shares in Acc-Ross at R0.53 per share to be exercised eight
months after signature. The call option
agreement was attached to the
shareholders’ agreement as, in the words of Street Spirit’s
deponent, ‘proof of
the aforegoing scheme’.
[10] The tacit term was
formulated by Street Spirit as follows:
‘
That
the aforesaid transaction [the transfer to Ukwanda of 15 per cent of
the ordinary issued share capital of Acc-Ross Holdings
Ltd and
derivative instruments equating to 45 per cent of the share capital
of that company] would be effected and that should
it not be, . . .
[Street Spirit] would be entitled to resile from the shareholders’
agreement and claim immediate repayment
of the money loaned to
[Ukwanda].’
[11] Street
Spirit alleged that Ukwanda had breached the agreement to acquire the
Acc-Ross interests, and that it had duly terminated
the shareholders’
agreement and claimed repayment of R3.5 as
restitutio
in integrum
as it was entitled to do. Despite
the opening words of clause 5.2.1, Street Spirit did not allege that
it had tendered return of
the shares issued to it but in fact relied
on such issue in support of its status as a member of the company.
[12] Street Spirit also
averred in the application that the Vuwa loan (investment) had been
made on condition that the Acc-Ross
transaction took place and on the
false representation that it would do so. It was thus induced into
making the loan to Ukwanda.
This case does not appear to have been
advanced before the court a quo and was not relied on by counsel for
Street Spirit before
us, perhaps with good reason, given the
existence of ‘whole contract’ and ‘no
representations’ clauses
in the shareholders’ agreement.
[13] The case as
presented in the founding affidavit went on to aver that, by reason
of the failure to transfer the Acc-Ross investment
to Ukwanda,
Ukwanda was hamstrung in its efforts to raise the finance it needed
to operate (beyond the moneys loaned by Street
Spirit). By December
2008 it had became clear to Street Spirit that Ukwanda would be
unable to realise its objectives because of
its inability to raise
finance ‘which was aggravated by Sedimo’s failure to
procure the transfer of the Acc-Ross Investment
to the appellant’.
[14] Ukwanda, in its
answering affidavit, admitted the conclusion and terms of the
shareholders’ agreement and the terms of
the Jansk letter of
the same date and the call option attached to the agreement. That
aside, it denied the substance of nearly
all other averments,
inferences and interpretations relied on by Street Spirit. It also
denied the existence of the tacit term
set up by the applicant.
[15] The learned judge
did not find that Ukwanda’s denial could be dismissed as mala
fide or plainly lacking in credibility
or substance. He summarised
the applicant’s averments, much as I have done, without
analysis, did not refer to Ukwanda’s
response and concluded:
‘
Given
all the above facts I am of the view that it was indeed a tacit term
of ‘the shareholders’ agreement] that the
Acc-Ross
transaction would take place. Otherwise it would not make business
sense in the circumstances for the applicant to agree
to lend the
respondent R6 000 000 and undertake to obtain additional loans
totalling R200 000 000 for the respondent.’
[16]
I am by no means sure that the alleged tacit provision was a ‘term’
at all. It seems by its formulation to have
been more akin to a
resolutive condition. See
Venter
Agentskappe (Edms) Bpk v De Sousa
1990
(3) SA 111
(A) at 111B-G. Moreover, the ‘undertaking’ to
transfer the Acc-Ross interest seems to have depended on further
agreement
between Ukwanda and Jansk and was not something which could
be enforced against Ukwanda by Street Spirit.
[17]
Assuming however that Street Spirit was correct in its identification
of a ‘tacit term’, I do not think it discharged
the onus
of proving that the term as formulated was necessary to the
conclusion of the agreement.
4
The evidence, even without regard for
the denials, goes no further than establishing that acquisition of
the Acc-Ross interest would
have been to the advantage of Ukwanda.
