Strategic Partners Group (Pty) Ltd and Others v The Liquidators of Ilima Group (Pty) Ltd and Others (34026/18) [2021] ZAGPJHC 403 (13 September 2021)

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[2021] ZAGPJHC 403
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Strategic Partners Group (Pty) Ltd and Others v The Liquidators of Ilima Group (Pty) Ltd and Others (34026/18) [2021] ZAGPJHC 403 (13 September 2021)

IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:
34026/18
Reportable
No
Of
interest to other Judges No
Revised:
Yes
Date:
13/09/2021
In
the matter between:
STRATEGIC
PARTNERS GROUP (PTY) LTD
First Appellant
NJILO
CAPTIAL INVESTMENTS (PTY)
LTD
Second Applicant
MZOLISI
DILIZA
Third Applicant
DAVID
MOSHAPALO
Fourth Applicant
EBRAHIM
SINBANDA
Fifth Applicant
and
THE
LIQUIDATORS OF ILIMA GROUP (PTY) LTD
First Respondent/Counter-Applicant
(In
liquidation)
THE
MAGISTRATE, KRUGERSDORP
Second Respondent
THE
MASTER OF THE HIGH
COURT
Third Respondent
JUDGMENT
MAIER-FRAWLEY
J
:
Introductory
background
1.
Ilima Group (Pty) Ltd (hereafter
referred to as the ‘company in
liquidation’) was compulsorily wound up by order of court.
Thereafter, the Master of
the High Court appointed 3 joint
liquidators to wind up its affairs. Those 3 liquidators are referred
to collectively as the first
respondent. The company in liquidation
is the owner of a 11.784% shareholding in the first applicant
(hereafter referred to as
‘SPG’).
2.
The second applicant is
a shareholder, the third and fourth
respondents are directors, whilst the fifth respondent is the auditor
of SPG.
3.
The liquidators were required
in the course of winding up the affairs
of the company in liquidation to value and dispose of the
shareholding owned by it. They
took steps to ascertain the value of
the shareholding by way of seeking access to the financial affairs of
SPG. The liquidators
used the provisions of sections 414 and 415 of
the old Companies Act (Act No. 71 of 1973) to commence proceedings
before the Second
Respondent and to have persons subpoenaed to attend
the proceedings to provide information which the liquidators believed
would
be necessary to properly value the shareholding of the company
in liquidation. The persons subpoenaed to attend the proceedings

included
inter alia,
representatives of the first applicant
and the third to fifth applicants. Not only was their evidence
required but they were required
to produce various categories of
documents in the course of those proceedings. These persons are
persons who naturally have knowledge
about the affairs of SPG and who
also through the production of documents could reveal information
pertaining to the shareholding
in question. The liquidators realized
that any shareholders agreement was relevant to the valuation of the
shareholding. In November
2013, they called for production of SPG’s
shareholders agreement and also indicated that they required an
independent valuation
of the company in liquidation’s
shareholding in SPG (hereinafter intermittently referred to as ‘the
shares’ or
‘the shareholding’). SPG sought to make
use of the shareholders agreement to achieve a forced sale of the
shares and
took steps under the shareholders agreement to obtain a
valuation of the shareholding so that it could implement the rights
it
believed it held. In due course a valuation of the shares was
obtained from Mazars. The liquidators disputed the valuation as well

as the enforceability of the shareholders agreement as not all
shareholders had signed it. Thereafter, two further valuations were

procured, one by the liquidators (the Zeelie Valuation) and another
by SPG (the Price Waterhouse Coopers ‘PWC’ valuation).

These are referred to in more detail below. Suffice it to say at this
juncture that the Zeelie valuation was disputed by SPG whilst
the PWC
valuation was disputed by the liquidators.
4.
Litigation ensued between
the parties and in due course the dispute
concerning the validity of the shareholders agreement was resolved by
findings made by
the Court. In a judgment delivered on 17 August
2018, Unterhalter J found that no valid and binding shareholders
agreement had
been concluded between the shareholders of SPG.
5.
On 8 June 2020, after the
judgment of Unterhalter J had been
delivered, notice was given of a Special General Meeting of the
shareholders of SPG for purposes
of passing a resolution to abrogate
SPG’s Memorandum and Articles of Association in their entirety
and to replace them with
a Memorandum of Incorporation (‘MOI’).
The terms of the MOI provided,
inter alia,
for a forced sale
of the SPG shares at a value determined at a retrospective date,
being the date on which a forced sale event,
as defined therein,
occurred.
6.
The liquidators had concerns,
inter alia
, that that the
proposed MOI would effectively restrict access to certain information
and/or documentation of SPG and that the forced
sale provisions
therein imposed a restriction on the manner in which the liquidators
could seek to realise the shares, moreover,
without regard for the
present day value thereof. The liquidators voted against the adoption
of the proposed resolution. Despite
their opposition, the resolution
was adopted by majority vote on 30 June 2020.
7.
The liquidators formed the
view that the adoption of the new MOI,
given the absence of a valid shareholders agreement providing for a
forced sale mechanism,
was a stratagem employed by the majority to
achieve what they could not accomplish under the purported
shareholders agreement and
that its provisions providing for a forced
sale of the shares at a value determined at a retrospective date was
oppressive and
unfairly prejudicial to the creditors of the company
in liquidation.
8.
The question which would
naturally have arisen in the proceedings
before the second respondent was whether or not the liquidators were
entitled to demand
production of documents with a view to valuing the
shareholding, bearing in mind that the validity of the shareholders
agreement,
upon which SPG had relied, was vehemently in dispute. In
issuing the relevant subpoenas, the second respondent would
ordinarily
have made a call as to the relevance and materiality of
the information sought during the course of those proceedings. The
papers
filed in the present proceedings do not suggest otherwise.
9.
If the forced sale provisions
included in the new MOI were to apply,
the valuation of the shareholding would be a mechanical matter, once
the forced sale procedure
provided therein was set in motion, and
there would be room for the argument that the documents sought by the
liquidators would
be irrelevant to the establishment of the value of
the shares. In addition and by extension, the evidence sought to be
produced
already through the witnesses subpoenaed would be
irrelevant.
10.
If I were to find that the new MOI is oppressive
or unfairly
prejudicial in its effect and result apropos the company in
liquidation (minority shareholder) so that the liquidators
are
entitled to ignore the impact of the MOI upon them, as contemplated
by the provisions of the new Companies Act (Act No. 71
of 2008), then
the liquidators would be entitled to proceed to interrogate witnesses
and demand production of relevant documents
for purposes of valuing
the shareholding and in further dealing with the shares in question.
11.
SPG and the other applicants’ launched this
application
(effectually relying on the status of the MOI) in which they seek a
ruling on the claims for production of documents
made in terms of s
414 read with s 415 of the old Companies Act.
12.
In this regard, the relief sought in the main application
is for a
declarator that ‘
the liquidators of Ilima Group (Pty) Ltd
(in liquidation), a shareholder in Strategic Partners Group (Pty)
Ltd, are entitled to
no more documents from any of the applicants
other than those documents which fit into the categories of documents
described in
the following statutes:- (a)
sections 26
and
31
of the
Companies Act, 2008
, alternatively, (b) section 113 of the Companies
Act of 1973’
together with an order for costs against those
respondents who oppose the application. Only the First Respondent
opposed the main
application. Neither the first nor the second
respondent participated in the proceedings.
13.
The liquidators opposed the main application and
also filed a counter
application in which, apart from seeking the dismissal of the main
application, they seek,
inter alia,
a variety of declarators
directed towards seeking rulings on the status of clause 27 of the
new MOI as well as the status of the
documents sought at proceedings
before the second respondent and further in these proceedings.
14.
For the sake of completion, the relief sought in
the
counter-application, includes the following:
14.1.   An
order that the main application be dismissed with costs, such costs
to include the costs of two counsel;
14.2.   A
declarator that in terms of section 163(2)(h) of the Companies Act,
71 of 2008 (‘the 2008 Act’),
the provisions of clause 27
of the Memorandum of Incorporation of SPG, as approved at the General
Meeting of shareholders of SPG
on 30 June 2020, do not apply to the
shareholding or sale of such shareholding held by Ilima Group (Pty)
Ltd (in liquidation) (‘Ilima’)
in SPG;
14.3.   A
declarator that the documents and records sought by the first
respondent at insolvency enquiry proceedings held
at the Krugersdorp
Magistrates Court on 23 March 2018 and 15 June 2018 respectively,
fall within the category of documents to which
the first respondent
is legally entitled to in terms of sections 414 and 415 of the old
Companies Act) and
are to be provided to the first respondent;
14.4.   An
order that the fifth applicant provide the documents, listed in
annexure ‘B1.3’ to the Notice of
Counter-Application, to
the first respondent;
14.5.   An
order that the first to fourth applicants provide the documents,
listed in annexure ‘C’ to the
Notice of
Counter-Application, to the first respondent;
14.6.   An
order that the first to fifth applicants pay the costs of the
counter-application on an attorney and client
scale, such costs to
include the costs of two counsel.
Issues
for determination
15.
The legal issue arising for consideration in the
main application is
whether a shareholder in liquidation (represented by its liquidators)
is entitled to only the limited rights
of access to information and
documents as are afforded to an ordinary shareholder under the
provisions of the new
Companies Act or
whether, by virtue of the
provisions of
ss414
and
415
of the old
Companies Act, the
liquidators
are entitled to wider access to information and documents for
purposes of administering the insolvent estate of the
shareholder in
liquidation.
16.
The issue for determination in the counter-application
is whether or
not the first respondent has established an entitlement to the
declaratory relief sought, including the relief sought
in terms of
s163(h)
of the new
Companies Act, and
whether the order so sought is
just and equitable in the circumstances of this matter.
Condonation
17.
The first
respondent seeks condonation for the late filing of its answering
affidavit in the main application. The applicants oppose
the grant of
condonation. The answering affidavit was filed 22 months after it was
due. Whilst at first blush this appears to be
an extraordinarily
lengthy delay, the liquidators have given a full account for the
entire period of the delay, as set out in Annexure
‘TH6’
[1]
to the answering affidavit, as is required by law.
[2]
In short, the explanation given for the delay is that the liquidators
made concerted attempts throughout that period to engage
with SPG and
other shareholders with a view to find common ground on the dispute
that had arisen between the parties in relation
to the true value of
the company in liquidation’s shares in SPG, including the
manner of realisation thereof, given the unresolved
dispute
concerning the validity of the shareholders agreement.
18.
The first respondent filed a composite
affidavit, both in answer to the founding affidavit filed in the main
application and in
support of its counter-application, which,
according to the liquidators, was brought after exhausting every
possible other avenue
to objectively value the shares, as is
incumbent upon them to do, given the duty owed by them to the
concursus creditorum
to dispose of the shares at a fair and current market related value,
on an informed basis, by having access to all the necessary
and
relevant documents required and requested by them, but which have not
all been provided to them.
19.
In
Van
Wyk,
[3]
the Constitutional Court held that the standard for considering
condonation is the interests of justice. Whether it is in the
interests of justice to grant condonation depends upon the facts and
circumstances of each case. The issue of prejudice remains
an
essential factor in the adjudication of an application for
condonation.
[4]
The
constitutional court has given guidance on how an application for
condonation ought to be approached. As pointed out by Zondo
J in
Grootboom
:
[5]
“…
the
interests of justice must be determined with reference to all the
relevant factors. However, some of the factors may justifiably
be
left out of consideration in certain circumstances. For example,
where the delay is unacceptably excessive and there is no explanation

for the delay, there may be no need to consider the prospects of
success. If the period of delay is short and there is an
unsatisfactory
explanation but there are reasonable prospects of
success, condonation should be granted. However, despite the presence
of reasonable
prospects of success, condonation may be refused where
the delay is excessive, the explanation is non-existent and granting
condonation
would prejudice the other party. As a general proposition
the various factors are not individually decisive but should all be
taken
into account to arrive at a conclusion as to what is in the
interests of justice.”
20.
The main
application does not appear to have been prosecuted with any
perceptible vigour and it has not been demonstrated that the

applicants have been prejudiced by the delay. On the contrary, the
launch of the main effectively stultified any further proceeding
of
the insolvency inquiry that was scheduled to proceed on 18 September
2018 in the Krugersdorp Magistrate Court, a consequence
which
redounded to the benefit of SPG and those applicants who were
subpoenaed to appear thereat. In any event, by the time the
matter
was heard, all the affidavits were before the court and legal
argument was presented in relation to the parties’ respective

