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[2021] ZAGPJHC 466
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Tlake v A Re Somang Projects (Pty) Ltd and Others (18894/2020) [2021] ZAGPJHC 466 (30 July 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:
18894/2020
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED
30/7/2021
In
the matter between:
SELLO
TLAKE
Plaintiff
and
A
RE SOMANG PROJECTS (PTY) LTD
First Defendant
JACK
MASEKWAMENG
Second Defendant
A
RE SHOMENG HOLDINGS (PTY) LTD
Third Defendant
COMMISIONER
OF THE COMPANIES AND
INTELLECTUAL
PROPERTY COMMISSION
Fourth Defendant
JUDGMENT
WINDELL,
J:
INTRODUCTION
[1]
During July 2020, the plaintiff instituted action
proceedings against the defendants. The plaintiff’s claim is
based on an
alleged oral agreement concluded between the plaintiff
and the second defendant during 2010, in terms whereof he would
render certain
geological services in respect of a coal mining
project, in exchange for which he would be allocated a 12% ownership
interest in
the first defendant, A Re Somang Projects CC (“the
CC”) before it was converted to a private company.
[2]
This is an application to join
a number of
Government officials (“the officials”) as the fifth to
seventh defendant. The application is opposed.
THE
PLEADINGS
[3]
The plaintiff’s claim is straightforward and simple. As stated,
it is based on an oral agreement concluded between the
plaintiff and
the second defendant, Mr
Masekwameng
.
In the particulars of claim the plaintiff alleges that the material
express, implied and/or tacit terms of the oral agreement
were the
following:
“
7.1. the Plaintiff
would work on a coal mining development project ("Coal Mining
Project”) which had been initiated by
the Second Defendant;
7.2. the Plaintiff would
render geological and related services ("Geological Services”)
in respect of the Coal Mining
Project to ensure that a mining right
application is completed and lodged with the Department of Mineral
Resources (DMR) and
7.3. the Plaintiff would,
in exchange for the Geological Services rendered, be allocated 12%
(twelve percent) ownership interest
in A Re Somang Projects Close
Corporation, the entity which is now the First Defendant ("A Re
Somang Projects CC") (sic).”
[3]
The plaintiff further alleges that despite the fact that he performed
in terms of the oral agreement and rendered the geological
services
during 2011, and despite the fact that the CC was granted the mining
right by the Department of Mineral Resources and
Energy (“the
DMR”) on 22 February 2017, the second defendant neglected
and/or failed to issue shares to the plaintiff
upon the conversion of
the CC to a private company in October 2018. The plaintiff contends
that he is entitled to become a shareholder
in the first defendant,
and that the first defendant is, through the second defendant and/or
the third defendant, undertaking mining
operations in the mining area
and selling the coal to the exclusion of the plaintiff, without any
justifiable reason. The plaintiff
therefore seeks the following
relief:
1.
Declaring the plaintiff as the owner of 12% (twelve percent) of the
entire issued share capital
in the first defendant.
2.
Directing the second defendant to
provide the plaintiff with the original share certificate in the name
of the plaintiff reflecting
the plaintiff as the owner of 12% (twelve
percent) of the entire issued shares in the first defendant.
3.
Directing the first, second and
third defendants (“the defendants”) to provide the
following information to the plaintiff:
i.
the first defendant’s securities
register;
ii.
the details and dates of all dividends declared
by the first defendant;
iii.
the first defendant’s
(and any subsidiaries of the first defendant) audited financial
statements for the financial years 2017,
2018, and 2019;
iv.
all material agreements concluded by the first
defendant in respect of the mining area and/or the mining right
including, without
limitation, loan agreements, mining outsource
agreements and coal sale agreements; and
v.
correspondence between the
first defendant and its subsidiaries (if any) and any of the mining
sector regulators in respect of the
mining right and/or the mining
area.
4.
Directing the first, second and/or
third defendants to pay the plaintiff 12% of all dividends paid by
the first defendant to the
third defendant and/or its shareholders.
5.
