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[2021] ZANCHC 13
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Modise and Others v Sekgoro and Others (1898/2019) [2021] ZANCHC 13 (12 March 2021)
IN THE HIGH COURT OF SOUTH
AFRICA,
NORTHERN CAPE DIVISION,
KIMBERLEY
Reportable/Not reportable
Case No: 1898/2019
In the matter between:
SAMUEL MOTLAPELE
MODISE
FIRST APPLICANT
NTHABISENG JAQUELINE
MASAO
SECOND APPLICANT
TEKO MORENENG SCHALK
PADISHO
THIRD APPLICANT
JOHN
LANDELLA
FOURTH APPLICANT
and
DANIËL
MABE SEKGORO
FIRST RESPONDENT
THE COMMISSIONER: COMPANIES &
INTELLECTUAL PROPERTY
COMMISSION
SECOND RESPONDENT
Heard:
09 February 2021
Delivered:
12 March 2021
Judgment: THE APPLICATION FOR
LEAVE TO APPEAL
PHATSHOANE AJP
[1] This
is an application for leave to appeal the whole of my judgment and
order dated 30 October 2020
in terms of which:
1.1
Mr Daniël Mabe Sekgoro, the first respondent, was declared to
have been
duly appointed the director and shareholder of Kgaraga
Investment Company, Registration No: 1998/000603/07, since 23
December 2015.
1.2
The Commissioner of Companies and
Intellectual Property Commission (CIPC) was authorised and directed
to do all things necessary
to effect amendments to
CIPC
records by erasure of the names of Mr Samuel Motlapele Modise, Ms
Nthabiseng Jaqueline Masao, Mr Teko Moreneng Schalk Padisho
and Mr
John Landella, the first to fourth applicants, as directors and
shareholders of Kgaraga Investment Company.
1.3
The applicants were ordered to pay the costs of the application,
jointly and
severally, the one paying, the other to be absolved
[2] The
Judgment and order is attacked on three primary grounds. It was
contended for the applicants that
I erred in finding that:
2.1
Mr Sekgoro had the necessary
locus standi
to bring the
application and had followed correct procedures in vindicating his
rights;
2.2
the non-joinder of the directors in their official capacity, the
company and its shareholders
was inconsequential to the order sought
by Mr Sekgoro and in relying on
Hülse-Reutter
& others v Gödde
[1]
to justify the non-joinder
of the company.
It was further argued that I
erred in awarding costs against the applicants in their personal
capacity in the circumstances where
Mr Sekgoro represented himself.
[3] In
the main application the present applicants, who were the
respondents, filed seven-page-long heads
of argument. In the current
application the heads of argument run to 30 pages. They traverse
several sections of the Companies
Act, 71 of 2008 (“the Act”)
and canvass some questions of law which were never argued during the
main application.
I must also add that the heads deviate a bit to
capture some additional evidence which does not address any of the
grounds of appeal.
I have pointed out in the primary judgment that Mr
Sekgoro’s melancholy that his company was hijacked by the
applicants was
met with bare denials. In submissions, a belated
attempt is made by the applicants to amplify their unsubstantiated
denials to
argue that in terms of s 213 of the Act it is an offence
to disclose confidential information concerning the affairs of any
other
person. This of course, has no bearing on any of their grounds
of appeal.
[4]
As captured in para 5 of the main judgment Mr Sekgoro lodged a
complaint with the CIPC, concerning the
takeover or hijacking of
Kgaraga Investment Company,
which issued an
inspectors report on 24 February 2020. The report succinctly sets out
the background as foreshadowed in the main
judgment. It is important
to detail the contents of the report. It reads in part:
“
On
30 August 2019 a letter (Annexure B) was written and sent to the
directors of the company requesting them to provide copies of
documents that were submitted to CIPC in the application for the
removal of Mr Sekgoro as a director. A response from the directors
was required by 6 September 2019 but no response nor acknowledgement
was received by the inspector, the same letter was resent
to the
company on 13 September 2019 and still no response was received. On
13 September 2019 the inspector contacted one of the
directors Mr.