cases, as put up in the full gamut of affidavits.
[6]
In all the circumstances, I am of the view that it is in the
interests of justice to grant condonation.
Broader
Factual Matrix
21.
The
applicants accuse the liquidators of abusing their statutory powers,
deliberately delaying the finalisation of the liquidation
process and
acting with
mala
fides.
[7]
It is thus necessary to contextualise the controversy by providing a
chronology of salient events.
22.
The relevant factual background set out below is
not contentious,
being either undisputed or unrefuted on the papers.
23.
It bears mention that as the company in liquidation
holds 11.784% of
the total issued shares of SPG, its interest in SPG is therefore the
equivalent of 11.784% of the value of SPG.
24.
It is not in dispute that SPG holds a significant
shareholding in Bombela Concession Company (Pty) Limited (‘BCC’).
Bombela Civils Joint Venture Proprietary Limited (‘BCJV’)
,
a subsidiary of BCC, is involved in the construction of the Gautrain
project. BCC has a concession agreement with the Gautrain
Province
relating to the Gautrain project and is involved in the operation of
the Gautrain project. There had been various ongoing
disputes between
the Gauteng Province and BCC/BCJV and
vice
versa
, some of which resulted in
arbitration and court proceedings instituted by one or another of
those parties against the other. However,
by the time the present
application was heard, certain of those claims had become settled
between the various role-players.
25.
The company in liquidation was placed under final
winding-up by order
of court on 28 April 2010. The liquidators have been in control of
the company in liquidation since their appointment
by the Master on 7
March 2011. Pursuant to their appointment, the liquidators set about
investigating the affairs of the company
in liquidation. On 5
November 2013, they requested to be advised of the extent of its
shareholding in SPG, as well as a valuation
thereof. Whilst SPG
initially maintained that the extent of the company in liquidation’s
interest in SPG was 10%, it eventually
recognized that it is in
actual fact 11.784%.
26.
Under cover
of a letter dated 11 November 2013,
[8]
the liquidators called for a copy of SPG’s shareholders
agreement, indicating therein that they required an independent
valuation of the company in liquidation’s shareholding in SPG.
Further, they recorded that ‘with regard to the valuation
of
the shares, we want to be involved in this process
so
that an independent verification is possible
,
particularly, the mandate given to the valuators…’ (own
emphasis).
27.
This
notwithstanding, the first applicant went ahead and singularly
mandated Mazars Corporate Finance (Pty) Ltd (‘Mazars’)
to
attend to the valuation of SPG shareholding.
[9]
On 27 May 2014, Mazars completed their valuation, which was furnished
to the liquidators on 23 June 2014. Mazars concluded that
the value
of 100% of the shares in SPG was between R62 million and R74 million,
as at 31 March 2014, which value was said to be
‘subject to
material uncertainties as discussed in more detail below.’
[10]
28.
In a letter
addressed by the third applicant to SPG on 23 June 2014 ( a copy of
which was forwarded to the liquidators) it was made
clear that SPG
was seeking to facilitate the sale of the company in liquidation’s
shares in SPG through the forced sale mechanisms
provided for in
clauses 24 & 25 of the SPG shareholders agreement.
[11]
The letter recorded,
inter
alia
,
that SPG would commence with the implementation of the sale of the
relevant shares at a price of R5.4 million in accordance with
clauses
15.2 and 15.4 of the shareholders agreement, as required in clause 25
thereof. It was specifically recorded that SPG’s
shares were
unlisted and were subject to pre-emptive requirements in favour of
other SPG shareholders, which limited the tradability
thereof. In
this letter, the third applicant indicated that, in the light of the
various restrictions, the board of directors of
SPG considered the
fair market value of the company in liquidation’s shares to be
approximately R5.4 million, after applying
a 20% discount to the
value calculated by Mazars, given existing restrictions on the
encumbering of the shares.
[12]
29.
On 14
November 2014, the liquidators rejected the Mazars valuation,
inter
alia
,
on the basis that the shareholders agreement was not signed by all
the shareholders of SPG.
[13]
In paragraph 13 of their letter, the liquidators made plain their
stance that the company in liquidation was not legally bound
to sell
its shares in SPG on a forced sale basis nor were they bound by the
Mazars valuation, which had purportedly been conducted
in accordance
with the provisions of the disputed shareholders agreement. The
liquidators however indicated that they were nonetheless
prepared to
negotiate with SPG, its shareholders and outsiders for the sale of
the company in liquidation’s shares in SPG.
30.
A material
dispute accordingly arose between the parties in regard to the
validity of the SPG shareholders agreement and concomitantly,
the
method of valuation, including the applicability of the forced sale
process provided for in the disputed agreement for purposes
of
liquidating the company in liquidation’s shareholding in SPG.
The dispute concerning the validity of the shareholders
agreement was
ultimately resolved pursuant to litigation between the parties, in
the judgment of Unterhalter J, delivered on 17
August 2018, wherein
he found that
no
valid and binding shareholders agreement had been concluded between
the shareholders of SPG.
[14]
31.
Prior to
the aforesaid resolution of the dispute by the court and in response
to a second valuation conducted by Mazars, the liquidators
decided to
procure an independent valuation of shareholding from Mr Pieter
Zeelie (Zeelie), a chartered accountant with more than
30 years’
experience. In terms of his report, dated 10 March 2015 (the Zeelie
valuation),
[15]
Zeelie arrived
at a valuation of SPG of between R1.009 billion and R1.25 billion, an
amount significantly higher than that determined
by Mazars. Based on
these figures, the value attributed to the company in liquidation’s
shareholding in SPG was between R119
million and R147 million. The
Zeelie report further demonstrated certain blatant errors in the
Mazars valuation.
32.
On 4 June 2015, under cover of a letter by attorneys
Hogan Lovells
(the erstwhile attorneys representing the first respondent) the
liquidators submitted an offer to SPG and its shareholders
to
purchase the company in liquidation’s shareholding for an
amount of R100 million, which offer was not accepted.
33.
The first
and third applicants, including other unnamed shareholders of SPG,
considered the Zeelie valuation to be over-inflated.
SPG decided to
source another independent valuation, presumably as a result of the
criticisms levelled by Zeelie against the Mazars
valuations and in
response to the Zeelie valuation. To this end, SPG engaged PWC on 29
July 2015 to perform a further valuation
of the company in
liquidation’s shares in SPG. The liquidators were invited to
participate in the PWC valuation process and
to provide their inputs
therein, which they declined to do, for reasons given in the letter
of Hogan Lovells, dated 17 September
2015.
[16]
The liquidators also declined to contribute towards the costs of the
PWC valuation. This notwithstanding, SPG proceeded to mandate
PWC on
their own, to which end, they furnished PWC with select information
regarding the valuation to be performed by PWC. Stated
differently,
the PWC valuation was based on information provided solely by SPG,
however, as the liquidators later discovered, important
issues and
information having a material impact on the value of SPG, were
withheld from PWC, as more fully detailed in paragraphs
17.6 to 17.11
of the first respondent’s answering affidavit.
[17]
34.
On 5 April
2016, PWC furnished SPG with a ‘factual memorandum’
[18]
and its valuation.
[19]
According to the applicants, the PWC valuation was provided to the
liquidators on 31 May 2016.
[20]
The effective date of the valuation was 30 April 2015. At the time,
SPG faced a claim of R746 million made by BCJV against it arising

from a shareholders’ cash call, as more fully described in
PWC’s report. PWC valued SPG at R69 million, plus R746 million,

on the basis that the R746 million would be added back if the BCJV
claim was not successful. The approach of PWC was to deduct
the
maximum amount to which SPG was exposed (R746 million) with provision
being made for ‘a price adjustment to the amount
paid to the
company in liquidation for its shareholding once the outcome for the
anticipated arbitration process in connection
with the BCJV claim is
known’.
35.
PWC accordingly valued the company in liquidation’s
shares at
11.784% of R69 million, being R8.1 million plus 11.784% of the R746
million, on a contingent basis.
36.
The
liquidators allege in the answering affidavit that as the Gautrain
project is a very successful and lucrative project, SPG’s

shareholding in BCC is very valuable and therefore, the company in
liquidation’s shareholding in SPG is likewise very
valuable.
[21]
37.
To enable them (and Zeelie) to consider and review
the PWC report,
the liquidators called for various documents, including PWC’s
working papers.
38.
On 30
August 2016, discussions were held with Mr Matthew Human (‘Human’)
of PWC who, after having been advised of the
true position of SPG’s
involvement in the Gautrain project, acknowledged that he was not
aware of such facts, which were
thus not taken into account in the
PWC report, and, had such facts been made known to him, it would have
materially increased the
value of SPG and consequently the value of
the company in liquidation’s shareholding in SPG.
[22]
Present at the meeting were: Van Den Heever (liquidator), Mr Canny
(‘Canny’) (attorney acting for the liquidators),
Zeelie,
Mr Njokweni (‘Njokweni’) (attorney acting for SPG) and Mr
Gelderblom (director of SPG).
39.
On 23 November 2016, Canny informed Njokweni of
media reports
indicating that a settlement agreement had been concluded between the
Gauteng Province and the Bombela companies,
which suggested that the
valuation of SPG’ s shareholding in BCC/BCJV would likely have
increased, with the result that the
company in liquidation’s
shareholding in SPG would likewise also have increased. On 29
November 2016, Njokweni acknowledged
the newspaper content and
advised Canny that the PWC valuation was incorrect and would need to
be adjusted.
40.
Human had in the meantime provided parts of his
working papers to
Zeelie from which it became evident to the liquidators that
information pertaining to the settlement of claims
between the
Bombela companies and the Gautrain Province had not been provided to
PWC, which information had thus not been taken
into account by Human
in PWC’s valuation of SPG.
41.
Despite Njokweni’s advices (referred to in
para 39 above), no
amended PWC valuation was forthcoming, notwithstanding several
written requests being made to both Human and
Njokweni on behalf of
the liquidators during the period 9 January 2017 and 13 February
2018.
42.
After discussions with SPG regarding the proposed
PWC re-evaluation
collapsed, the liquidators instructed Zeelie to update his valuation
with all new information and documentation
so far obtained. Zeelie
advised the liquidators of certain additional information and
documentation he would require for purposes
of completing the updated
valuation. Various written requests were made therefore in February
and March 2018, all of which appear
to have been ignored by SPG. It
was eventually decided to hold insolvency enquiries for purposes of
obtaining such additional information
and documentation to enable the
liquidators to determine the existing financial state of affairs of
SPG for purposes of finalising
an updated valuation of the company in
liquidation’s shareholding in SPG.
43.
It is
common cause that the liquidators refused to accept the PWC valuation
of SPG with its concomitant valuation of the company
in liquidation’s
shareholding in SPG.
[23]
In
summary, their objections thereto were,
inter
alia,
that:
43.1.
The PWC
valuation was premised on the provisions of the shareholder’s
agreement, the validity of which was, to the knowledge
of the
management of SPG, placed in dispute by the liquidators as early as
November 2014,
[24]
which
agreement was subsequently declared not to be valid or binding by
order of court dated 17 August 2018.
[25]
As such there was no trigger event or basis upon which the company in
liquidation’s shareholding wais to be valued on a forced
sale
basis, more particularly, as at 30 April
2015
(per the PWC valuation), and a present day valuation was required;
43.2.
Since the
PWC valuation was provided to the liquidators on 22 August 2016,
[26]
as such, the information is almost 6 years old;
43.3.
Certain
material information which was provided to PWC was incorrect;
[27]
which Human (of PWC) confirmed would have had a material impact on
his valuation;
[28]
43.4.
From a
perusal of Human’s working papers it became evident to the
liquidators that SPG had withheld information which was
relevant for
determining the proper and fair value of the shares held by the
company in liquidation and which Human did not take
into account,
which they allege would have had a material impact on the PWC
valuation;
[29]
44.
It is common cause on the papers that the liquidators
made an offer
to sell the company in liquidation’s shareholding in SPG for
the sum of R125 million sometime after a settlement
meeting held
between the parties on 14 September 2018 failed to produce agreement
between the parties. Details of the offer, including
the
circumstances under which it was made or precisely how it was arrived
at, were not disclosed in the papers. The said offer
was not
accepted. On 3 October 2018, Mr Njokweni (SPG’s attorney)
requested the liquidators to submit a revised offer relating
to the
proposed sale of the company in liquidation’s share in SPG on
the basis that the offer, which SPG believed was based
largely on the
purchase price that had been paid by SPG for additional shares
acquired by it in BCC in December 2017, failed to
take into account
an alleged R293 million debt due by SPG to acquire a further 12.88%
interest in BCC that was due by SPG to BCC
and a 15% discount to take
into account the limited marketability of the company in
liquidation’s shares in SPG and a further
15% discount to take
into account the company in liquidation’s minority shareholding
in SPG.
45.
It is further common cause that SPG has paid an
aggregate total
amount of R31.6 million in dividends to the liquidators since 2010,
which they continue to collect on the company
in liquidation’s
behalf.
46.
As indicated earlier, on 8 June 2020, i.e., after
the judgment of
Unterhalter J on 17 August 2018 which determined the invalidity of
the shareholders agreement, notice was given
of a Special General
Meeting of the shareholders of SPG for purposes of passing a
resolution to abrogate SPG’s Memorandum
and Articles of
Association, in their entirety, and to replace them with a Memorandum
of Incorporation (‘MOI’).
47.
As noted earlier, having formed a view that the
provisions of the new
MOI providing for a forced sale of the company in liquidation’s
shareholding at a value determined
at a retrospective date was
oppressive and unfairly prejudicial to the creditors of the company
in liquidation, as envisaged in
s163 of the 2008 Act, the liquidators
decided to institute the counter-application in these proceedings
with a ‘Notice of
Counter-Application’ having been
delivered on 7 August 2020.
48.
The s 163 relief sought in the counter-application
was resisted by
the applicants on the basis that: (i) there has been no oppression of
the company in liquidation; (ii) there exists
no grounds in law or
‘in the justice and equity jurisprudence’ for a
re-wording of the amended SPG MOI; and (iii) there
is no need for a
re-determination of the value (and hence price) of the shares in
question, as that was already performed by PWC,
which fixed a fair
market value subject to adjustment and which adjustment has since
been performed by Professor Wainer (‘Prof
Wainer’) in
2021 after taking account of the settlement of the BCJV dispute in
order to arrive at a figure of R59.7 million
for the company in
liquidation’s shares in SPG (or R47.8 million after deducting a
20% minority discount therefrom).
49.
Based on
Professor Wainer’s report, and prior to the filing of a
composite replying/answering affidavit by the applicants
in these
proceedings, SPG’s attorneys made an offer on 10 February 2021
to the liquidators’ attorneys to purchase the
shares in
question for R59.7 million, based on the alleged (but disputed)
market value of the shares as determined by PWC at 31
March 2015,
[30]
which offer was not accepted by the liquidators.
50.
In their (composite) replying affidavit, the applicants
seek an order
in terms of ss 163(1) and (2) of the 2008 Act
, inter alia
,
directing sale of the company in liquidation’s shares to a
qualifying BBBEE party ‘
for the fair market value
consideration thereof determined by PWC in their report dated 2016,
duly adjusted by Professor Wainer
in February 2021, being R47.8m
…’
with the company in liquidation to pay the costs ‘on the
attorney client scale’.
The
Insolvency Inquiry
51.
It is
perhaps apposite at this juncture to contextualize certain subpoenas
that were issued in the course of a lawfully convened
insolvency
inquiry
[31]
that is currently
underway in terms of ss 414 and 415 of the old
Companies Act.
52.
According
to the liquidators, in order to enable them to perform a proper
valuation of SPG for purposes of determining the value of the company