Nor was Street Spirit able to establish the centrality of the
Acc-Ross transaction to the
conclusion of the agreement or its
undertaking to lend money to the company or to procure finance for
it. In my view the appellant
failed to show any material connection
between implementation of the Acc-Ross transaction and its decision
to lend money to Ukwanda
or between that transaction and its
undertaking to procure loan finance for Ukwanda. In the
last-mentioned regard the reference
in the affidavit to the
‘hamstringing’ of the company’s ability to raise
finance is an ex post facto deduction
and Street Spirit does not
allege that such a threat was present to the minds of the parties
before or at the signing of the agreement.
It is common occurrence
that contracting parties are disappointed in their expectations. That
however does not justify amendment
of their juristic acts by the
court.
5
[18] Counsel for Street
Spirit submitted that the agreement between the shareholders is to be
found not only in the contract between
but also in the annexures to
the contract (the letter of 21 November 2007 from Jansk and the call
option). So construed, he argued,
the materiality of the transfer of
the Acc-Ross interest is manifest, since the letter states that ‘the
agreement will only
become effective immediately following such
transfer’ and ‘agreement’ must mean the
shareholders’ agreement.
[19] I am not persuaded
that the submission is correct. First, although ‘the/this
agreement’ is defined in clause 1.1.1
as ‘the agreement
as set out in this document together with the annexures attached
thereto’ that definition does not
elevate the content of the
annexures to the level of matters of agreement between the parties.
Second, the letter does not refer
to the shareholders’
agreement at all. Logically, the ‘agreement’ which is
only to become effective on transfer
is the undertaking to fund which
is provided in the preceding paragraph of the letter. Third,
counsel’s interpretation would
give rise to an irreconcilable
conflict between the contract and the letter since the former is
expressly rendered effective on
the date of signature (clause 1.1.13)
while the letter would suspend the operation of the contract until
transfer of the Acc-Ross
interest. The whole tenor of the contract is
opposed to such suspension, no obligations are prospectively phrased
and no provision
is made for the event of non-fulfilment of the
predicated condition.
[20] The reliance on the
alleged undertaking by De Beer in relation to the transfer of the
shares and derivatives by the end of
April 2008 is not borne out by
the terms of the Jansk letter. In that letter De Beer uses the word
‘proposed’ in relation
to the transfer. He qualifies the
transfer as ‘subject to the conclusion of successful
negotiations and any required regulatory
approvals’ and he
undertakes to ‘endeavour to complete the proposed agreements
for the transfers’ by the end
of April 2008, none of which, on
the face of it suggests either unequivocal commitment to or final
agreement in relation to the
acquisition. Mr Barbas, deposing on
behalf of Ukwanda, denied that an undertaking was given by Jansk and
added that Jansk ‘had
set various conditions which are not
addressed by [Street Spirit] and which have not been met’.
Barbas emphasises in the
answering affidavit that no definitive or
final agreement had been reached in relation to the interest of
Acc-Ross in Ukwanda or
in the obtaining by the appellant of the
instruments in Acc-Ross.
[21] Ukwanda denied that
the call option agreement was entered into in anticipation of the
subscription for a 55 per cent interest
in it by Sedimo or that
Sedimo did so subscribe. De Beer supported this denial with a
confirmatory affidavit.
[22] With regard to
clause 8.1.1 of the agreement, which, according to Street Spirit
related specifically to the proposed take up
of shares by Sedimo,
Ukwanda denied any such connection. The wording of the clause appears
to be carefully non-specific, suggesting
an uncertain future event.
To this extent it was inconsistent with implicit reliance by the
parties on a certain and binding, albeit
tacit, term that transfer of
the Acc-Ross interests would take place on or before 28 April 2008 or
at all.