Landela to verify his email address, but he instead provided an
alternative email address …@gmail…for
the inspector to
send the letter. On 20 September 2019 Mr. Landela sent an email and
attached documents that were submitted to
remove Mr. [Sekgoro] as a
director (Annexure C).
The
documents that were submitted are:
·
CoR Form
dated 19/03/2019
·
A copy of the
resolution of a meeting held on 11 March 2019 signed by John Landela
Wilco Kaith, Peko Padisho, Nthabiseng J, Khomo,
Allen Rhoda,
Nomathemba Landela and Sam Modise.
·
A copy of an
affidavit by John Landela
·
A letter
authorising Mr. Chineme Ogu to submit forms to CIPC
·
Meriting
Investments (Proprietary) Limited share certificate
·
Certified id
copy of Ogu Chineme
·
Certified id
copy of Samuel Motlapele Modise certified by Chineme Ogu
·
Certified id
copy of John Landela
·
Certified id
copy Padisho Schalk
·
Certified id
copy Nthabiseng Masao
According
to Section 71 of the Act a director may be removed by an ordinary
resolution passed at a shareholders meeting and before
the
shareholders may consider such resolution, the director concerned
must be given a notice of a meeting and the resolution, he
must be
given an opportunity to make a presentation in person or through a
representative.
Section
71(8) states that if the company has fewer than three directors, the
company must approach the Companies Tribunal for determination.
Conclusion
When
Samuel Modise resigned as a director on 6 February 2016, Daniel Mabe
Sekgoro became the only director in the company.
Mr.
Sekgoro was removed in a resolution passed at a shareholder’s
meeting where the majority of the current directors were
also
appointed as directors,
effectively the company only had Daniel
Sekgoro as a director. The Company should have followed the
provisions of Section 71(8)
in applying for the removal of Mr.
Sekgoro
.
Recommendations
It
is recommended that: the Commissioner approves the inspector’s
report on Kgaraga Investments Company (Pty) Ltd.
It
is recommended that copies of the report be given to Daniel Sekgoro
and to the current directors of Kgaraga Investments Company
(Pty) Ltd
as required in terms of Section 170(2)(b) of the Act.
It
is recommended that the company reverse the removal of Daniel Mabe
Sekgoro as a director in Kgaraga Investments Company (Pty)
Ltd and
reinstate him as a director. The company after having complied with
the provisions of Section 71 of the Act and the requirements
for a
removal of a director by CIPC, can consider filing a new application
for the removal of Daniel Mabe Sekgoro.”
[5]
Section 170 of the Act deals with the outcome of the inspector’s
investigation referred to above
as follows:
“
(1)
After receiving the report of an inspector or
independent investigator, the Commission or Panel, as the case may
be, may-
(a)
excuse
any person as a respondent in the complaint, if the Commission or
Panel considers it reasonable to do so, having regard to
the person's
conduct, and the degree to which the person has cooperated with the
Commission or Panel in the investigation;
(b)
refer
the complaint to the Companies Tribunal, or to the Commission or the
Panel as the case may be, if the matter falls within
their respective
jurisdictions in terms of this Act;
(c)
issue
a notice of non-referral to the complainant, with a statement
advising the complainant of any rights they may have under this
Act
to seek a remedy in court;
(d)
in
the case of the Commission, propose that the complainant and any
affected person meet with the Commission or with the Companies
Tribunal, with a view to resolving the matter by consent order;
(e)
commence
proceedings in a court in the name of the complainant, if the
complainant-
(i) has
a right in terms of this Act to apply to a court in respect of that
matter; and
(ii) has
consented to the Commission or Panel, as the case may be, doing so;
(f)
refer
the matter to the National Prosecuting Authority, or other regulatory
authority concerned, if the Commission or Panel, as
the case may be,
alleges that a person has committed an offence in terms of this Act
or any other legislation; or
(g)
in
the case of-
(i) the
Commission, issue a compliance notice in terms of section 171; or
(ii) the
Panel, refer the matter to the Executive Director, who may, among
other things, issue a compliance notice
in terms of section 171.