in liquidation’s shareholding in SPG, they decided to institute
an insolvency inquiry in terms of the provisions of
s414
as read with
s415
of the old
Companies Act before
a magistrate (second respondent)
in the Krugersdorp Magistrate Court. To this end, six subpoenas were
issued against SPG officials
during the period 2015
[32]
to April 2016 for the production of information and documents, as
required at various times, for purposes of investigating the
affairs
and property of the company in liquidation.
53.
As indicated earlier, pursuant to the meeting of
30 August 2016,
certain additional documentation relating to the basis upon which the
PWC valuation was determined was provided
to the liquidators at their
request.
54.
Thereafter,
during the period 6 April 2018 and 4 June 2018, five further
subpoenas were issued against,
inter
alia
,
SPG officials and its auditors, calling on them to appear at further
iterations of the insolvency inquiry on dates specified therein,
inter
alia,
in order to produce the documents and information specified in the
subpoenas.
[33]
The information
and documents sought under cover of the subpoenas were ostensibly
required to enable Zeelie to compile an updated
current valuation of
SPG and along therewith, a current valuation of the company in
liquidation’s shareholding in SPG.
55.
At an inquiry held on 23 March 2018 at the Krugersdorp
Magistrates’
Court, with the second respondent presiding, which the deponent to
the founding affidavit (Diliza) and another
SPG official, Ms Nadine
Goldblatt were subpoenaed to attend, they agreed to provide and were
ordered by the second respondent to
provide a vast array of documents
and information listed in the subpoenas, by 13 April 2018. According
to the liquidators, two
files containing some, but not all of the
subpoenaed documents, were handed to Van Den Heever during the course
of April 2018,
albeit after the deadline, which documents were
ultimately handed over to Zeelie. The persons subpoenaed were legally
represented
at the inquiry and would no doubt have been apprised of
their legal rights in relation to the subpoenas and inquiry.
56.
On 4 June
2018, subpoenas were issued, requiring the attendance of the fourth
and fifth applicants and another representative of
SPG’s
auditors, one Sicelo Vilakati, at an insolvency inquiry to be held on
15 June 2018. They too were legally represented
at the inquiry. At
their request, the inquiry was postponed to 3 August 2018. The
various representatives undertook to hand over
the subpoenaed
documentation by no later than 13 July 2018 but in the event that
they failed to do so, they were warned to appear
at the inquiry on 3
August 2018. The third applicant also undertook to provide certain
further information and documentation
[34]
on or before 13 July 2018. Despite the agreement to provide documents
and the subsequent agreed order of the second respondent,
and despite
various written requests that followed thereupon,
[35]
the required information and documentation was not provided to the
liquidators.
57.
On 14 September 2018 a further iteration of the
inquiry was to be
held since representatives of SPG and its auditors had failed to hand
over the documentation, as undertaken.
On 13 September 2018, SPG’s
attorneys requested a without prejudice meeting for purposes of
exploring a settlement of the
matter. According to the liquidators,
SPG’s attorney advised that SPG was finding the ongoing
subpoenas and in-depth probing
oppressive and wished to settle the
question of the appropriate value of the the company in liquidation’s
shares in SPG by
way of negotiations. He requested that Van Den
Heever withdraw any threats of imprisonment of witnesses who failed
to deliver documents
and to excuse them from the next hearing of the
inquiry. It was agreed that the inquiry would be postponed to 9
November 2018 and
that the fourth applicant and the auditors would
hand over the requisite documentation.
58.
As indicated earlier, the settlement meeting held
on 14 September
2018 failed to bring about consensus between the parties. No further
documentation was received from SPG or its
auditors in compliance
with the various undertakings (and as ordered by the second
respondent) as outlined above. Instead, the
main application was
launched on 14 September 2018.
59.
According to the liquidators, the inquiry scheduled
for 9 November
2018 was postponed and further negotiations took place between the
parties thereafter in an ongoing attempt to explore
an amicable
resolution to the lingering but unresolved dispute about what the
fair market value of the company in liquidation’s
shareholding
in SPG is. These attempts,
inter alia,
included the submission
of an offer by the liquidators to SPG and the response received from
SPG’s attorneys thereto, as referred
to in paragraph 44 above.
More pertinently, the liquidators allege that the response itself
‘demonstrates that SPG is not
prepared to negotiate in good
faith, raising facts which the liquidators cannot verify
independently because they do not have the
relevant documentation.’
Discussion
Main
application
60.
The
applicants contend that the liquidators have unreasonably delayed the
realisation of assets in the winding-up of the company
in liquidation
since their appointment on 7 March 2011 in conflict with their
statutory duties, amongst others, the duty provided
for in
s 391
[36]
of the 1973 Act. They also contend that the liquidators have sought
to employ the provisions of ss 414 and 415 of the old
Companies Act
to
obtain production of wide-ranging classes of documents, many of
which are alleged to contain (unspecified) sensitive or confidential

commercial information of SPG, for the professed purpose of valuing
the shareholding in question. This, despite SPG having secured
an
independent valuation of the shares by PWC in 2016, and despite the
liquidators allegedly having had sufficient information
at their
disposal to effectually place a value on the company in liquidation’s
shareholding, as evidenced by their ability
to make an offer to SPG
for the sale of the shares in stipulated amounts, first in 2015 and
later in 2018. Furthermore, the applicants
submit that the
liquidators have adopted a valuation process that not only disregards
the framework for accessing the company information
prescribed in the
new
Companies Act but
which amounts to an abuse of their statutory
duties and functions. The process employed by the liquidators is
alleged to be one
which is designed to maximise prejudice to SPG by
(i) disregarding the ‘independent PWC valuation’ process;
(ii) imposing
a partisan valuator of their choice on SPG; and (iii)
using the valuation process as a springboard to ‘harass SPG and
its
officials to submit to interrogation at insolvency enquiries and
produce commercially sensitive information as if it were the very

insolvent the company that is the subject of the liquidators’
appointment.’
61.
The applicants thus seek an order declaring that
the liquidators are
only entitled to further documents falling into the categories
described in
sections 26
and
31
of the new
Companies Act. The
applicants initially contended that a shareholder in liquidation is
not entitled to bypass the statutory framework for accessing
company
information provided for in the new
Companies Act by
resorting to the
provisions of
sections 414
and
415
of the old
Companies Act, however
,
by the time the replying affidavit was filed in the main application,
this approach was significantly watered down, as indicated
below.
62.
The liquidators, on the other hand, submit that
the main application
has been motivated by a pending insolvency inquiry lawfully convened
and conducted in terms of
Sections 414
and
415
of the old
Companies
Act. They
submit that the applicants are seeking to avoid compliance
with statutory subpoenas requiring production of documents falling
within
the ambit of those two sections and relating to the company in
liquidation and its shareholding in SPG.
63.
The liquidators submit that they were entitled
to employ the
provisions of
ss 414
and
415
of the old
Companies Act to
procure the
production of documents and information required to enable them to
investigate the affairs and property of the company
in liquidation in
the course of the winding-up process. They did not have at their
disposal all the requisite information and documentation
with which
to do a proper valuation of the company in liquidation’s
shareholding in SPG. They allege that they have been
obstructed on an
ongoing and prolonged basis from gaining access to information
required by them to discharge their duties in liquidating
and
distributing the assets of the company in liquidation, specifically,
the shares held by it in SPG. As pointed out in the first

respondent’s heads, ‘
the winding-up and insolvency of
the company
[the company in liquidation]
entitles, and indeed
obliges its liquidators, acting in the best interests of the
company’s general body of creditors, to
realise the shares held
by the company in SPG. This cannot be undertaken without adequate
information being made available to the
liquidators to enable the
liquidators to deal with the shares in an informed and responsible
manner
.’
64.
The liquidators further submit that the approach
adopted by the
applicants ‘is fundamentally and legally flawed in that they
purport to focus on the position of a shareholder
generally in a the
company and such shareholder’s rights vis-à-vis that the
company under the company legislation
in the ordinary course’
whilst ignoring the context in which and basis upon which the
documents forming the subject-matter
of the subpoenas (issued within
the framework of an insolvency inquiry lawfully convened) or as
further sought in these proceedings,
are required to be produced –
not simply
qua
ordinary shareholder, but in the context of the
winding-up and insolvency of the first respondent and the
liquidators’ duties
to realise the company in liquidation’s
shareholding in SPG at its true and present day value for the benefit
of the
concursus creditorum.
65.
The
applicants’ founding affidavit in the main application abounds
with trenchant criticism of the process followed by the
liquidators
in their quest to ascertain or verify the true, fair and reasonable
market value of the shares held by the company
in liquidation in SPG.
What is not in dispute on the papers, however, is the fact that when
the liquidators took control of the
insolvent the company, they did
not have all the facts or knowledge about the company in
liquidation’s affairs at their disposal.
They were entitled to
utilize the mechanisms provided in 1973 Act and in the Insolvency Act
[37]
- which continue to apply
in terms of the provisions of item 9 of Schedule 5 of the 2008 Act -
as a means of obtaining information
about the affairs and property of
the insolvent the company both before and after the institution of
the
concursus
creditorum.
From a reading of the first respondent’s affidavits in these
proceedings, the overall purpose for convening an insolvency
inquiry
was to discover information and obtain production of records which
relate to the property of the company in liquidation
(and its value)
and which may be to the financial benefit to the company in
liquidation - as it pertains to the company in liquidation’s

shareholding in SPG and the value thereof - for the proper winding-up
of the insolvent the company.
66.
In
Ferreira
[38]
the
Constitutional Court affirmed what was said by Hurt J in
Lynn
NO
,,
[39]
where
the learned judge, in recognizing
the
importance of the need for full information at a comparatively early
stage of the winding up, stated that ‘…the
procedure
provided by
sections 417
and
418
of the
Companies Act is
not
primarily concerned with the prosecution of offenders. The sections
are aimed at assisting officers of the court in the performance
of
their duty to the creditors of companies in liquidation, the Master
and the Court… I cannot conceive of any other procedure
which
would enable liquidators, effectively and efficiently, to fulfil
their task.’ In
Swart,
[40]
Binns-Ward J
inter
alia
considered
an application for the setting aside of subpoenas issued in terms of
s 414
of the old
Companies Act. In
considering the statutory
mechanisms contained in
ss 414
and
415
, including the duties of
liquidators and the objects of enquiries conducted in terms of
ss 414
and
415
and
ss 417
and
418
of the old
Companies Act, the
learned
Judge concluded that ‘
There
is no difference for relevant purposes between
ss 414
and
415
and
ss
417
and
418
, respectively, of the
[1973]
Act’.
At para
21 of the judgment, the learned judge pointed out that ‘
Provision
for enquiries of this nature has a long pedigree and it is mirrored
in the statutory regimes of other countries to whose
law comparative
reference is commonly made in our the company law
…’.
[41]
67.
In
Ferreira,
supra, the Constitutional Court approved of what was stated,
inter
alia,
in cases such as
Cloverbay
[42]
where the court dealt
with an examination under section 236 of the English Insolvency Act
1986 and stated that ‘[T]he reason for the inquisitorial

jurisdiction contained in s. 236 is that a liquidator or
administrator comes into the company with no previous knowledge and
frequently
finds that the company's records are missing or
defective.
The
purpose of s. 236 is to enable him to get sufficient information to
reconstitute the state of knowledge that the the company
should
possess
’
(own emphasis)
and
Re
Rolls Razor Ltd (No. 2),
[43]
where the Appeal Court held that:
‘
The
process under s. 268 is needed because of the difficultly in which
the liquidator in an insolvent the company is necessarily
placed. He
usually comes as a stranger to the affairs of a the company which has
sunk to its financial doom... Even those who are
wholly innocent of
any wrongdoing may have motives for concealing what was done. In any
case, there are almost certain to be many
transactions which are
difficult to discover or to understand merely from the books and
papers of the the company.
Accordingly,
the legislature has provided this extraordinary process so as to
enable the requisite information to be obtained
.
The examinees are not in any ordinary sense witnesses, and the
ordinary standards of procedure do not apply.
There
is here an extraordinary … mode of obtaining information
necessary for the proper conduct of the winding-up. The process,

borrowed from the law of bankruptcy, can only be described as being
sui generis’
. (own
emphasis)
68.
In
Bernstein,
[44]
the Constitutional Court was again seized of a challenge to the
constitutionality of ss 417 and 418 of the old
Companies Act. The
judgment of Ackerman J affords a comprehensive consideration of the
nature and purpose of insolvency enquiries under the old
Companies
Act. As
pointed out in
Swart
supra
,
‘those observations hold equally true in respect of enquiries
under
ss 414
-
415
.’
The
provisions under consideration were held to be compatible with the
Interim Constitution. The Constitutional Court acknowledged
that,
subject to effective controls against their abusive use, the
far-reaching effects of the said statutory provisions were justified

in the public interest and accordingly have to be borne with stoicism
by those upon whom they are properly brought to bear.
69.
The
liquidators were well within their rights to utilise the statutory
mechanisms provided in the old
Companies Act in
causing subpoenas to
be issued by the second respondent for the production of documents
relevant to the company in liquidation
and its affairs for the
purpose of winding-up the said company and in dealing with the shares
held by it in SPG. Whilst they have
been criticized for failing to
utilise the provisions of
s 164
of the new
Companies Act to
procure a
court determined fair market valuation of the company in
liquidation’s shares, and for failing to utilise the provisions

