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[2021] ZAGPPHC 355
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Safety Grip CC v Advent Oil (Pty) Ltd and Others v Arvoprox (Pty) Ltd (96949/2015; 96948/2015) [2021] ZAGPPHC 355 (18 May 2021)
IN
THE HIGH C OURT OF SOUTH AFRICA
GAUTENG
DIVISION , PRETORIA
CASE
NO: 96949/2015
And
CASE
NO
:
96948/2015
In
the matter between :
SAFETY
GRIP CC
Applicant
and
ADVENT
OIL (PTY) LTD First
Respondent
THULANI
JOSIAH HADEBE Second
Respondent
And
In
the matter between :
SAFETY
GRIP CC
Applicant
And
ARVOPROX
(PTY) LTD T/A
PAKAMOLE
TRANSPORT First
Respondent
THULANI
JOSIAH
HADEBE Second
Respondent
J
U
D
G
M
E
N
T
GWALA
,
AJ :
1.
This is an application for leave to appeal an order I had made in
terms of which I had dismissed both applications. The applicant
seeks
leave to appeal in respect of both matters. In the judgment I had
reasoned that the credit agreement entered into between
the applicant
and Advent Oil was invalid.
2.
At the time of conclusion of the credit agreement between applicant
and Advent Oil, Mr Nkosi was the sole director of Advent
Oil. He was
also a director and a shareholder in Arvoprox.
3.
Arvoprox required to enter into a credit agreement. It was unable to
secure credit it needed from the applicant. Mr Nkosi was
advised to
use Advent Oil as a conduit to boost the credit worthy of Arvoprox .
He did this by purporting to approve a conclusion
of the credit
agreement between Advent Oil and the applicant. This credit agreement
was for the benefit of Arvoprox of which Mr
Nkosi was a sole director
and a sole shareholder.
4.
The conclusion of the credit agreement between Advent Oil and the
applicant was not approved nor authorized by the shareholder.
5.
Mr Nkosi did not disclose this credit agreement to Ms Mbethe, the
shareholder in Advent Oil. No approval of the credit agreement
was
granted by the shareholder . Therefore, Mr Nkosi was not permitted to
conclude the credit agreement on behalf of the Advent
Oil. Thus, the
credit agreement did not have any binding effect , due to the
invalidity, so I concluded as informed by the provisions
of
section
75(3)
of the
Companies Act 71 of 2008
.
6.
The crux of the argument by the applicant in the application for
leave to appeal is that
section 75(
3
) of the
Companies Act does
not
apply in the circumstances of this matter. I am unable to agree.
7.
Section 75
(3) provides that :-
"(3)
If
a person
is
the
only
director
of
a
compan
y
,
but
does
not
hold
all
of the
beneficial
interests
of all
of
the issued
securities
of
the
compan
y
,
that person may
not-
(a)
approve
or enter into any agreement in which the
person or
a
related
person has
a
personal
financial
interest;
or
(b)
as
a
director,
determine
any
other
matter
in
which
the person
or
a
related
person
has
a
personal financial interest,
unless
the
agreement
or
determination
is
approved
by
an
ordinary resolution of the shareholders after the
director has
disclosed the
nature and e
x
tent of that
interest
to
the
shareholders.
"
8.
In my view the position of Mr Nkosi fits the definition of the person
referred to in
section 75(3)
. As a director Advent Oil he concluded
a n agreement for the benefit of another comp any of which he is a
sole director and shareholder.
This benefits him financially .
9.
Section 75(1)(b)
defines related person as follows : -
're
l
ated
person'
,
when
used
in reference to
a
d
i
rect
o
r,
has the
meaning
set
out
in
section 1
,
but
al
s
o
in
c
l
udes
a
sec
o
nd
company
of which the
direct
o
r
or
a
related person is
a
lso
a
dire
c
tor,
or
a
close
corporation
of
which
the
director
or
a
related
person is
a
member .
10.
Once more, Mr Nkosi fits this definition of related person and
Avroprox too .
11.
As it is, the credit agreement was not approved by the shareholder.
In fact , it was not even disclosed to the shareholder.
For these
reasons I say it is invalid. It is unauthorised in law.
12.
There is another aspect which concerns Mr Hadebe states that the
portion of the credit agreement that relates to him agreeing
to stand
as surety was signed in error for the reasons set out in the judgment
.
13.
I concluded that Mr Hadebe was misled into believing that he was
signing a cred it agreement unbeknown to him that he was signing
a
suretyship agreement . The credit agreements signed on behalf of
Advent Oil and Arvoprox were not signed by him in his personal
capacity. This justifies a conclusion that Mr Hadebe should not be
held personally liable as a surety.
14.
For these reasons, I am unable to form an opinion that the appeal
would have a reasonable prospect of success or that there
is some
other compelling reason why the appeal should be heard . There are no
conflicting judgments on the matter under consideration;
15.
In the result I make the following order :
15.1
Both applications for leave to appeal are dismissed with costs .
GWALA,
AJ
JUDGE
OF THE HIGH COURT (ACTING)