(2)
The Commission or Panel, as the case may be-
(a)
in
its sole discretion, may publish a report contemplated in subsection
(1); and
(b)
irrespective
whether it publishes such a report, must deliver a copy of the report
to-
(i) the
complainant, or a regulatory authority that requested the initiation
of the complaint;
(ii) any
person who was a subject of the investigation;
(iii) any
court, if requested or ordered to do so by the court; and
(iv) any
holder of securities, or creditor, of a company that was the subject
of the report, or any other person implicated
in the report, upon
payment of the prescribed fee.”
[6] It
can be safely assumed that the inspector’s report was forwarded
to the applicants, regard being
had to its recommendations that they
be furnished with copies. The applicants, as the purported directors
of the company, on one
hand, flatly refused to reverse the removal of
Mr Sekgoro as a sole director of Kgaraga Investment Company and to
reinstate him
as recommended by CIPC. The CIPC, on the other, did not
act in terms of s 170 of the Act. In the applicants own words: “it
is unbeknown to us if indeed the commissioner approved the report.”
The CIPC appears to have faded in the background.
[7]
In
Singh
and Others v The Companies and Intellectual Property Commission and
Others
[2]
the Court
held:
‘
[
26]
Whatever the situation may be with regard to a private action
launched in the High Court concerning contractual disputes, the
present dispute, which deals with the accuracy of company records,
falls within the jurisdiction of the Commission, namely
to
investigate a complaint. This function, as indicated, goes to the
heart of its mandate, namely to ensure the proper administration
of
the Act and compliance with the principles of good corporate
governance.
[27]
One would expect if there was an order of preference or priority
in relation to the competing fora, the statutory regulator
would
enjoy preference. The share register is, after all, a document in
which the world at large should have confidence. Thus,
the
Commission must be empowered to fulfil its obligations to ensure
accurate records of companies under its jurisdiction, the
fulfilment
of which is manifestly in the public interest. It stands to reason
that the Commission's powers to investigate a complaint
concerning
the accuracy of a company record must enjoy primacy over private
litigation involving companies.’
[8] The
facts in
Singh
(supra) are quite distinguishable from the
present because in that case the CIPC’s decision to actively
investigate the complaint
was stopped in its track through a review
application. The same cannot be said here. Following a period of nine
months of inaction
on the CIPC and the applicants’ side, since
the CIPC inspector’s report had been issued, Mr Sekgoro had no
other recourse
but to approach this Court to vindicate his right. The
CIPC is a party to this litigation. To date it has not filed any
response
to any of the issues raised in the papers and did not give
its perspective on the matter.
[9]
Apparent from their written submissions the applicants are making
inferences against themselves that
CIPC may have issued a compliance
notice against them in terms of s171 to comply with the
recommendations of the inspector. If
it is so that the CIPC has
issued a compliance notice that they reinstate Mr Sekgoro as a sole
director of the company, as recommended
by the inspector, it is
significant that a year later the applicants remain defiant. The
whole spectrum of conjecture in respect
of a compliance notice that
may or may not have been issued does not take the applicants’
case any further.
[10]
Mr Sekgoro, as found in the main judgment, had a direct and
substantial interest in the outcome of the litigation
because the
applicants took away his company from him. He was entitled to bring
this application in the manner he did. He could
not have brought it
in terms of s 174 of the Act as the applicant sought to argue because
the CIPC never issued to him a
notice of
non-referral in response to his complaint which would have entitled
him to apply to a court for leave to refer the matter
directly to the
court.