of PAIA
[45]
to obtain
production of documents, I have not been referred to nor am I aware
of any authority that obliges a liquidator to do
so to the exclusion
of the provisions in the old
Companies Act. On
the contrary, it is
pointed out in the general commentary on
s 164
of the new
Companies
Act in
Henochsberg
[46]
that
‘It should be noted that an alteration of the Memorandum of
Incorporation
may
also
be
challenged by a member on the ground that it…unfairly
disregards the interests of the shareholder in terms of
s 163
…’.
(own emphasis) It has in any event not been established by the
applicants that the relevant procedural requirements
for the
invocation of
s164
were met. In the light of the authorities quoted
above and in the view I take of the matter, the interesting arguments
presented
by the applicants in their heads concerning the efficacy,
practicality and preferability of the provisions of
s164
or PAIA need
not detain me further.
70.
The
potential scope for an inquiry under
ss 414
and
415
is ‘extremely
wide’.
[47]
As is
apparent from the provisions of
ss 414(2)
and
415
(1),
[48]
the only limitation upon the scope of the interrogation and so too,
the seeking of documents, is that the Master or presiding officer
(as
the case may be) must disallow any question which is irrelevant and
may disallow one which would prolong the interrogation
unnecessarily.
71.
In dealing with the argument that the mechanism
for obtaining information and the discovery of records provided for
in the old
Companies Act constitutes
an extraordinary mode of
obtaining information, it was held in
Bernstein
that ‘
Inasmuch
as the subject matter of the enquiry is the affairs of the company
taken in the very widest sense, the examinee may be
interrogated on a
very wide range of matters and may be compelled to disclose any of
his books or papers, however confidential
or incriminating they might
be.
The mechanism is
available
, not only
against the directors, officers, employees or agents of the failed
the company and against those suspected of being responsible
for its
failure, but
also against
innocent third parties whose misfortune it is to know something about
the trade, dealings, affairs or property of the
company
.’
(footnotes omitted) (emphasis added)
72.
Further, in dealing with the
argument that the mechanism of
sections 417
and
418
and its
employment was one whereby innocent outsiders, who played no part in
the management of the company or its demise, are,
inter
alia,
forced to go to a
place where they do not want to be; are forced to give evidence by
their own oral testimony and by the production
of documents; are
forced to reveal confidential information that they want to keep
private; are forced to produce their private
books and documents that
they want to keep confidential, the Constitutional Court in
Bernstein,
supra,
had the following to say:
“
..directors, officers of
the company generally, auditors of the company and certain outsiders,
have a duty to assist a
section 417
enquiry achieve its objects. This
duty has been voluntarily assumed by such persons entering into their
respective relationships
with the company.
Section 417(2)
permits
interrogation concerning any matter referred to in
section 417(1).
The latter section refers to any director or officer of the company
or person known or suspected to have in his possession any
property
of the company or believed to be indebted to the company, or any
person whom the Master or the court deems capable of
giving
information concerning the trade, dealings, affairs or property of
the company. In effect the section permits questions
to be asked in
connection with property, claims or the trade, dealings, affairs or
property of the company.
The scope of the interrogation in terms
of section 417(2) of the Act must, however, be informed by the
purpose of the enquiry
.
In so far as the purpose is
concerned with the discovery of information which may be to the
financial benefit of the the company
and relates to the proper
winding-up of the the company, as more fully analysed above, the
scope of the questioning is limited
to this purpose.
” (own
emphasis)
73.
The
liquidators utilized the mechanism provided in ss 414 and 415 to
obtain information required to independently assess and/or
verify the
value of the company in liquidation’s shareholding in SPG,
which, as is common cause or at least not in dispute
on the papers,
comprises a significant asset in the insolvent estate.
As
the court in
Bernstein
recognised,
it is the function of a liquidator or administrator to do his best
for the creditors. I can see nothing improper in
a liquidator seeking
to obtain as much information as is reasonably required for purposes
of assessing
,
on an informed basis,
[49]
the
value of an asset forming part of the insolvent estate for purposes
of liquidating same for the ultimate financial benefit
of the
concursus
creditorum
.
74.
The PWC report appears to have
raised more questions than answers, precipitating a need for further
interrogation of the current
value of SPG and in turn, the value of
the company in liquidation’s shares. As circumstances evolved,
the question of the
applicable date of the valuation became
particularly contentious in the light of the judgment of Unterhalter
J, which in turn gave
rise to the need to determine the
current
or present-day value of SPG and that of the company in liquidation’s
shareholding in SPG.
75.
Significantly, by the time the applicants’
filed their replying
affidavit in the main application, they acknowledged that ‘
The
[main] application does not seek to limit the liquidators to only the
documents available to an ordinary shareholder, this is
obvious
because the liquidators have already obtained via the liquidation
process considerably more documentation than an ordinary
shareholder
would be entitled to in the absence of litigation and associated
discovery obligations..’
76.
Despite the applicants’ evidence that they
willingly
co-operated in the insolvency inquiry process by attending the
adjourned hearings (albeit at inconvenience to witnesses
involved)
and providing documentation (such that they allegedly had), as sought
in terms of the various subpoenas, the first respondent’s

answering affidavit sets out several instances, supported by
corroborating evidence, where requests made for information and
documentation
required by the liquidators to ascertain the current
value of the company in liquidation’s shareholding, both before
and
after the publication of the PWC report, were not met. This is
aside from the fact that undertakings given by representatives of
SPG
and those of its auditors to provide subpoenaed documents, which were
ordered by the second respondent to be produced, were
on the
unrefuted version of the liquidators, not all provided.
77.
The
liquidators have provided detailed reasons in paragraph 18 of the
answering affidavit for why the documentation sought (both
prior to
the launch of the counter-application and thereafter) is required by
them. None of those facts were engaged with or specifically
addressed
by the applicants in their affidavits. The allegations in the
answering affidavit cast doubt on the veracity and reliability
of the
valuation arrived at by PWC in its report.
[50]
It has not been suggested by the applicants that the information that
has been sought over an extended period of time by the liquidators

and which is now sought in these proceedings, was or is not relevant
or material for a determination of SPG’s true value
and
concomitantly, a fair and reasonable current market value of the
company in liquidation’s shareholding in SPG. Rather,
their
case is premised on the fact that the liquidators were able to made
offers of sale in respect of the company in liquidation’s

shareholding, first in 2015 and later in 2018, which according to the
applicants, means that the liquidators must have valued the
shares –
therefore, so it was contended, the liquidators have no further need
for information or documentation regarding
the value of the shares or
the holding of a further inquiry, since the object thereof, namely,
to place a value on the said shareholding,
has thus fallen away.
78.
The applicant’s above stance however fails
to account for the
case put up by the liquidators in their papers concerning the need to
determine the
current
value of the company in liquidation’s
shareholding. It also fails to account for the fact that the PWC
valuation pegged the
valuation date at 30 April 201
5
, being
the date on which a forced sale event envisaged in the now defunct
shareholders agreement was said to have occurred. The
applicable date
of valuation, however, remains a controversy between the parties,
given that the applicants still rely in these
proceedings on that
self-same historic date on which to fix the value of the shares in
these proceedings. Sans a valid shareholders
agreement providing for
a date of valuation linked to a forced sale event, that date is no
longer relevant, that is, unless reliance
is placed by the applicants
on the provisions of the amended MOI. It seems to me to be fairly
obvious that the applicants are effectually
relying, without saying
so in so many words, on the provisions of the new MOI for determining
a value of the shares in question
at a retrospective date, being the
date on which a forced sale event was said to have occurred. And it
is
that
very standpoint that informs the s163 relief that is
being sought by the liquidators in the counter-application, a point
to which
I shall return later in the judgment.
79.
The
Applicants seek, ‘in the context of the documents already
provided, the value established by the liquidators and the entire

factual matrix of the oppressive enquiry on SPG and third parties’,
to limit the liquidators’ rights to obtain further
information
or documents from SPG to those that an ordinary shareholder would be
entitled to in terms of the
Companies Act, having
regard to ‘the
peculiar facts’ of this matter. The applicants point out in
their replying affidavit that this court
is not asked to pronounce on
the rights of all possible witnesses in insolvency enquiries, but to
exercise its discretion to limit
access to what is described in
generic terms (but without specificity) as the ‘sensitive and
confidential’ information
of SPG.
[51]
80.
The ‘peculiar facts’ relied on are,
inter alia,
that:
80.1.
SPG willingly obtained ‘independent’
valuations from Mazars and PWC;
80.2.
The
liquidators refused to participate in the PWC valuation process and
eventually rejected the PWC valuation, allegedly ‘without

informing SPG of the basis for such rejection’, relying
instead, on their own preferred valuation obtained from Zeelie;
[52]
80.3.
The
liquidators had sufficient information at their disposal to arrive at
a value of the shares, evidenced by their ability to make
two
separate offers for the sale of Illima shares to SPG on two separate
occasions, the first of which was made in 2015
[53]
for
the sum of R1 million, and the second of which was made in 2018 for
the sum of R 1.25 million after the liquidators had obtained
two
lever arch files worth of SPG documents under subpoenas issued in the
ongoing
ss 414
&
415
insolvency enquiry; The liquidators
therefore do not need further documents to value the shares, as they
have already valued them;
80.4.
SPG obtained an opinion from Prof Harvey
Weiner, whose affidavit is attached to the replying affidavit as
annexure ‘MD1’,
to the effect that PWC had ‘more
than sufficient information for a valuation of the shares in 2015, in
the form of the PWC
‘factual memorandum’; As such, the
applicants’ contend that there is no need for the liquidators
to obtain more
info or documents from SPG, as ‘
a
leading expert in the field of valuations has pronounced that quite
sufficient information was available in the factual memorandum
of
PWC, which… the liquidators have been in possession of for a
number of years.’
81.
In the light of these facts, the applicants
contend that the purpose for holding an enquiry (i.e., to place a
value on the company
in liquidation’s shareholding) has fallen
away as a value has already been established by the liquidators (per
Zeelie valuation),
as supported by the offers that were made by the
liquidators to sell the shares to SPG at specific prices, and by SPG
(PWC valuation),
as supported by the opinion of Prof Weiner and as
duly adjusted by him.
82.
The
above facts must, however, be considered in the light of the broader
context. Firstly, the PWC valuation obtained by SPG remains
disputed
by the liquidators on what appears to me to be not unreasonable or
untenable grounds in the answering affidavit.
[54]
Inter
alia
,
the liquidators dispute the value attributed to the shares by PWC is
either market related, fair, reliable or accurate, given
that PWC was
furnished with incorrect information and was also not apprised of
material information,
inter
alia
,
in relation to the outcome of litigation pertaining to the Gautrain
project or the outcome of proceedings between BCJV and BCC,
which,
according to the unrefuted version of the liquidators, is likely to
have had a material bearing on the valuation of the
shares by PWC.
83.
Moreover, the liquidators point out that ‘
at
the end of SPG’s financial year on 30 June 2020, it [SPG] had a
net asset value in excess of R1.4 billion. This is a substantial
net
asset value and as the company in liquidation holds some 11% of the
shareholding therein that shareholding is worth a lot more
than what
SPG is offering for those shares. This again underscores the fact the
shares are not being fairly valued by SPG.
”
It must be remembered that the value of the shares, which the
applicants contend has already been established by the liquidators
as
a basis to inform their offers of sale, thus allegedly obviating the
need for further insolvency enquiries, was in fact rejected
by the
applicants, with
Zeelie’s valuation remaining in dispute
and the ultimate appraisal of the true value of the shares remaining
a point of contention
between the parties. Since the Zeelie valuation
was not accepted by the applicants, it stands to reason therefore
that the true
value of the shares was required to be interrogated by
the liquidators, with the true value being established through a
transparent
process wherein the liquidators would be afforded the
same right of access to information about the company (SPG, its
subsidiaries
and associated companies) which bears upon the value
of
the SPG group, and concomitantly, the proportionate shareholding of
The company in liquidation in SPG, but which information
it has been
prevented from accessing, leading to the launch of the
counter-application. Ultimately, the first respondent’s
case
has consistently been that the applicants are withholding relevant
financial information which is necessary to determine the
fair
present day value of the shares.
84.
Secondly, the applicants have not engaged
with the facts put up in the answering affidavit regarding the impact
and effect of the
forced sale provisions in the shareholders
agreement upon which all the valuations secured by SPG (including
that obtained from
PWC, as supported Prof Weiner) were predicated. It
is quite evident from the PWC report that Human (the PWC valuator)
had pegged
the value of the shares in question on the date on which a
forced sale event occurred, as envisaged in the forced sale
provisions
contained in the purported SPG shareholders agreement,
which provisions the applicants have steadfastly sought to rely on
and apply,
the validity of which, however, formed the basis of an
ongoing dispute between the parties that emerged as early as 2014,
and which
eventually culminated in court proceedings to determine its
outcome. The dispute was finally resolved in favour of the first
respondent
when, in 2018, Unterhalter J held that no valid and
binding shareholders agreement had ever come into existence. This
carried the
immediate consequence that the stance adopted by the
liquidators since 2014 was vindicated and that the date on which the
forced
sale event under the now defunct shareholders agreement
occurred, being the date on which the value of the shares was fixed
in
accordance with the forced sale provisions contained therein (as
applied in the valuations obtained from both Mazars and PWC,) could

not be invoked or relied on by the applicants, who could also not
force a sale of the shares at the value they held at such historic

date. Simply stated, without any forced sale mechanism regulating the
valuation methodology, there was nothing preventing the liquidators

from seeking to procure a sale of the shares on the open market,
based on their current value at the time of any such sale, as
would
be the case in any commercial transaction, subject only to the
pre-emptive rights of the remaining shareholders of SPG as
provided
for both in the then extant articles of association of SPG and now in
its subsequently amended MOI.
85.
Thirdly, as demonstrated in the first respondent’s
papers, the valuations obtained by the parties several years ago have
become
outdated, given that, for obvious reasons, they fail to
account for any verifiable increase (or decrease) in the value of the
shares
during the intervening period.
86.
Fourthly,
the applicants’ argument loses sight of the fact that
that
Zeelie provided only a provisional value to the liquidators for
purposes of making an offer of sale in respect of the shares
in
2015.
[55]
T
he
price which the liquidators were prepared to accept in terms of their
respective offers was one with which they were ostensibly
satisfied,
based on the information available to them at the time (within the
context of a liquidation) as would be the position
with any sale
concluded as between a willing seller and willing buyer on the open
market in such circumstances. Although the first
offer was closely
aligned with the estimated value placed by Zeelie on the shares (on
the basis of information accessed by him
at the time), it must be
remembered that Zeelie made it known in his report that he lacked
certain information with which to value
the shares more
comprehensively.
[56]
The
second offer appears to have been based merely upon an estimation of
the value of the shares at the time, taking account of
the price paid
by SPG for its acquisition of additional shares in BCC.
[57]
87.
As I am not called upon in these proceedings to
determine whether the computation of the value placed on the shares
or the methodology
employed by one or another valuator is reliable or
correct, a determination of which would in any event be inappropriate
on motion,
given that material disputes that have arisen in the
papers in relation to the vastly disparate valuations obtained by the
respective
parties, it is neither apposite nor possible to decide
which of the valuations are to be preferred for purposes of resolving
the
prevailing impasse between the parties.
88.
Fifthly, on the applicants’ own version,
they co-operated with
the insolvency inquiry process instituted in terms of the old
Companies Act by
appearing on the appointed days for each of the
hearings conducted before the second respondent. On each occasion,
undertakings
were furnished by persons subpoenaed to provide the
documents or information subpoenaed and orders for the provision of
the documents
and information were given by the second respondent.
After undertakings were furnished at the inquiry convened on 18
September
2010, the applicants, in a
volte face,
decided to
renege on their undertakings. They now allege, rather audaciously in
my view, that the subpoenas issued under the auspices
of enquiries
conducted under ss414 and 415 of the 1973 Act, amounted to
‘overreach’ (were unduly broad) or that the
convening of
further inquiries constitutes an abuse by the liquidators of their
powers under the relevant statutory provisions,
this, in
circumstances where the applicants: (i) have not applied to set aside
the subpoenas either on the basis that they were
issued without
proper cause or for an illegitimate purpose or because they
constitute an abuse of process or that they were issued
without the
presiding officer (second respondent) having properly applied his
mind to what the liquidators contended was reasonably
required; (ii)
have not sought a review the insolvency proceedings currently
underway in terms of ss 414 and 415, as was incumbent
upon them to do
if they wished to challenge the legitimacy thereof on the basis that
the statutory mechanism in old
Companies Act that
caters for the
production of information, was being used for improper purposes;
(iii) have not complained that the presiding officer
failed to
exercise his discretion in the manner provided by the Act (in
authorising the various subpoenas) or in ordering the agreed