[23] Ranchod AJ found
further support for his view that a tacit term had been proved in a
meeting of some of Ukwanda’s shareholders
that took place on 4
March 2009, ‘where an oral agreement was reached for repayment
of the loan’. The learned judge
was seemingly unconscious that
Ukwanda not only denied giving such an undertaking but that Barbas
had explained why he would not
have done so. Barbas deposed that:
‘
The
meeting was not a shareholders’ meeting nor a meeting of the
directors of the respondent. I would not agree to repayment
without
shareholders’ consent. Furthermore, the respondent received
legal advice confirming that the respondent was not obliged
to make
repayment of the loan by virtue of the shareholders’
agreement.’
[24] The learned judge
rode roughshod over both denial and explanation. He said:
‘
In
my view what is important here is that the Chief Executive Officer
(‘CEO’) of the respondent, Mr Peter Barbas, undertook
to
repay the loans to the applicant. The day to day running of the
company is vested in its board of directors and not the
shareholders’.
[25]
The court’s approach was in conflict with the established rule
in motion practice.
6
If the learned
judge intended to be robust I think he was wrong: neither Mr Barbas’s
credibility nor his evidence should have
been so superficially
judged. Whether or not the board had the final say on the question of
repayment, the origin of the loan obligation
lay in the shareholders’
agreement and the importance of the obligation in the context of
Ukwanda’s business may very
well have influenced Barbas’s
understanding of his duties. Moreover, if, as he deposed, Ukwanda had
received advice that
the loan was not repayable (an averment which
could not be challenged on the papers) it is unlikely that he would
have ignored
the advice. It is not insignificant in the matter of
probabilities around this issue that the unsigned minute of this
‘discussion’
annexed to Street Spirit’s replying
affidavit reflects attempts to settle the dispute and does not appear
to bear out any
unequivocal undertaking to repay the loan by Barbas.
In addition, in the first letter written by Street Spirit’s
attorneys
after 4 April in which its claim for payment is set out (on
8 April 2009) justification is founded in the tacit agreement but no
mention is made of an undertaking to pay. The same shortcoming is
repeated in the letters of demand from Street Spirit’s
attorneys on 11 May and 19 June 2009. It is thus clear that Ukwanda
raised a real dispute of fact in relation to the so-called
undertaking to pay.
[26] On a conspectus of
all the relevant evidence, Street Spirit accordingly did not prove
that it was entitled to rely on a tacit
term which entitled it to
resile from the shareholders’ agreement and reclaim the moneys
advanced to Ukwanda. The provisions
of clause 5.2.7 were not
disturbed and Street Spirit’s assertion that it was a creditor
of Ukwanda should not have been upheld
in the court a quo.
Did Street Spirit
prove that it was entitled to bring the application in terms of s
346(1)(c) of the Act?
[27] Section 346 of the
Act provides:
‘
(1)
An application to the court for the winding-up of a company may,
subject to the provisions of this section, be made-
.
. .
(c)
by one or more of its members, or any person referred to in s 103(3),
irrespective of whether his name has been entered in the
register of
members or not. . .
(2)
A member of a company shall not be entitled to present an application
for the winding-up of that company unless he has been
registered as a
member in the register of members for a period of at least six months
immediately prior to the date of the application
or the shares he
holds have devolved upon him through the death of a former holder and
unless the application is on the grounds
referred to in section
344(b), (c), (d), (e) or (h).
[28] Section 103 of the
Act provides:
‘
(1)
The subscribers of the memorandum of a company shall be deemed to
have agreed to become members of a company upon its incorporation,
and shall forthwith be entered as members in its register of members.
(2)
Every other person who agrees to become a member of a company and
whose name is entered in its register of members, shall be
a member
of the company.
(3)
A company shall, subject to the provisions of its articles, enter in
the register as a member,
nomine
officii
,
of the company, the name of any person who submits proof of his
appointment as the executor, administrator, trustee, curator or
guardian in respect of the estate of a deceased member of the company
or of a member whose estate has been sequestrated or of a
member who
is otherwise under disability or as the liquidator of any body
corporate in the course of being would up which is a
member of the
company, and any person whose name has been so entered in the
register shall for the purposes of this Act be deemed
to be a member
of the company.