Directing the first and second
defendants to invite the plaintiff to all future shareholders’
meetings of the first defendant.
[4]
In the particulars of claim the plaintiff also relies on a
shareholders’ agreement titled “
Shareholders Agreement
A Re Resomeng Project”
that was concluded between the
plaintiff and,
inter alia
, the second defendant who acted on
behalf of Mogwasha Development Investment Proprietary Limited and the
Mogwasha Trust. The Shareholders
Agreement stated that the
shareholders of the CC were: Mogwasha Trust – 44% (forty-four
percent); Mogwasha Development Investment
– 29% (twenty-nine
percent); Simon Mohale – 3% (three percent); Molobe Paulina
Mogale – 5% (five percent); Kedibone
Martha Molefe – 5 %
(five percent); Dennis Mashile – 2% (two percent); and
the
plaintiff, Sello Tlake – 12% (twelve percent)
(emphasis
added).
[5]
On 9 October 2020 the defendants filed their plea, incorporating two
special pleas, one being of prescription and the other
lack of
authority. As far as the lack of authority plea is concerned, the
defendants pleaded that to the extent that the first
defendant was a
party to the oral agreement on which the plaintiff relies (the
plaintiff does not allege that it was), the second
defendant disputes
that he was authorised by the first defendant to bind it to that
agreement or to allocate a 12% interest in
the first defendant to the
plaintiff.
[6]
In their plea on the merits the defendants admit that the plaintiff
and the second defendant concluded an oral agreement in
terms whereof
the plaintiff “
would perform certain geological work in
support of an application that would be made by the first defendant
for the granting to
it of a mining right.”
Although it is
admitted that the plaintiff rendered geological services during 2011,
the remainder of the allegations in the particulars
of claim are
denied.
THE
JOINDER APPLICATION
[7]
In
terms of the Rule 10(3) of the Uniform Rules of Court, a plaintiff
may join a further defendant or defendants where the question
arising
between them depends on the determination of substantially the same
question of law or fact. It is, however, trite that
an applicant may
also join another party or parties where that party or those parties
has or have a “direct and substantial
interest” in the
subject matter of the application (and or action).
[1]
That interest has been held to be “
a
legal interest”
in
the subject matter of the application which may be affected
prejudicially by the judgment of the court.
[6]
It is clear from the plaintiff’s founding affidavit that t
he
basis of the joinder application and reason why the plaintiff wants
to join the
namely Minister of Mineral Resources
and Energy (“the Minister”) as the fifth defendant; the
Director-General: Mineral
Regulation of the DMR (“the
Director-General”) as the sixth defendant; and the Regional
Manager of the DMR, Mpumalanga
Province (“the Regional
Manager”) as the seventh defendant, is because it is
alleged that these officials have
a “direct
and substantial interest” in the outcome of the action for the
following reasons
:
1. The Minister, who is
cited in his official capacity, is in terms of the Mineral and
Petroleum Resources Development Act
[2]
(“the Act”) charged with the authority of making
decisions in relation to mining rights and that it is he who has the
right to delegate such authority.
2. The Minister has, in
terms of section 103(1) and (2) of the Act delegated and assigned
powers to the Director-General and he
was the official who took the
decision to grant the first defendant a mining right in terms of
section 23(1) of the Act, therefore
the Director-General has an
interest in the outcome of the litigation.
3. The Regional Manager,
Mpumalanga has a direct interest in the outcome of the litigation
because he or she would have had to perform
various functions prior
to the approval of a mining right, such as the approval of the
environmental management plan and the mine
in respect of which the
mining right was granted is situated in the province of Mpumalanga.
[7]
From the heads of argument it became clear that the joinder
application is based on essentially four legs: Firstly, by converting
the CC into a private company there was a cession, transferral or
alienation of the mining right and/ or the controlling interest
in
the CC, without the written permission of the Minister as
contemplated in section 11 of the Act, which has the result that it
is of no force or effect and is invalid. Secondly, there is a dispute
about the mining area where the mining is currently taken
place. The
mining right is very clear about the mining area in respect of which
it was granted, therefore if the first defendant
is not mining in
terms of the mining right, that should be of interest to officials.