production of documents; (iv) have not themselves applied to court to
determine the fair market value of the company in liquidation
shares
in question; and (v) have not seriously challenged the ambit of the
provisions of ss 414 and 415 or suggested that the provisions
of ss
414 and 415 of the old
Companies Act are
not broad enough to cover
the type of information sought in the counter-application and (vi)
have not seriously challenged the
relevance or justifiability of the
information sought in the counter-application.
89.
It must be stressed that the applicants have not
pertinently denied or sought to engage with the facts put up by the
first respondent
in the answering affidavit, more specifically, those
material aspects set out in paragraph 17 of the answering affidavit
which
bear upon on the acceptability, veracity or reliability of the
PWC valuation or indeed the facts provided in the answering affidavit

to ground the liquidators’ belief that the value of the shares
are higher than the price offered by SPG (R47.8 million),
regard
being had to the audited financial statements of SPG for the year
ending on 30 June 2020 (Annexure ‘TH72’ to
the
liquidators replying affidavit), including what the liquidators term
as ‘flaws in Wainer’s conclusion’, as
highlighted
by Zeelie in his affidavit (annexure ‘TH74’ to the
liquidators replying affidavit). All these aspects have
a bearing on
the relief sought in the counter-application and in part inform the
grounds of opposition to the relief sought in
the main application.
90.
Before
turning to the
s163
relief sought in the counter-application, it is
necessary to deal with an argument raised on behalf of the
applicants, namely,
that
the production of documents and information sought by the liquidators
constitutes an abuse of the
ss 414
and
415
process. Reliance was
placed on
Thorne
[58]
(and authorities there cited) for the contention that the liquidators
have impermissibly sought to carry on the business of the
company in
liquidation without the sanction of creditors or the Master and have
moreover sought to delay the realisation of the
relevant shares in
order to extract a ‘commercial bargain’ at a price
dictated by them, in conflict with their duty
to act reasonably and
to liquidate the insolvent’s assets expeditiously. By
‘commercial bargain’ I understand
the argument to refer
to an advantageous offer.
91.
There are several difficulties with the above contention.
Firstly,
there is no admissible evidence on the papers to support the
proposition that the liquidators do not have the sanction
of the
Master or creditors in adopting the chosen course. Any allegations to
this effect remain nothing more than inadmissible
speculation.
Secondly, had the information sought for purposes of verifying the
value of SPG (so that a verifiable value of the
company in
liquidation’s shares could be ascertained) been provided to the
liquidators voluntarily (or pursuant to the inquiries
conducted) the
realisation of the shares would no doubt have been achieved earlier
rather than later. The information was not voluntarily
provided.
Hence the need for invoking the statutory mechanism in order to
obtain such information. This is also not discounting
the fact that
time was taken up by the pursuit of litigation in relation to the
dispute surrounding the validity of the shareholders
agreement, which
meant that until that dispute was finally resolved, the basis upon
which the realisation of the asset could occur,
remained unresolved.
Thirdly, the case of
Thorne
is in any event distinguishable on
its facts. That case concerned a complaint regarding the Trustee’s
fees. The Trustee had
continued to conduct the insolvent’s
business without the authority of the Master or resolutions of
creditors. In those circumstances,
the Master exercised a discretion
in reducing the tariff pertaining to the Trustee’s fees.
92.
In the
present case, the liquidators have made out a case that they have
formed a considered view, based on facts set out in the
answering
affidavit, supported by Zeelie’s expert opinion, that the price
offered by SPG for the company in liquidation’s
shares is below
its current market value and that a better price is to be obtained.
There is, after all, no requirement in law
that obliges liquidators
to sell an assets as quickly as possible at a price that is believed,
based on cogent facts, to be considerably
below its true market
value. The liquidators are required to do what is best for the
creditors and this would entail attempting
to secure the best
possible price for the shares commensurate with the true and fair
market value thereof. I cannot find anything
unreasonable or untoward
in the conduct of the liquidators in circumstances where they
consider, as in the present case, that more
information is required
to determine the present day value of the shares so as to enable them
to sell the asset at the best possible
price for the benefit of the
concursus
creditorum,
particularly
since the present-day value of the company in liquidation’s
shareholding has not yet been determined by any valuator
to date. The
liquidators believe that SPG’s current value has likely
increased by virtue of the settlement of the Gautrain
litigation, the
acquisition by SPG of further shares in BCC
,
and, not least of all, having regard to its recent financial
statements, and they thus ought to be placed in an informed position

to verify same. Such an approach would serve the legitimate purpose
of discovery of information which may be to the financial benefit
of
the company in liquidation, inuring to the ultimate financial benefit
of the
concursus
creditorum
,
as alluded to in
Bernstein
[59]
and thus cannot be said to amount to an abuse of the liquidators’
statutory duties.
93.
For all the reasons given, I cannot find that the
applicants have
established an entitlement to the relief sought in the main
application.
Section
163
relief
94.
During oral argument presented at the hearing of
the matter, counsel
for the applicant submitted that the relief sought by the applicants
in the main application has to a large
extent become subsumed by the
s163
relief sought (by SPG) in the counter-application.
95.
At the risk
of repetition, it will be remembered that a composite affidavit was
filed by the applicants, both in reply to the answering
affidavit
filed in the main application and in answer to the founding affidavit
filed in the counter-application. In such affidavit,
the applicants
seek relief in terms of
s163
of the new
Companies Act
[60]
for an order which effectively authorises a forced sale of the shares
to ‘a qualifying BBBEE’ third party at a price

commensurate with the value attributed to the shares by PWC in their
report (which determined the value as at 30 April 2015)
[61]
and which, after adjustment by Prof Wainer in 2021 (pursuant to the
settlement of the BCJV claim) increased the value of the shares
from
R8.1 million to R59.7 million. According to Prof Wainer, if a
minority discount of 20% is applied to the adjusted amount,
as he
opines it should be in the absence of a shareholders agreement, then
the value of the company in liquidation’s shareholding
in SPG
would be R47.8 million. This is the price which the applicants
contend for in the draft order proposed by them in their
composite
affidavit, being a price that they allege is commensurate with the
‘fair value’ of the shares, such value
having been
determined at a historic date in 2015.
96.
As regards
the relief sought by the applicants in their replying/answering
affidavit, the first respondent argues,
in
limine
,
that ‘the applicants impermissibly purport to seek new,
allegedly (but not truly) ancillary relief in terms of
ss163(1)
and
163
(2)
[62]
of the 2008 Act.’
97.
The basis
for s 163 relief sought by the applicants in their replying/answering
affidavit is summarised in the applicants’
heads of argument,
as follows: ‘…
there
is no obligation on SPG to purchase Ilima’s shares. It,
however, seeks closure to the practice of harassment to which
it has
been subject and it is voluntarily willing to make the purchase at a
reasonable price using the date on which the liquidators
were obliged
to accept the offer as the valuation date…
’
without the applicants, however, disclosing in their papers, a
legitimate or justifiable basis upon which the liquidators
were
‘obliged’ to accept the PWC valuation, given that the
said valuation was disputed for the reasons advanced in
the answering
affidavit (and in correspondence preceding the launch of the main
application), which impact upon the veracity or
reliability of the
PWC valuation, in circumstances where the applicants failed to make
any real effort to respond to the substance
of either the contents of
Zeelie’s report or the reasons advanced by the liquidators for
rejecting the PWC report.
[63]
98.
Be that as
it may, the first respondent objects to the applicants introducing or
seeking such relief – which was not prayed
for in their notice
of motion or addressed in their founding affidavit - on the basis
that it raises an entirely new case in reply.
This is because the
founding affidavit in the main application was concerned with the
ambit of inquiries convened in terms of the
provisions of the old
Companies Act;
[64
]
whether the
production of documents sought thereunder was justified by the
provisions of
ss 414
and
415
; and the restriction, if any, to be
imposed on the exercise of the wide powers afforded to liquidators
under the provisions of
the old
Companies Act to
investigate the
existence (including the value) of an asset during the course of the
winding up an insolvent estate. This, says
the first respondent, is
in stark contrast to the order now sought by the applicants in their
composite replying/answering affidavit
for the compulsory sale of the
company in liquidation’s shareholding in SPG via the back door
of an application brought by
the first respondent, as shareholder of
SPG, in terms of
s 163
of the new
Companies Act for
just and
equitable relief as a result of the recent amendment of the SPG MOI.
99.
The
applicants contend that since the counter-application was brought in
terms of s 163(1) of the 2008 Act, the court is thus considering
an
application as envisaged in that section, and hence it has, by
operation of s 163(2), the power to make any order it considers

fit.
[65]
The applicants allege
that a fitting order is one whereby the company in liquidation is
compelled to sell its shares to a qualifying
BBBEE (third) party at
the value determined by PWC in their 2016 report, as adjusted by prof
Wainer in February 2021, being R47.8
million.
100.
The basic
thrust of the first respondent’s point
in
limine
is
that the relief sought by applicants in their replying/answering
affidavit could not be considered or granted as their notice
of
motion did not provide therefore and moreover, the applicants failed
to move for an appropriate amendment of the notice of motion.
There
is established authority for this proposition,
[66]
subject to the exception that an order in terms other than that set
out in the notice of motion but which is: (i) clearly indicated
in
the founding affidavit; (ii) is established by satisfactory evidence
on the papers; and (iii) the basis therefor has been fully
canvassed
i.e., the party against whom such relief is to be granted has had the
fullest opportunity of dealing with the claim for
relief being
pressed, may be entertained by the court
[67]
101.
In
Johannesburg
City Council
,
[68]
the Full Court had occasion to consider what ‘further or
alternative’ relief encompasses. There it was held that:
“
The
applicant's counsel misconceived his position in thinking that the
original notice of motion could possibly suffice. This was
probably
based on a mistaken view of the effect of the prayer for alternative
relief. The law regarding the necessity for an appropriate
amendment
of the claim under such circumstances and the limits of a prayer for
alternative relief, is contained in the following
passage from the
judgment of TINDALL JA in
Queensland Insurance Co Ltd v Banque
Commerciale Africaine
1946 AD 272
at 286:
‘
In regard to
the judgment for £2 450, in my opinion, the plaintiff was not
entitled to claim it on the action as framed. The
action is based on
the policy; the claim for £2 450 is based on the compromise
arising from the acceptance of the tender
in the alternative pleas.
The prayer for alternative relief does not help the plaintiff over
the difficulty. It is unnecessary
to consider whether the practice of
including such a prayer is derived from the Roman-Dutch or the
English practice. In the Roman-Dutch
practice according to Van
Leeuwen RDL5.15.8, this prayer (the so-called clausule salutaire
asking for such other relief as the
Court may deem best for the
plaintiff) is of such effect that every right to which the
plaintiff may in any way be entitled
upon the allegations in his
claim, is thereby considered to be included in the prayer. See also
Voet 2.13.13 and Van der Linden
Jud Pract 2.3.7 vol 1 at 147. The
effect of the prayer for 'such further or other relief as the nature
of the case might require'
in the English practice seems to be the
same. See Cargill v Bower 10 ChD502 at 508, in which FRY LJ
pointed out
that the prayer for alternative relief is
limited by the statement of fact in the declaration and by the terms
of the express claim,
and that a plaintiff cannot get, under the
prayer for alternative relief, anything that is inconsistent with
those two things
…’
In
Hirschowitz
v Hirschowitz
1965
(3) SA 407
(W)
at 409 VIEYRA J applied these principles to motion proceedings. The
prayer for alternative relief is to my mind, in modern practice,

redundant and mere verbiage. Whatever the Court can validly be asked
to order on papers as framed, can still be asked without its

presence. It does not enlarge in any way ‘the terms of the
express claim’, as pointed out by TINDALL JA (
op
cit
).”
102.
In my view, the order for a forced sale as sought by the applicants
in
their composite replying/answering affidavit, does not meet the
threshold for consideration as required by the authorities quoted

above. No evidence in support of a claim for a forced sale, in the
terms proposed, is provided in the applicants’ founding

affidavit. But even if I were to consider such a claim on the basis
proposed by the applicants, the following factors would militate

against its grant: Firstly, the relief is predicated upon an
acceptance of the PWC valuation even though it has been disputed on

grounds that
prima facie
do not appear to me to be
unreasonable or unjustifiable so that they should be summarily
discounted; Secondly, it presupposes that
a forced sale will
necessarily resolve the current
impasse
between the parties
where the very notion of a forced sale, based on an outdated
valuation, remains a hotly contested issue; and
thirdly, I am in any
event not persuaded that the impugned order is just and equitable in
the peculiar circumstances, for reasons
that will become apparent
later in the judgment.
103.
That brings me to the relief sought by the first respondent in the
counter-application,
namely, a declarator that in terms of section
163(2)(h) of the Companies Act, 71 of 2008 (‘the 2008 Act’),
the provisions
of clause 27 of the Memorandum of Incorporation of
SPG, as approved at the General Meeting of shareholders of SPG on 30
June 2020,
do not apply to the shareholding or sale of such
shareholding held by The company in liquidation Group (Pty) Ltd (in
liquidation)
(‘The company in liquidation’) in SPG.
104.
On the case put up by the liquidators, they encountered resistance by

the applicants to being afforded access to financial information of
SPG which is both relevant and material to arriving at an informed

and responsible assessment of the present-day valuation of the
company in liquidation’s shareholding in SPG. The applicants

resist such an outcome on the basis that the PWC valuation is correct
and that the liquidators acted unreasonably in failing to
accede to
the applicants’ views and the resultant valuation as performed
by their appointed valuator.
105.
As I have already found, without the amendment to SPG’s MOI,
and
without a shareholders agreement in existence providing for a
forced sale mechanism, the applicants had no right to dictate a
forced
sale of the shares at a forced sale price determinable on the
date on which a forced sale event occurred. On the contrary, the
liquidators had a right to negotiate a sale of the shares on the open
market, with whomever they chose, in order to secure the best
price
possible, subject only to the pre-emptive rights of co-shareholders
to acquire the shares on no less favourable terms. That
is, after
all, why the liquidators pursued the insolvency inquiries to obtain
information necessary to establish the fair market
value of the
shares.
106.
In terms of the clause 27 of the amended MOI of SPG:
“
27.1.
A Shareholder shall be deemed to have committed an act of insolvency,
winding up or business rescue if:
27.1.1.
save for solvent re-organisation or reconstruction, it is wound up,
provisionally or finally, or is placed under provisional
or final
judicial management; or
…
27.2.
If a Shareholder commits an act of insolvency, winding up or business
rescue, then:
27.2.1.
Upon receipt by the Defaulting Shareholder, (or its statutory
representative), of written notice from those Aggrieved Shareholders

whose aggregate Equity Proportion inter se is not less than 50%,
a
Right to Call in respect of the Equity of the Defaulting Shareholder
shall be deemed to have arisen on the Business Day
immediately preceding the date of the event giving rise to the act of
insolvency
; and
27.2.2.
The purchase Consideration for the Forced Sale in this clause shall
be the Forced Sale Price.”
(emphasis
added)
107.
The ‘forced sale price’ is defined in clause 1.2.24 as:
“
the
price at which a Shareholder may become obliged to sell its Equity to
the other Shareholders after a Forced Sale Event has occurred
as expressed in this Agreement, which price shall mean a value
determined, in the first instance by written agreement between the