[11]
As regards the citation of the company, I stated in the main judgment
that this was an unusual case. It
concerned
an amendment to the company records allegedly in a clandestine
fashion and in complete disregard of the law. I have also
stated in
the main judgment that Mr Sekgoro may have cited the company as
either an applicant or respondent merely as a prudent
measure. I was
not swayed that failure to join the company rendered the application
fatally defective. Failure to cite the company
could not have been
prejudicial as no relief was sought against it. In view of the fact
that the company had been hijacked, where
would Mr Sekgoro have
served its papers and upon whom would he have done so. He could have
never cited the applicants as the official
directors of the company
or have served papers on them in that capacity because this would
have perpetuated
what
he believed to be an incorrect factual position.
[12]
What remains is the question of costs. The author AC Cilliers: Law of
Costs
[3]
states
the following on unrepresented persons seeking costs orders:
“
Where
such a litigant employs an attorney to assist him or her with the
preparation of an affidavit, the costs can be recovered
as a
disbursement. It has been held that, when granting an order of costs
in favour of a lay litigant, the court should not simply
use the word
“costs” but should rather make an order in terms of which
the lay litigant is awarded “costs limited
to actual
disbursements reasonably incurred”
[4]
.
[13]
In
Schwartz
v Goldschmid
1914 TPD 122
Curlewis J held:
“
I
find that in the appeal of
Chester
v Oldman
[
1914
TPD 67
],
to which Mr
Blackwell
has
referred, the appeal was upheld with costs, but the Court did not lay
down what costs. The Registrar informs me that the usual
practice is
to allow, in a case of this sort, the costs of the litigant who
appears in person, based on the scale of the costs
of a witness. I
think we ought to allow the respondent costs of appeal. His case has
been before the Court on several occasions
without being
reached. The respondent will therefore be entitled to costs, based on
the scale for witnesses' costs.’
[14]
Mr Sekgoro was represented by a firm of attorneys, Elliot Maris,
throughout the litigation. They filed all the
pleadings on his behalf
and withdrew on 11 August 2020, two days prior to the hearing of the
main application before me. He is
therefore entitled to his costs
which the applicants have to bear jointly and severally, in their
individual capacity, as I have
determined in the main judgment. The
order as to costs that I made does not lay down what costs. The
courts have frequently corrected
or supplemented their orders on
matters appertaining to costs.
[5]
Mr
Sekgoro’s costs’ are his actual disbursements or expenses
reasonably incurred.
[15]
There is no merit in the applicants’ argument that the costs
order should not have been made against them
in their individual
capacity. They were cited on that basis and opposed the application
in the same way.
[16]
In terms of
s 17(1)(a)(i)
and (ii) of the
Superior Courts Act, 10 of
2013
, leave to appeal may only be given where the judge or judges
concerned are of the opinion that the appeal
would
have a
reasonable prospect of success; or there is some other
compelling reason why the appeal should be heard. In my view,
the
applicants did not satisfy the threshold for granting leave to
appeal. It follows that their application for leave should fail.
In the
result, I make the following order:
Order
1.
The application for leave to appeal is dismissed.
2.
The first to the fourth applicants are to pay the
costs of the application for leave to appeal limited to actual
disbursements reasonably
incurred, jointly and severally, the one
paying the other to be absolved.
MV
Phatshoane AJP
Appearances:
For
1
st
to 4
th
applicants:
Adv J.K Mongala
Instructed
by: Althea Le Roux Attorneys
For
the respondent
(in person
): Mr DM Sekgoro
[1]
2001
(4) SA 1336
(SCA)
at
1346A-C.
[2]
2019
(5) SA 432
(SCA) at para 26-27
[3]
Butterworths, Third
Edition, 1-7 Issue 32 para 1.03C.
[4]
Nationwide
Detectives & Professional Practitioners CC v Standard Bank of
Namibia
Ltd
2008 (6) SA 75
(Nm) at 82.
[5]
See
Herbstein and Van Winsen: The Civil Practice of the High Courts and
The Supreme Court of Appeal of South Africa, 5th Ed, 2009 ch35-p927
III The
inherent power of the court to supplement, clarify or correct its
own judgment.