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[2019] ZAGPPHC 103
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Public Investment Corporation Soc v Companies & Intellectual Property Commission (15315/2019) [2019] ZAGPPHC 103 (26 March 2019)
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO.: 15315/2019
26//3/2019
In the matter between:
PUBLIC INVESTMENT CORPORATION SOC
et al
Applicants
and
COMPANIES
& INTELLECTUAL PROPERTY COMMISSION
et
al
Respondents
JUDGMENT
VAN DER
WESTHUIZEN, J
[1] This application came
before me as a matter of urgency. It concerns the issue
by the
respondent, the Companies & Intellectual Property Commission
(CIPC), of a compliance notice in terms of the provisions
of section
171 of the Companies Act, 71 of 2008 (the Act), to the applicant, the
Public Investment Corporation SOC (PIC), or its
board, on 21 February
2019. The notice stipulated compliance therewith to be before or on
15 March 2019.
[2] The issue is whether
the issued compliance notice is defective and stands to be set
aside,
or whether it ought to be suspended pending a review of that notice
in the normal course.
[3] In terms of section
171(5) of the Act, an issued notice of compliance remains in
force
until set aside, either by the Companies Tribunal, or a Court.
Hence this application.
[4] Much of what PIC
contends is common cause, or not seriously disputed by CIPC.
However, CIPC has launched a counterapplication for the modification
of the notice in certain respects.
[5] The notice requires
PIC, and not its board to whom the notice is directed, to recover
R4,3 billion from Ayo Technology Proprietary Limited (Ayo) to whom it
was paid during December 2017 for a subscription of shares.
As
recorder earlier, PIC is obliged to recover the aforesaid amount
within 15 business days from the issue of the notice.
The
interest on the said amount is to be recovered within six months of
the date of the issued notice.
[6] In
my view the matter is urgent and I heard the application and reserved
judgment.
A second urgent application was issued in respect of
the said notice and was enrolled to be heard when this application
was heard.
The applicant in that application is Ayo Technology
Solutions (Pty) Ltd, the party to whom the payment of the said amount
was made.
The respondent parties are
inter
alia
PIC and CIPC. I shall deal
with that application in a separate judgment.
[7] Several grounds are
raised upon which PIC relies for the review and setting aside
of the
said notice, or alternatively the suspension thereof pending a review
in the normal course. These are:
(a)
Absence of a
fair procedure;
(b)
Irrational
decision taken by CIPC;
(c)
Material
factual error.
[8]
Under the rubric, Absence of a fair procedure, PIC submits that a
fair procedure includes
a fair hearing prior to the taking of a
decision.
[1]
In the absence of a fair hearing, or as in the
present instance no hearing, the decision taken is reviewable under
both PAJA and
the principle of legality.
[2]
It is further submitted on behalf of PIC that
where a proper hearing is not afforded, it constitutes a nullity.
[3]
[9] It
is common cause between the parties that no advance notice was
afforded PIC of
the taking of, or the possibility of, the decision to
issue a notice in terms of section 171 of the Act. When
representatives
of PIC met with representatives of CIPC on 20
February 2019, they were unaware of the detail to be discussed at
that meeting.
Furthermore, they were aware that no notice was
given to the board of PIC against whom the issued notice was
directed. This
is common cause between the parties. It is
further common cause that the decision to issue the compliance notice
had already
been taken prior to the meeting of 20 February 2019.
It was in fact issued the day after the meeting. It is also
common
cause that nothing that could be said by PIC at the said
meeting would impact upon the decision to issue the notice.
CIPC
does not dispute that it was informed at the meeting that the
board of PIC had not taken the decision to subscribe to the shares
and that steps were taken to recover the said amount of R4,3 billion
from Ayo. It is common cause that the aforementioned
information had no effect upon the decision taken prior to 20
February 2019 and that despite the information supplied, the said
notice was nevertheless issued on 21 February 2019.
[4]
[10] It is common
cause that no fair hearing had been afforded PIC in respect of the
possibility of
the issuing of the notice of compliance. In this
regard, the provisions of sections 168 to 171 of the Act prescribe
the parameters
within which the power to issue a compliance notice is
to be exercised. In oral argument, it was conceded on behalf of
CIPC
that it was obliged to afford PIC a fair hearing prior to the
taking of the decision to issue a compliance notice.
[5]
That concession is well made.
[11] However, it is submitted on behalf
to CIPC that PIC has acquiesced in the issuing of the said
notice and
merely sought an extension of the period within which to comply
therewith. In this regard CIPC relies on correspondence
to that
effect and seeks in its counterapplication that the notice be
modified in terms of the provisions of section 172(2) of
the Act.
The modifications that are sought relate to the actions to be taken
and the period within which those actions are
to be taken by PIC.
[12] That submission cannot be upheld.
Section 172(2) of the Act provides that any person issued
with a
compliance notice in terms of the Act may apply for the review
thereof and the compliance notice may be confirmed or modified
or set
aside. In the instance of confirmation or modification of the
notice, that section presupposes that a valid decision
was taken and
a valid notice of compliance was issued. Furthermore, the
relevant correspondence makes it clear that the taking
of the
decision to issue the notice and the issuing thereof, lacks legality
as required by the Constitution and is hence reviewable.
At no
stage did PIC acquiesce in the taking of the decision and the issuing
of the said notice. That much is gleaned from
the
correspondence relied upon by CIPC.
[13] In my view, it
follows that the issued notice of compliance is a nullity and stands
to be set
aside.
[6]
[14] In view of my finding that the
issued notice of compliance is a nullity, it does not require
consideration of the other grounds upon which the issued notice is
attacked.
[15] It follows further that the
counterapplication cannot succeed and stands to be dismissed.
No valid notice was issued that could be modified.
I grant the following order:
(a)
The Compliance
Notice issued by the respondents on 21 February 2019 to the
applicants is declared unlawful and of no force or effect;
(b)
The Compliance
Notice mentioned in paragraph (a) above is set aside;
(c)
The
respondents are, jointly and severally, the one paying the other to
be absolved, to pay the applicants’ costs, such costs
to
include the costs consequent upon the employ of two counsel;
(d)
The
counterapplication is dismissed;
(e)
In respect of
the costs of the counterapplication, the respondents are jointly and
severally, the one paying the other to be absolved,
to pay the
applicants’ costs, such costs to include the costs consequent
upon the employ of two counsel.
C J VAN DER WESTHUIZEN
JUDGE OF THE HIGH COURT
On behalf of Applicant: G Marcus SC
P Ngcongo
D Wild
Instructed by:
Gwina Attorneys Inc.
On behalf of Respondent: A F Arnoldi
S Mentz
Instructed
by:
State Attorney
[1]
Joseph et al v City of Johannesburg
2010(4) SA 55 (CC) at
[42]
[2]
Minister of Home Affairs et al v Scalabrini Centre et al
2013(6) SA 421 (SCA) at [67] – [69]
[3]
Crook et al v Minister of Home Affairs et al
2000(2) SA 385
(T) at 398I-J
[4]
Administrator, Transvaal et al v Zenzile et al
1991(1) SA 21
(SCA) at 37C-F
[5]
Zondi v MEC for Traditional and Local Government Affairs
2005(3) SA 589 (CC) at [101]
[6]
Gavric v Refugee Status Determination Officer et al
2019(1)
SA 21 (CC) at [79] – [80]