Shareholders or their representative, and failing such agreement
being reached within 5 (five) Business Days after written request
for
an agreed determination being delivered by any Shareholder to the
others, than by an independent Merchant Bank division of
any of the
largest 6 (six) commercial banks in South Africa to be appointed by
agreement between the Shareholders, or failing such
agreement by the
Chairman of the South African Institute of Chartered Accountants:
1.2.24.1,1.
which shall have reference to the value of the Equity in the open
market on a going concern basis as between a willing
purchaser and
willing seller;
1.2.24.1.2.
which shall give each party an opportunity to make written
submissions to him, concerning the manner in which the Forced
Sale
Price should be determined;
1.2.24.1.3.
which shall value the Shareholder's Loans at their face value;
1.224.1.4.
whose decision (save for manifest error) shall be final and binding
on the Parties; and
1.2.24.1.5.
whose costs of valuation shall be borne by the selling Shareholder(s)
on the one hand and the Call Shareholders on the
other hand in equal
shares, the liability of the Call Shareholders for their half of such
costs being in proportion to their Equity
Proportion Inter Se.”
(emphasis
added)
108.
In terms of clause 1.2.25, a ‘Forced Sale Event’ means:
“
any event
provided for in this MOI pursuant to which a Shareholder may become
obliged to sell its Equity to the other Shareholders,
other than a
voluntary sale.”
109.
The liquidators allege that the amendment of SPG’s MOI has the
unfairly prejudicial effect of: (i) depriving the liquidators of the
opportunity to negotiate a sale at the present day value of
the
shares; (ii) limiting the pool of prospective buyers to only
co-shareholders of SPG; (iii) imposing a methodology for determining

the value for the purpose of a forced sale of the shares at a
formulaic value; (iv) forcing consequences upon the first respondent

which were not there prior to the amendment in June 2020, which
amendment occurred only after the judgment of Unterhalter J in
2018,
by altering pre-existing conditions that regulated the sale of the
shares, resulting in the first respondent being deprived
of rights
which had already vested, one of which includes the right to
liquidate the shares at their current value; (vi) the amendment
of
the MOI is unfairly prejudicial to the first respondent (as minority
shareholder), with SPG seeking to procure a suppressed
value of the
shares on a contrived basis through the amendment of its MOI during
the process of the present ongoing litigation.
110.
These
allegations, which were met with a bald denial by the applicants in
their answering affidavit, do not in my view give rise
to a genuine
material dispute of fact, warranting acceptance of the applicants’
version on the application of the Plascon-Evans
test in motion
proceedings. As was stated in
Wightman:
[69]
“
A
real, genuine and
bona
fide
dispute of
fact can exist only where the court is satisfied that the party who
purports to raise the dispute has in his affidavit
seriously and
unambiguously addressed the fact said to be disputed
.
There will of course be
instances where a bare denial meets the requirement because there is
no other way open to the disputing
party and nothing more can
therefore be expected of him. But even that may not be sufficient if
the fact averred lies purely within
the knowledge of the averring
party and no basis is laid for disputing the veracity or accuracy of
the averment. When the facts
averred are such that the disputing
party must necessarily possess knowledge of them and be able to
provide an answer (or countervailing
evidence) if they be not true or
accurate but, instead of doing so, rests his case on a bare or
ambiguous denial the court will
generally have difficulty in finding
that the test is satisfied. I say ‘generally’ because
factual averments seldom
stand apart from a broader matrix of
circumstances all of which needs to be borne in mind when arriving at
a decision. A litigant
may not necessarily recognise or understand
the nuances of a bare or general denial as against a real attempt to
grapple with all
relevant factual allegations made by the other
party. But when he signs the answering affidavit, he commits himself
to its contents,
inadequate as they may be, and will only in
exceptional circumstances be permitted to disavow them. There is thus
a serious duty
imposed upon a legal adviser who settles an answering
affidavit to ascertain and engage with facts which his client
disputes and
to reflect such disputes fully and accurately in the
answering affidavit. If that does not happen it should come as no
surprise
that the court takes a robust view of the matter.”
111.
The introduction of clause 27 in SPG’s new MOI, given the
absence
of a valid shareholders agreement, and any reliance thereon
by SPG (and co-shareholders of the company in liquidation) by
retrospective
application of its provisions, when viewed within the
greater context of: (i) the history of the ongoing dispute
surrounding the
basis upon which the valuation of the company in
liquidation’s shareholding in SPG was conducted by PWC,
including the method
of valuation employed by it (based on the forced
sale provisions of an invalid shareholders agreement) and (ii) the
ongoing dispute
concerning the appropriate date on which the value of
the shareholding is to be determined for purposes of any sale of the
shareholding;
and (iii) the applicants’ intransigent insistence
on relying on a value determined as at April 2015, ostensibly to
avoid
disclosure of the true and present-day value of SPG; and (iv)
the liquidators’ various attempts to procure access to relevant

SPG company information and documentation to enable them to determine
or verify the fair current market value of the shareholding
in SPG on
an informed basis, which attempts have to date hereof been
unsuccessful, given that undertakings furnished by representatives
of
SPG and its auditors to provide the information and documentation
sought were later reneged upon without any proper explanation;
and
(v) the intransigent insistence by SPG to rely on the forced sale
provisions for purposes of fixing the valuation of the shares
at a
historic date, without regard for any increase (or decrease) in the
value of the shares during the intervening period until
the eventual
date of sale of the shares; and (vi) the occurrence of subsequent
events which may have had a material impact on the
present-day value
of the shares, will result in SPG seeking to procure a sale or
buy-out of the shareholding in question at a value
other than their
present-day worth, as has effectively been sought by the applicants
in these proceedings. I am persuaded that
any reliance on clause 27
of the MOI by SPG and the remaining shareholders of SPG will be
unfairly prejudicial to the creditors
of the company in liquidation
for the reasons stated in para 109 above, as envisaged in s163 of the
2008 Act.
112.
Furthermore, the amendment to the MOI will for obvious reasons, not
affect
shareholders equally if the provisions of the amended MOI were
to apply retrospectively (in so far as clause 27 thereof purports
to
allow this) and in so far as SPG relies thereon. As matters stand,
the only shareholder who will be affected in such event is
the
company in liquidation. By limiting the value of the shareholding to
a historic date in 2015 (as is the case in the PWC valuation),
no
account is taken of any increase in the value of the shareholding as
at the present date. Stated differently, limiting the value
of the
shares to that which pertained as at a historic date based on the
occurrence of a forced sale event, will inure only to
the benefit of
co-shareholders to the obvious prejudice of the
concursus
creditorum,
who will be deprived of the benefit of having the
shares offered for sale to a willing buyer at the present-day value,
subject only
to the pre-emptive rights of co-shareholders.
113.
The fact
that the court has a wide a discretion in making any order it
considers appropriate in terms of s 163, does not mean that
it should
grant the order as prayed for by the applicants. Section 163(1)(a)
deals with unfairly prejudicial conduct or conduct
which unfairly
disregards the interests of a minority shareholder and relates to
specific actions of the company and resolutions
of the shareholders
that have been passed or proposed. On an application under this
section, the court may, with a view to remedying
or bringing to an
end the mentor’s complaint, make any interim or final order it
considers appropriate. As noted in the case
of
Armitage
N.O.
[70]
,
‘The remedy under section 163 is aimed at balancing the
interests of all persons having an interest in a the company and
in
doing so, the legislator has given the courts a very broad
discretion, applying general standards of fairness, to decide these

cases on their merits. The court has the power to do what is
considered fair and equitable in all the circumstances of the case,

to put right and cure the unfair prejudice which the minority
shareholder has suffered at the hands of the majority of the the

company. It is empowered to make such order as it thinks fit for the
granting of the relief…”. In
Grancy,
[71]
it was held that the section must be construed in a manner that will
advance the remedy it provides, rather than limit it.
114.
It
is trite that a declaratory order is an order by which a dispute in
terms of the existence of some legal right or entitlement
is
resolved. The right can be existing, prospective or contingent.
[72]
115.
Given the protracted history surrounding the dispute concerning the
fair
value of the company in liquidation’
s
shares; the
judgment of Unterhalter J that eventually decreed the shareholders
agreement to be invalid, thereby vindicating the
approach hitherto
adopted by the liquidators; the timing of the amendment of the SPG
MOI to bring into play what SPG wanted but
failed to achieve through
a non-existent shareholders agreement, in order to procure an
alteration of pre-existing conditions that
were in place prior to the
amended MOI (where no forced sale provisions existed and no
restrictions were imposed on the sale of
the shares in question to
third parties (subject to shareholders’ pre-emptive rights);
the likely appreciation in the value
of the company in liquidation’s
shareholding in SPG between the date of its liquidation and the date
of the ultimate realisation
of its shareholding, as demonstrated in
the first respondent’s papers, it is my view that the majority
shareholders unfairly
sought to achieve a result which the court, per
Unterhalter J found not to subsist. In all these circumstances, I
have no doubt
as to the prejudicial effect of clause 27 of the new
MOI and have no hesitation in finding that the introduction thereof
has had
a result that is unfairly prejudicial to the sale of the
company in liquidation’s shareholding.
116.
In the result, I find that the first respondent has established its
entitlement
to the relief sought in the terms set out in its notice
of counter-application, as set out in paragraph 14 above.
Costs
117.
It is trite
that an award of costs is a matter that falls within the discretion
of the Court. A punitive costs order has been said
to be an
extra-ordinary one which may be imposed by reason of special
considerations, arising either from the peculiar circumstances
or the
conduct of a party during the litigation.
[73]
118.
In
Plastic
Converters
,
[74]
the court cautioned that the scale of attorney and client is one
which should be reserved for cases where it can be found that
a
litigant conducted itself in a clear and indubitably vexatious and
reprehensible matter. The term ‘vexatious’ was
considered
in the context of a punitive costs award in
Johannesburg
City Council
,
[75]
where the court expressed the view that proceedings may be regarded
as vexatious when a litigant puts the other side to unnecessary

trouble and expense which it ought not to bear. The Constitutional
Court affirmed this approach in
Public
Protector v SARB
,
[76]
stating that a punitive costs order is appropriate ‘in
circumstances where it would be unfair to expect a party to bear any

of the costs occasioned by the litigation’
[77]
and is designed ‘to mark the court’s displeasure at a
litigant’s conduct, which includes vexatious conduct and

conduct that amounts to an abuse of the process of court’.
[78]
119.
In this matter, I am persuaded that a punitive costs order is
warranted.
Without repeating what has already been stated, the fact
remains that the applicants did not appear to consider it oppressive
or
an abuse by the liquidators of their duties when they submitted
themselves at the insolvency inquiriy and furnished unconditional

undertakings to supply the information or documents requested
(thereby avoiding interrogation), only to later renege on such
undertakings
whilst generally continuing to obstruct the liquidators
from discovering the true and current value of SPG, ultimately
maintaining
that the liquidators were not entitled to the information
on indefensible grounds, thereby incurring costs which ought not to
have
been incurred.
120.
For all the reasons given, the following
order is granted:
ORDER
1.
The main application is dismissed with
costs, such costs to include the costs of two counsel
.
2.
The late filing of the answering affidavit
in the main application is condoned.
3.
The counter-application succeeds. In this
regard:
a.   It is
declared that in terms of section 163(2)(h) of the Companies Act, 71
of 2008 (‘the 2008 Act’),
the provisions of clause 27 of
the Memorandum of Incorporation of SPG, as approved at the General
Meeting of shareholders of SPG
on 30 June 2020, do not apply to the
shareholding or sale of such shareholding held by The company in
liquidation Group (Pty) Ltd
(in liquidation) (‘The company in
liquidation’) in SPG;
b.   It is
declared that the documents and records sought by the first
respondent at ‘insolvency enquiry’
proceedings held at
the Krugersdorp Magistrates Court on 23 March 2018 and 15 June 2018
respectively, fall within the category
of documents to which the
first respondent is legally entitled to in terms of sections 414 and
415 of the Companies Act, 1973,
(‘the 1973 Act’) and are
to be provided to the first respondent;
c.   The fifth
applicant is to provide the documents, listed in annexure ‘B1.3’
to the Notice of Counter-Application,
to the first respondent;
d.   The first
to fourth applicants are to provide the documents, listed in annexure
‘C’ to the Notice of
Counter-Application, to the first
respondent;
e.
The first to fifth applicants are to pay
the costs of the counter-application on an attorney and client scale,
such costs to include
the costs of two counsel.
A.
MAIER-FRAWLEY
JUDGE
OF THE HIGH COURT,
GAUTENG
DIVISION, JOHANNESBURG
Date
of hearing:

14 June 2021
Judgment
delivered

13 September 2021
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email and publication
on
Caselines. The date and time for hand-down is deemed to be have been
at 10h00 on 13 September 2021.
APPEARANCES:
Counsel
for Applicants