Thirdly, there may be documents in the possession
of the officials,
relevant to the plaintiff’s cause of action, that would assist
the court in resolving this dispute pertaining
to the nature of the
geological services. Fourthly, there would be no prejudice to the
officials if they are joined.
THE
MINING RIGHT
Cession/
transferral of the mining right/ controlling interest.
[8]
The plaintiff contends that it is not disputed that the mining right
was granted to the CC, yet the first defendant, A Re Somang
(Pty) Ltd
admits to mining in terms of the mining right. Given that the
shareholders of the two entities differ, the mining right
has been
transferred, ceded or alienated. If such transfer, alienation or
cession was without the written consent of the Minister,
it is
contended that the defendants either breached a material term of the
mining right or submitted inaccurate, incorrect or misleading
information to the DMR. If that is indeed the case, so it is argued,
the mining right could very well be cancelled or suspended.
In the
circumstances, it cannot be argued that the Minister,
Director-General and the Regional Manager, do not have a direct and
substantial interest in the outcome of the litigation.
[10]
It is common cause that the CC was converted to a private company,
namely A Re Somang Projects (Pty) Ltd. In terms of paragraph
2 of
Schedule 2 to the
Companies Act, 71 of 2008
read with
section 2(2)
of
the
Close Corporations Act, 1984
, A Re Somang Projects CC and A Re
Somang Projects (Pty) Ltd is one and the same corporate entity. The
conversion thereof from a
close corporation to an incorporated
private company thus makes no difference to its legal corporate
status. In addition,
section 11(1)
of the Act
is
only triggered when a “controlling interest has been ceded or
transferred, without the written consent of the Minister.
In
Mogale
Alloys (Pty) Ltd V Nuco Chrome Bophuthatswana (Pty) Ltd and Others
[3]
, Coppin J, held that first
has to be determined whether the interest was a controlling interest.
At paragraph 38 he states as follows:
“
If
the majority shareholder with the controlling interest intends to
dispose only of a portion of his interest and the disposal
will not
result in a change of control, ie the shareholder will retain the
controlling interest, then the disposal would in my
view not require
the Minister's consent. If, however, the effect of the disposal
would be that the holder of the controlling
interest would lose such
control, then the disposal would require the Minister's consent, even
if no one else acquires that controlling
interest.”
[11]
The argument of the plaintiff has no factual or legal basis. Firstly,
it
is based on pure speculation and
on the assumption that the mining right may have been ceded,
transferred, alienated or encumbered
by the CC to the first defendant
and/or that it was the controlling interest in the CC that was
transferred and/or ceded. Secondly,
as alluded to above, the
conversion of the CC to an incorporated private company made no
difference to its legal corporate status.
Thirdly, and most
importantly, it is not an issue that features in the pleadings at
all.
The
mining area
[12]
In paragraph 10, 14 and 15.5 of the particulars of claim the
plaintiff averred that:
“
10. The First
Defendant provided information to the Plaintiff for the area in
respect of which A Re Sornang Projects CC was to apply
for the mining
right, being Portion 35, Portion 60 and the remaining extent of Farm
Kromkrans 208 IS, Portions 1, 2 and 3 and the
remaining extent of
Farm Witbank 209 IS; and Portions 1, 2, 3 of the Farm Krogshoop 213
IS ("the Mining Area”).
14. On 22 February 2017,
A Re Somang Projects CC was granted the Department of Mineral
Resources in respect of the Mining Area ("the
Mining Right”).
15.5. the Mining Right
was granted in respect of the Mining Area;”
[13]
In the plea the defendants deny that the mining right that was
granted in favour of the first defendant related to the mining
area
alleged by the plaintiff (i.e. the geographic area to which the
mining right applied).
[14]
The plaintiff attempts to latch onto this, and contends that as a
result of the defendants’ denial of the mining area,
it is now
directly relevant to the cause of action and the officials it seeks
to join have a material interest in the outcome of
this aspect.