(4)
Subject to the provisions of section 213 (1)
(b)
,
the bearer of a share warrant may, if the articles of the company so
provide, be deemed to be a member of the company within the
meaning
of this Act, either for all purposes or for such purposes as may be
specified in the articles.’
[29] There is no question
that ss (3) is not of application in this appeal.
[30] The onus, as is the
case with any person who relies upon a provision in a statute for his
power to act or right of action,
lies upon the person who purports to
exercise that power or assert that right. Applied to a case like the
present, Ukwanda was,
in the first instance, required to make clear
that, in bringing the application it acted as a member. Having done
so it needed
to place evidence before the court which met the
statutory requirements that justified its reliance, ie that its name
was entered
in the company’s register as a member and had been
so for at least six months prior to the application for liquidation.
[31] Street Spirit did
not, in its founding affidavit, allege that it was a member. Nor did
it expressly or impliedly rely on its
status as such to bring the
application. Street Spirit did allege that it subscribed for 150
ordinary par value shares during November
2007 and that it still held
those shares twenty months later when the application was launched.
In that sense Street Spirit was,
its counsel submitted, a shareholder
of Ukwanda. It was common cause that Street Spirit was a party to the
shareholders’
agreement and that it had been issued shares
subject to it making the loan provided for in clause 5.2.
[32]
Counsel also submitted that Ukwanda did not, in its answering
affidavit, take the point that the applicant was not entered
in the
register of members. Had it done so, he said, it would have been a
simple matter for Street Spirit to call for an inspection
of
Ukwanda’s share register. To raise the point for the first time
in the appeal was unfair to Street Spirit. In this regard
he relied
on the principle that, as a general rule, a question of law can be
advanced on appeal only if its consideration involves
no unfairness
to the other party. Moreover the raising of a new point on appeal
will usually only be allowed if that point is covered
by the
pleadings.
7
[33] It follows from the
incidence of the onus that these submissions cannot be sustained: as
I have said, the applicant’s
recourse to s 346(1) depended upon
its making the allegation that it was litigating as a member of
Ukwanda (a legal conclusion)
and on setting up the factual
allegations necessary to sustain that conclusion. Ukwanda would then
in answer have been able to
address the allegation or admit it as it
was advised. Because Street Spirit did not do so the necessary
substratum of its right
to bring the application was absent from the
beginning. Ukwanda was perfectly entitled to rely upon the defect on
appeal.
[34]
Counsel for Street Spirit nevertheless attempted to save his client’s
standing. He submitted that in terms of s 103(2)
of the Act every
person other than a subscriber who agrees to become a member of a
company and whose name is entered in its register
of Members shall be
a member of a company. According to the argument, Ukwanda admitted
that Street Spirit ‘holds’ shares
in it.
8
That admission, he
said, referred not to a mere beneficial holding but to a registered
holding of the shares. He referred to s 1(3)(a)
of the Act, in which
for the purposes of the Act, a company shall be deemed to be a
subsidiary of another company in specific circumstances.
Subsection
1(3)(1)(cA) provides that:
‘
For
the purposes of this subsection ‘hold’ or any derivative
thereof refers to the registered or beneficial holder (direct
or
indirect) of shares conferring a right to vote’.
According to counsel, it
was in the sense used in that subsection that Ukwanda made the
admission that Street Spirit held its shares.
[35] This was, in my
view, a contrived argument which finds no support in the affidavits.
Subsection (cA) attaches a special sense
in a particular statutory
context to the ‘holding’ of shares. That sense has
nothing to do with the statutory concept
of membership of a company.
There is nothing to indicate that the deponent to the founding
affidavit intended his words so to be
understood or that they were so
understood by Mr Barbas. The admission would only have been of
assistance to the applicant if it
were able to show that Barbas
intended to admit that the facts necessary to bring it within s
346(1)(c).