Adv. L. Morrison SC, together with
Adv T Scott
Attorneys
for Applicants
Knowles
Hussein Lindsay Attorneys
Counsel
for First Respondent:      Adv A. Subel SC,
together with
Adv J. Hershensohn
Attorneys
for First Respondent:    Lawtons Africa Attorneys
[1]
In
annexure ‘TH6”, the liquidators provide a timeline of
events which took place since the launch of the main application

wherein they outline the various attempts made by them to engage
with SPG ‘in order to arrive at an amicable resolution
of the
matter, including a resolution of the disputes relating to the
information and documentation that the liquidators seek
from the
applicants’.
[2]
See:
Asla
Construction (Pty) Ltd v Buffalo City Metropolitan Municipality
2017
(6) SA 360
(SCA)
,
paras
11 & 15.
[3]
Van
Wyk v Unitas Hospital and another
[2007] ZACC 24
;
2008
(2) SA 472
(CC) at 477 A-B. There, the court stated that factors
relevant to the enquiry as to whether it is in the interests of
justice
to grant condonation include, but are not limited to,
the
nature of the relief sought, the extent and cause of the delay, the
effect of the delay on the administration of justice and
other
litigants, the reasonableness of the explanation for the delay, the
importance of the issue to be raised and the prospects
of success.
[4]
See
for example:
Santa
Fe Sectional Title Scheme NO 61/1994 Body Corporate v Bassonia Four
Zero Seven CC
2018
(3) SA 451 (GJ) at 454F-G;
Madinda
v Minister of Safety and Security, Republic of South Africa
2008
(4) SA 312 (SCA).
[5]
Grootboom
v National Prosecuting Authority and Another
2014
(2) SA 68
(CC), para 51.
[6]
I incline towards the approach adopted by Wepener J in
Pangbourne
Properties v Pulse Moving
2013
(3) SA 140
GSJ where the answering affidavit was filed out of time,
as too, the replying affidavit. At par 18, the learned Judge
concluded
that : “…
in
the matter under consideration all the papers are before me and the
matter is ready to be dealt with. To uphold the argument
that the
replying affidavit and consequently also the answering affidavit
fall to be disregarded because they were filed out
of time will be
too formalistic and an exercise in futility and will leave the
parties to commence the same proceedings on the
same facts de novo…’
See
too:
Transafrican Insurance Co Ltd v
Maluleka
1956 (2) SA 273
(A) at 278
F-G.
[7]
The
applicants allege in para 2.4 of the replying affidavit that the
liquidators objective in opposing the main application is
not to get
more information on the value of the shares in question but
mala
fide ‘to keep the pressure up on SPG and its shareholders to
pay Ilima their price for the shares, not to find out
any more about
value.
’
[8]
See
Annexure ‘MD5” to the founding affidavit in the main
application.
[9]
As is apparent from the Mazars valuation (Annexure ‘MD7’
to
the founding application in the main application), Mazars was
appointed by the call shareholders in terms of clause 24.2 of
the
SPG shareholders agreement ‘to arrive at a fair market value
of the shares’ in SPG ‘for the purposes of
a sale by SPG
shareholders in terms of clause 24 of the shareholders agreement.’
In their report, Mazars pointed out that
‘
It
should be noted that the application of clause 24.2 would result in
a lower value of SPG should SPG be valued at the date when
the said
shareholder committed an act of insolvency. As a result we have
performed the valuation as at 31 March 2014…’.
It
was further recorded therein that the valuation was based on
‘management information, annual financial statements and
in
accordance with the shareholders agreement.’
[10]
See: Mazars valuation, under the rubric: ’Conclusion’.
[11]
These
provisions set out the process for a forced sale of an insolvent
shareholder’s shares in SPG to other SPG shareholders
and
provide the methodology for a valuation of such shares,
inter
alia
,
providing for an agreed valuation or if that is not possible, a
valuation by an independent merchant banker or chartered accountant

appointed by written agreement between the shareholders and whose
decision (save for manifest error) ‘shall be final and

binding’ upon the parties.
[12]
The value of R5.4 million was determined on the basis that the
company in liquidation held only a 10% shareholding in SPG.
[13]
See
Annexure
“MD9” to the applicants’ founding affidavit. In
their letter of 14 November 2014, the liquidators,
inter
alia,
disputed
that:- (i) a binding shareholders agreement was in existence; (ii)
the process pertaining to the sale of the shares was
to be governed
by the forced sale provisions of the said shareholders agreement;
and (iii) Mr Gelderblom, a director of SPG,
had been properly
nominated, constituted or appointed to be The company in
liquidation’s agent for purposes of giving effect
to clause 25
in the shareholders agreement.
The
basis for the dispute is more fully articulated in paragraphs 14 and
15 of the answering affidavit filed in the main application
There
the liquidators point out,
inter alia,
that two separate valuations in
respect of the value of SPG had been procured from Mazars by SPG,
one in June 2013 for purposes
of acquiring the shares of one
‘Manana’ and one in May 2014 relating to the sale of the
company in liquidation’s
shares. The June 2013 the valuation
of SPG (relating to the Manana shares in SPG) was indicated as being
between R315.2 million
and R326.6 million, whereas only a year
later, the valuation of SPG (relating to the company in
liquidation’s shares in
SPG) was indicated as being between
R62 million and R74 million, i.e., less than 20% of the valuation
relating to the Manana
shares, this, in circumstances where the net
asset value of SPG, as recorded in the Statement of Financial
Position of SPG for
2014, was some R550 117,693. The
liquidators point out that such figure was regarded by the directors
of SPG as well as
the auditors of SPG to have fairly represented the
value of SPG at the time, yet it differed substantially from both
the valuations
relating to the Monana shareholding and the company
in liquidation’s shareholding in SPG. To put this in proper
perspective,
the net asset value for June 2014 was the equivalent of
809% (more than 8 times) the average valuation by Mazars of SPG at
the
same date. Upon becoming aware of this, the liquidators became
suspicious as to why they had been provided with such low valuations

in respect of the company in liquidation’s shareholding, more
particularly, having regard to the R5.4 million that the
third
applicant had placed on the value of the shareholding for purposes
of implementing a forced sale, as per his letter of
23 June 2014.
[14]
The
judgment of Unterhalter J is contained in Annexure ‘TH10’
to the answering affidavit filed in the main application.
[15]
Annexure
‘TH24’ to the answering affidavit in the main
application (a duplication of Annexure ‘MD12 to the founding

affidavit).
[16]
Per
Annexure
‘MD14’ to the founding affidavit filed in the main
application. In this letter, the liquidators reiterated
their
stance,
inter
alia,
that: (i) since no SPG shareholders’ agreement, as signed by
all shareholders of SPG, had by then been produced, it remained
in
dispute that a legally binding SPG shareholders agreement had been
concluded; (ii) the authority of the directors of SPG to
instruct
PWC to determine the fair market value of the company in
liquidation’s shareholding in SPG was accordingly disputed;

and (iii) it was further disputed that PWC was properly authorized
to proceed with the valuation.
[17]
This included legal processes and ongoing negotiations with the
Gauteng Province relating to Gautrain aspects, which, as noted

earlier, included, among others, claims by the Gauteng Province
against BCJV and/or
BCC
and
vice
versa
.
It appeared to the liquidators, from a reading of the PWC factual
memorandum and valuation, that PWC had not been fully apprised
of
SPG’s involvement in the Gautrain project, as detailed in
paragraph 17.6 of the answering affidavit. It also appeared
from
documents in their possession and various discussions held by them
with some of the role-players in Gautrain that BCC had
been involved
in both arbitration and court proceedings with the Gauteng Province
and that documentation and information relating
to those
proceedings, which would have increased the valuation being
performed by PWC, may have been withheld by SPG from PWC,
as
detailed
in paras
17.8.6
to 17.8.9 of the answering affidavit. Further conduct on the part of
SPG in causing selected claims to be taken into account
by PWC (such
as a claim by the Gauteng Province against BCJV and a claim by BCJV
against SPG), which claims reduced the value
of SPG, without
disclosing the settlement negotiations that were taking place
between the relevant stakeholders or the outcome
thereof, which
would have impacted upon the valuation of SPG, are set out in
paragraphs 17.8.10 to 17.10 of the answering affidavit.
Claims by
the Gauteng Province against BCC/BCJV as well as claims by BCC/BCJV
against the Gautrain Province were not provided
for in the PWC
factual memorandum or its valuation report. This led to concerns by
the liquidators that the audited financial
statements of SPG did not
represent the true state of affairs of SPG for reasons given in para
17.11 of the answering affidavit.
[18]
See
Annexure
‘TH25.1’ to the answering affidavit in the main
application. Mr Human of PWC records therein that he conducted
a
valuation of SPG as at 30 April 2015, based on a forced sale event
that SPG indicated to him took place on 30 April 2015.
[19]
See
Annexure
‘TH25.2’ to the answering affidavit in the main
application (being a duplication of annexure ‘MS20’
to
the founding affidavit). PWC recorded therein that, based on clause
24 of the shareholders’ Agreement and “
representations
made to us by SPG and their representatives, we understand that a
forced sale event has occurred and a determination
of the forced
sale price is required. The forced sale price is defined in the
Shareholders’ Agreement as ‘the price
at which a
shareholder may become obliged to sell its equity to other
Shareholders after a Forced Sale event has occurred…which

price shall be the Fair Market Value.’
The
Fair Market Value was defined in the Shareholders’ Agreement
as,
inter
alia,
as
a determination (in the absence of agreement between the
Shareholders) of the value of the equity by an independent Merchant

Bank or a Chartered Accountant, which,
inter
alia,
shall have reference to the value of the Equity in the open market
on a going concern basis as between a willing purchaser and
a
willing seller, with no deduction being made for it being a minority
interest and which decisions by the valuator shall (save
for
manifest error) be final and binding on the parties. The report
further records that “…
in
accordance with our letter of engagement dated 29 July 2015, we have
determined the fair market value of the ordinary shares
of SPG held
by Ilima on a non-marketable, controlling basis,
on
the assumption that the forced sale event took place on 30 April
2015 and with reference to the relevant provisions of the

Shareholders’ Agreement.
According to the company
[SPG]
the
valuation will be binding on the parties concerned…as we are
required to assume a transaction in an open market on
a going
concern basis as between a willing purchaser and a willing buyer, we
applied a marketability discount of 15% to derive
the fair market
value of the equity of SPG…”
(own
emphasis)
The
effective date of the valuation was 30 April 2015, which, as
indicated in par 17.8.1 of the answering affidavit, the liquidators

assumed was to correspond with SPG’s attempted forced sale
process (as outlined in the PWC report).
[20]
According
to the liquidators, the PWC was furnished to them only on 22 August
2016, however, nothing significant turns on this.
[21]
This
allegation was not dealt with by the applicants in their replying
affidavit and remains unrefuted.
[22]
The
applicants object to the content of the discussions, more
particularly, Human’s acknowledgement, as being inadmissible

hearsay. They have not, however, disputed that the said meeting took
place at which the said discussions with Human occurred.
C
onfirmatory
affidavits by Canny and Zeelie were provided by the first respondent
in support of the allegations. The report by
Human is not considered
for the truth of its content, rather as a basis to explain why the
liquidators reacted in the way that
they did upon receiving the
information, i.e., in rejecting the PWC valuation.
[23]
The ostensible reasons therefore were more fully set out,
inter
alia,
in
paragraphs 17.8.6 to 17.20 of the answering affidavit.
[24]
See
para 29 and fn 13 above.
[25]
The
non-existence of the shareholders agreement would perforce have a
material effect on the valuation as indicated
inter
alia,
in
paras 12.4; 14.2 to14.4; and 17.5
to
17.6 of the answering affidavit.
[26]
See para 17.5 of the answering affidavit and annexure “TH
25.2” thereto. The valuation was published on 5 April 2016

when it was sent to the directors of SPG, per annexure ‘MD 20’
to the applicants’ founding affidavit I am mindful
that t
he
applicants state, in para 42 of the founding affidavit, that that
the PWC valuation was provided to the liquidators on 31 May
2016,
but this is not borne out by annexure ‘MD20’, contrary
to what has also been contended in para 33 read with
fn 30 of the
applicants’ heads of argument.
[27]
See p
ara
17.6 of the answering affidavit.
[28]
See
para 17.4 of the answering affidavit.
[29]
See paras 17.14; and 17.14.1 to 17.14.2 of the answering affidavit.
[30]
See
annexure ‘MD2” to the applicant’s composite
replying/answering affidavit.
[31]
The legitimacy of the examination process provided for in the
inquiry instituted under section 415 of the old Companies Act was

not questioned or challenged by SPG or other persons who were
subpoenaed to appear thereat, either in the course of the insolvency

proceedings or in these proceedings, whether on the basis that it
might be or was being used for improper purposes or on any
other
basis.
[32]
The
first subpoena was issued on 3 November 2015 whilst the Mazars
valuation was underway. The liquidators attached same as Annexure