[15]
The defence was pleaded in response to the allegation in paragraph
15.5 of the particulars of claim. It is, however, entirely
irrelevant
to the plaintiff’s cause of action, or to the defendants’
defences thereto. The plaintiff is free to prompt
any of the said
officials to cancel or suspend the said mining right. It is however
difficult to understand how this would assist
the plaintiff in his
cause of action, as it might be destructive of the ultimate relief
that the plaintiff seeks to obtain in the
action. But, assuming for a
moment that it is at all relevant to the plaintiff’s cause of
action, or any of the defendants’
defences, the precise area
can simply be determined from the notarially executed mining right.
In any event, the consequence is
that leg of the plaintiff’s
argument is not sustainable. It only reinforces that the officials
have no interest in the outcome
of this action.
Documents
[16]
the plaintiff submits that considering that the geological services
rendered by the plaintiff are in dispute, there are factual
disputes
which the officials sought to be joined would be in a position to
assist the court in resolving. The plaintiff states
that he prepared
certain documents that were submitted to the DMR and the defendants
are aware of this. In fact, in a letter dated
3 December 2019 the
defendants requested that the plaintiff furnish them with all
correspondence between the plaintiff and the
DMR.
[17]
The fact that the officials might have documents in their possession
that are relevant to the cause of action, is not a valid
basis on
which parties should be joined. Regardless of the plaintiff’s
entitlement to production by the defendant of the
documents sought by
him in his particulars of claim, he is free to seek discovery from
the defendant of all documents relevant
to issues in the action and
to make use of the mechanism provide in Rule 38 of the Uniform Rules
of Court. He has, despite the
lapse of nearly 9 months after the
closure of pleadings in the action, not taken any steps in that
regard, let alone any other
pre-trial steps.
Prejudice
[18]
In his replying affidavit, the plaintiff states that the joinder of
the said officials will not cause any prejudice to the
defendants.
This is incorrect. Not only will there be an entire wastage of time
and costs in the action by the joinder of irrelevant
and
disinterested parties, but the entire pre-trial process, which has
not commenced, has been, held in abeyance as a result of
this
application.
CONCLUSION
[19]
The cause of action, as set out in the particulars of claim is
straightforward. The issues that will fall for determination
by the
trial court are purely contractual in nature and will be determined
by the facts. The plaintiff relies on an oral agreement
and the
defendants deny the terms of the oral agreement. All the other issues
now raised by the plaintiff are collateral facts.
The fact that one
or more of the officials took the decisions relating to the issue of
the said mining right is, firstly not in
dispute in the action, and
thus entirely irrelevant, but none of such decisions requires the
joinder of any of the said officials.
[20]
The plaintiff has, moreover, not advanced any reason as to why it
would be convenient to join any of the said officials as
defendants
to the action, nor is there any such reason. The joinder of the
officials will cause an ongoing wasteful and unnecessary
delay in the
further prosecution of the action.
[21]
The plaintiff has not made out a case for the relief sought. In the
result the following order is made:
1.
The application is dismissed with costs, including the costs of
senior counsel.
L.
WINDELL
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
(
Electronically
submitted therefore unsigned)
Delivered:
This judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation
to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The
date for
hand-down is deemed to be 30 July 2021.
APPEARANCES
Attorneys
for the plaintiff:
Shandu Attorneys Incorporated
Counsel
for the plaintiff:
Advocate Xolisa Hilita
Attorneys
for the defendants:
Webber Wentzel
Counsel
for the defendants:
Advocate CM Eloff SC
Date
of hearing:
28 July 2021
Date
of judgment:
30 July 2021
[1]
Amalgamated
Engineering Union v Minister of Labour,
1949
(3) Sa 637
(A) at 657;
Transvaal
Agricultural Union v Minister of Agriculture and Land Affairs,
2005
(4) SA 212
(SCA) at 226F-227F.
[2]
Act
28 of 2002.
[3]
2011
(6) SA 96
(GSJ).