[36] Counsel for Street
Spirit also drew attention to the terms of two letters included in
the application papers:
1. Annexure A9 to the
founding affidavit, dated 3 July 2009 from Ukwanda’s attorneys,
Messrs Veneziano Inc, to Street Spirit
in which the following is
stated:
‘
3.2.3
Our client has previously demanded that you sign the CM42 in terms of
which the shares issued to Street Spirit be transferred
against
payment of the par value of the shares. Our instructions are that the
CM42 was submitted to your attorneys of record, Ramsay
Webber
Incorporated;
3.2.4
Notwithstanding demand, you have failed to sign the CM42 transferring
the shares held by Street Spirit.’
2. Annexure R7 to the
answering affidavit dated 9 April 2009 from the same attorneys which
contains the following:
‘
Kindly
further take note that our instructions are further that:
1.
Street Spirit 92 (Pty) Ltd (“Street Spirit”) is currently
a shareholder of Ukwanda Leisure Holdings (Pty) Ltd (“Ukwanda”);
2.
a Shareholders Agreement had been entered into between the
shareholders of Ukwanda;
3.
Street Spirit has caused a “trigger event” for a “Forced
Sale” as contemplated in clause 11.1.2 of the
shareholders
agreement;
4.
our client tenders to Street Spirit the par value of the Ukwanda
shares held by Street Spirit.
Please
find attached hereto a completed CM42 form for signature by a duly
authorised director of Street Spirit. Kindly advise when
the same can
be collected. We confirm that the amount of R150 as being the par
value of the share will be paid to you upon receipt
of the signed
CM42.’
Counsel submitted that
the most probable inference to be drawn from the quoted passages is
that Ukwanda knew and admitted that Street
Spirit was registered as a
member of Ukwanda.
[37] However Annexure A9
was referred to and relied upon in the founding affidavit neither in
the context of membership in Ukwanda
nor for the contents of paras
3.2.3 and 3.2.4 of the letter. The inference that Street Spirit seeks
to draw from it is consequently
equivocal. In any event, taken at
face value, it reflects no more than a belief on the part of Ukwanda
that Street Spirit was a
registered shareholder at the time of the
letter. Annexure R7 also does not contain an unequivocal admission
that Street Spirit
appears in Ukwanda’s register of members or
that it had been so registered prior to April 2009. Taken singly or
together
the letters are insufficient to redress the deficiency in
the founding affidavit.
[38] In the result I find
that the learned judge erred in finding that the applicant had proved
its status as a creditor of Ukwanda.
He did not consider whether
Street Spirit was a member but if he had done so he must have found
that it had not shown itself to
be one.
[39] The appeal
consequently succeeds. The following order is made:
1. The appeal is upheld
with costs.
2. The order of the court
a quo is set aside and replaced with an order in the following terms:
‘
The
application is dismissed with costs.’
____________________
J A Heher
Judge of Appeal
APPEARANCES
APPELLANT: F H Terblanche
SC
Veneziano Inc, Pretoria
Symington & de Kok,
Bloemfontein
RESPONDENT: L J Morison
SC (with him X Stylianou)
Ramsay Webber Inc
c/o Andrea Rae Attorney,
Pretoria
Matsepes, Bloemfontein
1
Section
344(f) of the Companies Act 61 of 1973.
2
Section
344(h).
3
Section
346(1)(b).
4
Wilkins
NO v Voges
1994 (3) SA 190
(A) at 136I-J.
5
Vander
Merwe v Viljoen
1953 (1) SA 60
(A) at 65G.
6
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)
at 634E-I.
7
With
reference to
Riddles v Standard Bank of South Africa Ltd
2009
(3) SA 463
(T) at 470H-I.
8
But
as counsel for the respondent pointed out, that does not mean that
Street Spirit’s name was entered in the register
of members as
provided in s 103(2). See
Moosa v Lalloo
1957 (4) SA 207
(D)
at 221-2;
Watt v Sea Plant Products
1999 (4) SA 443
(C) at
453. Nor does it speak to the duration of its inscription in the
register.