‘TH 42’ to their papers.
Inter
alia,
a
copy of the
signed
shareholders
agreement was subpoenaed, including the securities register of SPG.
To date, the complete securities register has
not been provided to
the liquidators.
[33]
The last of the five subpoenas that were issued in this period prior
to the launch of the main application, related to an inquiry
that
was scheduled to be held at the Krugersdorp Magistrates’ Court
on 15 June 2018, which was eventually postponed to
9 November 2018.
[34]
Per
the schedule contained in annexure ‘TH51’ to the
answering affidavit.
[35]
See
annexures “TH53’ to ‘Th56”. Written requests
were made on 20 August 2018; 22 August 2018; 7 September
2018 and 13
September 2018.
[36]
Section
391 reads:
“
A
liquidator in any winding-up shall proceed forthwith to recover and
reduce into possession all the assets and property of the
the
company, movable and immovable, shall apply the same so far as they
extend in satisfaction of the costs of the winding-up
and the claims
of creditors, and shall distribute the balance among those who are
entitled thereto.”
[37]
Sections
414, 415, 416 and 417 of the old Companies Act, read with ss 64-66
of the Insolvency Act.
[38]
Ferreira
v Levin NO and Others, Vryenhoek and Others v Powell NO and Others
1996
1 BCLR 1
(CC),
paras. 122-124.
[39]
Lynn
NO and Another v. Kreuger and Others
1995
(2) BCLR 167
(N)
at 170 D - F per Hurt J.
[40]
Swart
and Others v Fourie and Others
(2488/2017)
[2017] ZAWCHC 58
(22 May 2017), para [21] read with fn
3.
[41]
See
Ferreira
supra
at paras 115-120 and
Roering
NO and Another v Mahlangu and Others
2016
(5) SA 455
(SCA) at para 20 and note 5.
[42]
Cloverbay
Ltd v. Bank of Credit and Commerce International SA
[1991]
1 All ER 894
(CA)
at 900e.
In
Re
Rolls Razor, Ltd
[1968]
3 All ER 698
(ChD)
at 700 it was held that the
position
under section 236 of the Insolvency Act 1986 is broadly the same as
that under section 268 of the Companies Act. The
court held that:
‘
The
powers conferred by s. 268 are powers directed to enabling the court
to help a liquidator to discover the truth of the circumstances

connected with the affairs of the company, information of trading,
dealings, and so forth, in order that the liquidator may be
able, as
effectively as possible and, I think, with as little expense as
possible ... to complete his function as liquidator,
to put the
affairs of the company in order and to carry out the liquidation in
all its various aspects, including, of course,
the getting in of any
assets of the the company available in the liquidation. It is,
therefore, appropriate for the liquidator,
when he thinks that he
may be under a duty to try to recover something from some officer or
employee of a the company, or some
other person who is, in some way,
concerned with the the company's affairs, to be able to discover,
with as little expense as
possible and with as much ease as
possible, the facts surrounding any such possible claim.’
[43]
Re
Rolls Razor Ltd (No. 2)
[1969]
3 All ER 1386
at
1396 - 1397.
[44]
Bernstein
and Others v Bester NO and Others
[1996]
ZACC 2
;
1996
(2) SA 751
(CC),
1996
(4) BCLR 449
,
at
paras 24-25 the Constitutional Court recognized that a proportionate
approach is indicated – the more obvious and important
the
need for investigation in the peculiar circumstances, the more
rigorously the provisions can fairly and legitimately be applied.
[45]
The
Promotion of Access to Information Act, 2000
.
[46]
Henochsberg
on the
Companies Act 71 of 2008
, authored by Piet Delport.
[47]
See
Roering
NO and Another v Mahlangu and Others
2016
(5) SA 455
(SCA) at para 21. The Supreme Court of Appeal pointed out
that whilst
the
Constitutional Court in both
Ferreira
and
Bernstein
said
that our courts must be astute to prevent enquiries in terms of
ss 417
and
418
from being used as an instrument of abuse, it
did not seek to expand on the meaning of that expression…
What constitutes
an improper forensic advantage will depend upon the
circumstances of each case…
the
fundamental issue in determining whether there is abuse is whether
the enquiry is being used for a purpose not contemplated
by the
Act
…’
(at paras 35, 36 and 37). (own emphasis)
[48]
Section
414(2)
reads,
in relevant part, as follows:
“
The Master of
officer who is to preside or presides at any meeting of creditors,
may subpoena any person-
(a)
who is known or on reasonable grounds believed
to be or to have been
in possession of any property which belongs or belonged to the the
company… or who in the opinion
of the Master or such other
officer may be able to give material information concerning the the
company or its affairs, in respect
of any time before or after the
commencement of the winding-up, to appear at such meeting, including
any such meeting which has
been adjourned, for the purpose of being
interrogated; or
(b)  who is known
or on reasonable grounds believed to have in his possession or
custody or under his control any book or
document containing any
such information as is referred to in paragraph (a), to produce that
book or document or an extract therefrom
at any such meeting or
adjourned meeting.
(c)  …”
Section 415(2)
reads, in relevant part, as follows:
“
The Master or
officer presiding at any meeting of creditors of a the company which
is being wound-up and is unable to pay its
debts, may call and
administer an oath to or accept an affirmation from …any
other person…who was or might have
been subpoenaed in terms
of section 414(2)(a), and the Master or such officer and any
liquidator of the the company …may
interrogate the…person
so called…concerning all matters relating to the the company
or its business or affairs
in respect of any time, either before or
after the commencement of the winding-up, and concerning any
property belonging to the
the company: Provided that the Master or
such officer shall disallow any question which is irrelevant or
would in his opinion
prolong the interrogation unnecessarily.”
[49]
See
O’Neill
v Phillips
[1999]
UKHL 24
, PRA 10, WHERE THE House of Lords (per Lod Hoffman) set out
the manner in which an offer to purchase shares at a fair value
should
be calculated. There, the following was said:
“
In
the first place, the offer must be to purchase the shares at a fair
value. This will ordinarily be a value representing an
equivalent
proportion of the toal issued share capital, that is, without a
discount for its being a minority holding…
Secondly, the value,
if not agreed, should be determined by a competent expert…
Thirdly, the offer
should be to have the value determined by the expert as an
expert…the object should be economy and expedition,
even if
this carries the possibility of a rough edge for one side or the
other (and both parties in this respect take the same
risk) compared
with a more elaborate procedure…
Fourthly,
the offer should…
provide
for equality of arms between the parties. Both should have the same
right of access to the information about the company
which bears
upon the value of the shares
and
both should have the right to make submissions to the expert
…”
(own emphasis)
[50]
This
raised a material dispute of fact on the papers. I cannot conclude
that the first respondent’s version, which laid
out in detail
a reasonable
basis
for disputing the veracity or accuracy of the PWC valuation,
was
palpably
implausible, far-fetched or so clearly untenable, so that the court
is justified in rejecting it on the papers
.
See
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA)
at para 26;
See
also
Media
24 v Oxford University Press
2017
(2) SA 1
(SCA),
and
Malan
and Another v Law Society Northern Provinces
[2008]
ZASCA 90; 2009 (1) SA 216 (SCA).
[51]
Curiously,
a significant part of the applicants’ heads was devoted to an
argument that seeks to persuade this court to accept
the proposition
that a liquidator representing an insolvent shareholder ought not to
be entitled to information beyond that which
the new
Companies Act
allows
an ordinary shareholder to access from a the company. That
proposition, interesting as it may be, does not pass muster in the
light of the various authorities referred to above.
[52]
The
directors of SPG however likewise rejected Zeelie’s valuation,
having considered same to be ‘over-inflated’
without
addressing the substance of the report.
[53]
It is clear from the timeline sketched above that t
he
liquidators’ offer in 2015 was made after the Zeelie valuation
procured by the liquidators.
[54]
As earlier noted, t
he
liquidators’ reasons for refusing to accede to or participate
in the PWC valuation process were also previously set out
in a
letter dated 17 September 2015, Annexure ‘MD14” to the
founding affidavit in the main application.
[55]
This
is corroborated in Annexure “TH6’ to the answering
affidavit
.
[56]
Although
the Zeelie valuation was rejected by SPG as being ‘over-inflated’,
no reasons were provided in the papers
to ground such opinion.
[57]
See
Annexure ‘TH58” to the answering affidavit. being a copy
of the letter referred to in para 44 above, the contents
of which
(on the first respondent’s version in para 19.35 of the
answering affidavit) raised facts which the liquidators
could not
verify independently because they did not have the relevant
documentation.
[58]
Thorne
v The Master
1964
(3) SA 38
at p.50B to 51D. There, inter alia, the following was
said: “
The
essence of the matter in relation to the realisation of the assets
of an insolvent estate is that the trustee takes the estate
as he
finds it and converts it into cash which he distributes to the
creditors. It is no function of his to speculate with the
assets in
the hopes of improving their value, whether by delaying realisation
or by expending money upon them. In
Walker
v Brunt, N. O.
,
17 C. T. R. 669 at p. 670, HOPLEY, J., said:
'Now
it appears to me that when an insolvent surrenders an estate he
surrenders it as it is at the time of his insolvency, and
the
creditors must make the best of it in their own interests. The
liabilities of the insolvent are stated and fixed and determined

upon the day of the sequestration, and are not to have subsequent
additions by large sums of money, however meritorious the object
may
be for which they have been expended.'
Even
where creditors desire a postponement of realisation, there are
limits upon their rights in this regard. See
Wilkins v Pieterse
,
1937 C. P. D. 165 at p. 171, where DAVIS, J., approved the passage
from Mars on
Insolvency
which appears in the 5th ed. at
p. 263, reading as follows:
'Creditors
do not enjoy unlimited rights with regard to such sale. Thus, the
underlying principle of the law being to provide
for a speedy
realisation of the whole of the estate assets, though creditors can
authorise a gradual realisation and thus delay
the sale a reasonable
time, or that the realisation shall be postponed for a short period,
they cannot postpone such sale indefinitely.'
“
[59]
See
para 72 above.
[60]
The
order proposed and sought by the applicants is that:
“
1.
The company in liquidation is directed to sell to a qualifying BBBEE
party its shares in SPG for the fair market value consideration

thereof determined by PWC in their report dated August 2016, duly
adjusted by Professor Wainer in February 2021, being R47.8
m (forty
seven million eight hundred thousand rand) payable within such time
as may be agreed upon between The company in liquidation
and that
qualifying BBBEE party.
2.
The company in liquidation is to pay the costs on an attorney and
client scale.”
[61]
It
will be remembered that PWC valued SPG at R69 Million as at 30 April
201
5
on
the basis that an additional R746 million would be added if the BCJV
claim, based on a contribution sought from SPG in the
form of a cash
call, was unsuccessful. This meant that The company in liquidation’s
shares were valued at R8.1 million
plus 11.784% of R746 million, on
a contingent basis by PWC. The contingency in the valuation was
resolved sometime in 2020, enabling
SPG to instruct Prof Wainer to
make the required adjustment, which he did per his report dated 9
February 2021 (annexure “MD1’
to the applicants’
affidavit). The report calculates the adjusted amount as R59.7
million and applies a deduction of 20%
in respect of The company in
liquidation’s minority shareholding, arriving at a figure of
R47.8 million, ostensibly on
the basis that the now defunct
shareholders agreement (which allowed for the value of the
shareholding to be determined - in
a forced sale scenario - without
any deduction being made for minority status) no longer applies.
[62]
Sec
163(1) of the 2008 Act reads:
“
163.(1)
A shareholder or a director of a the company may apply to a court
for relief if—
(a) any act or omission
of the the company, or a related person, has had a result that is
oppressive or unfairly prejudicial to,
or that unfairly disregards
the interests of, the applicant;
(b) the business of the
the company, or a related person, is being or has been carried on or
conducted in a manner that is oppressive
or unfairly prejudicial to,
or that unfairly disregards the interests of, the applicant; or
(c)
the powers of a director or prescribed officer of the the company,
or a person related to the the company, are being or have
been
exercised in a manner that is oppressive or unfairly prejudicial to,
or that unfairly disregards the interests of, the applicant.”
Section 163(2) of the
2008 Act reads, in relevant part:
“
(2) Upon
considering an application in terms of subsection (1), the court may
make any interim or final order it considers fit,
including—
…
(e) an order directing
an issue or exchange of shares;
…
(h) an order varying or
setting aside a transaction or an agreement to which the the company
is a party and compensating the the
company or any other party to
the transaction or agreement;
…”
[63]
I
can in any event not find, on the evidence presented, that by
convening an inquiry and the issuing of subpoenas under the

provisions of the old
Companies Act, the
applicants were ‘harrassed’
into revealing sensitive and confidential the company information,
leading to a ‘
hopson’s
choice’
– to either either accept the liquidators’ price for the
shares or else face an ‘unending’ insolvency
inquiry for
the production of more and more documents for purposes of
determining or verifying the value of SPG and concomitantly
the
value of The company in liquidation’s shares in SPG.
[64]
i.e,
in terms of
ss 414
and
415
of the old
Companies Act.
[65
]
Section
163(1
)
reads, in relevant part:
“
A
shareholder or director of a the company may apply to court for
relief if-
(a) any act or omission
of the the company, or a related person, has had a result that is
oppressvie or unfairly prejudicial to,
or that unfairly disregards
the interests of, the applicant;
(b)…
(c)…"
Section
162(2)
reads, in relevant part:
“
Upon
considering an application in terms of subsection (1), the court may
make any interim or final order it considers fit, including-
…
(e) an order directing
an issue or exchange of shares;
…
(h) an order varying…an
agreement to which the the company is a party
(i) an order requiring
the the company, within the time specified by the court, to produce
to the court or an interested person
financial statements in a form
required by this Act, or an accounting in any other form the court
may determine;
…”
[66]
See:
Adendorffs
Boerderye v Shabalala & others
(997/15)
[2017] ZASCA 37
(29 March 2017) at para2 20 & 24;
Municipal
Workers Retirement Fund v Kopanong Local Municipality
(A67/2019)
[2019] ZAFSHC 159
(19 September 2019);
Mgoqi
v City of Cape Town & another
2006 (4) SA 355
(CPD) at paras [10] - [13
[67]
See
for example:
Port
Nolloth Municipality v Xhalisa
1991 (3) SA 98
(C) at 112C-E where the following was said:
““
Finally,
there remains the question of Municipality’s right to an order
in the limited form as sought by Mr Barnard on its
behalf by way of
the prayer for ‘further and/or alternative relief’. Such
a prayer can be invoked to justify or entitle
a party to an order in
terms other than that set out in the notice of motion (or summons or
declaration) where that order is
clearly indicated in the founding
(and other) affidavits (or in the pleadings) and is established by
satisfactory evidence on
the papers (or is given), cf Trustees of
the Orange River Land and Asbestos Co v King and Others 6 HCG 260 at
296-297. Relief
under this prayer cannot be granted which is
substantially different to that specifically claimed, unless the
basis therefor
has been fully canvassed, viz the party against whom
such relief is to be granted has been fully apprised that relief in
this
particular form is being sought and has had the fullest
opportunity of dealing with the claim for relief being pressed under

the head of ‘further and/or alternative relief.”
[68]
Johannesburg
City Council v Bruma Thirty-two (Pty) Ltd
1984 (4) SA 87
(T) at 92G-93G
[69]
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
2008
(3) SA 371
(SCA), para 13.
[70]
Armitage
N.O v Valencia Holdings 13 (Pty) Ltd and Others
(2315/2017),
an unreported decision of matojane J, para 42.
[71]
Grancy
property ltd v manala and Others
2015
(3) SA 313
(SCA).
[72]
See:
Suid-Afrikaanse
Onderlinge Brand- en Algemene Versekeringsmaatskappy Bpk v Van den
Berg
1976
(1) SA 602 (A).
[73]
See:
Nel
v Davis SC NO
[2016]
JDR 1339 (GP) at para 25.
[74]
Plastic
Converters Association of South Africa on behalf of Members v
National Union of Metalworkers of SA
[2016]
ZALAC 39
; [2016] 37 ILJ 2815 (LAC) at para 46.
[75]
Johannesburg
City Council v Television & Electrical Distributors (pty) Ltd
and Another
1997
(1) SA 157
(A) at 177D-E.
[76]
Public
Protector v SARB
[2019]
ZACC 29
;
2019 (9) BCLR 1113
(CC) at para 144.
[77]
Public
Protector v SARB,
para
221
.
[78]
Public
Protector v SARB,
para
223.