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[2019] ZAKZDHC 4
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Mncwango N.O v Ngcobo and Others (11908/2017) [2019] ZAKZDHC 4 (1 April 2019)
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 11908/2017
In
the matter between:
HALALISIWE
BAGCINILE MNCWANGO N.O.
Applicant
and
ZABA
LINCOLN NGCOBO
First
Respondent
MAMI’S
CONSTRUCTION CC
Second
Respondent
FIRST
NATIONAL BANK LTD
Third
Respondent
COMMISSIONER
OF COMPANIES AND
Fourth
Respondent
INTELLECTUAL
PROPERTY COMMISSION
THE
MASTER OF THE HIGH COURT, DURBAN
Fifth
Respondent
TINY
PHUMEZA NONTULO
Sixth respondent
Coram:
Koen J
Heard:
15 March 2019.
Delivered:
1 April 2019.
O
R D E R
1.
The issue whether an agreement was concluded between the first and/or
second
respondents with the deceased in terms whereof the first
and/or second respondents would be entitled to the continued
possession
and use of:
(a)
the 2012 Toyota Hilux 2.0 VVTI pickup single cab vehicle; and
(b)
the Volkswagen Polo vehicle with the registration [….];
as a trade-off for the
deceased having been given possession of a Toyota Hilux 4x4 vehicle
and a Subaru sedan, is referred for the
hearing of oral evidence on a
date to be arranged with the Registrar.
2. The
evidence relating to the issue in paragraph 1 above shall be that of
witnesses
who have deposed to affidavits and any further witnesses
the parties may wish to call provided that a summary of such
witnesses’
evidence has been delivered to the opposing party 15
days prior to the oral evidence, unless the witness has to be
subpoenaed.
3. The
provisions of Rule 35, 36, 37 and 38 shall apply to the hearing of
the oral
evidence.
4. The
costs relating to the relief claimed in paragraphs 1(a) and (b) of
the Notice
of Motion are reserved and shall be determined by the
court hearing the oral evidence.
5. An
order is granted in terms of paragraphs 1(c) and (d), 2, 3 and 5 of
the Notice
of Motion.
6. The
relief claimed in paragraph 4 of the Notice of Motion is dismissed.
7. The
first and second respondents jointly and severally are directed to
pay two-thirds
of the applicant’s costs to date but excluding
the costs relating to the relief claimed in paragraphs 1(a) and (b)
of the
Notice of Motion reserved in paragraph 4 above.
JUDGMENT
Koen
J
[1]
The applicant is the duly appointed executrix of the estate of her
late husband, Hamilton
Velenkosini Mncwango (hereinafter referred to
as ‘the deceased’). The deceased was during his
lifetime the holder
of a 50% registered members’ interest in
Mami’s Construction CC, the second respondent. The other
50% member’s
interest is that of the first respondent. It
is also not in dispute that the deceased was, during his lifetime,
the registered
owner of a VW Polo motor vehicle bearing registration
numbers and letters [….] (hereinafter referred to as ‘the
Polo’).
He was also the purchaser and hence entitled to
the possession of a 2012 Toyota Hilux 2.0 VVTI pick-up single cab
motor vehicle
(hereinafter referred to as ‘the Hilux’)
pursuant to a credit agreement, with the ownership in the Hilux being
reserved
to the credit grantor, the fifth respondent.
[2]
The deceased died intestate on 7 November 2016 leaving behind the
applicant and four
children, three children from his marriage with
the applicant and one child from a previous relationship, as his
intestate heirs.
The solvency or otherwise of his estate has
not been dealt with and is yet to be determined.
[3]
On 1 December 2016 the applicant, in her personal capacity, was
registered in the
records of the Commissioner of Companies and
Intellectual Property, the fourth respondent in this application, as
a 50% registered
member of the second respondent, in the place of the
deceased. It is common cause that this was done in error and
that she
should not be a member of the second respondent, in her
personal capacity. It is not necessary to analyse any further the
various
factual disputes relating to and giving rise to such
registration or to determine who is responsible for that error.
[4]
The applicant, with reliance on
s 26
of the
Administration of Estates
Act 66 of 1965
, has from time to time as she is entitled to do,
demanded delivery of
inter alia
:
(a)
The Polo;
(b)
The Hilux;
(c)
Copies of all financial records of the second respondent;
(d)
Copies of all joint venture contracts concluded between the second
respondent and any other
entity, for the period September 2016 to
date, including but not limited to copies of contracts concluded
between the second respondent
and Uzmile Trading CC;
(e)
That the deceased’
s 50%
membership of the second respondent be
transferred to her in her capacity as executrix of the estate of the
deceased.
[5]
Section 26
of the
Administration of Estates Act provides
:
‘
(1)
Immediately after letters of executorship have been granted to him an
executor shall take
into his custody or under his control all the
property, books and documents in the estate and not in the possession
of any person
who claims to be entitled to retain it under any
contract, right of retention or attachment.’
[6]
These requests have variously resulted in invitations by the first
respondent (mainly
represented by his son) in correspondence to meet
with the applicant and her attorneys to try and resolve the various
issues relating
to the deceased, his membership in the second
respondent, the second respondent, the Polo, the Hilux and other
matters. My
attention has been drawn to these offers to meet as
indicative of a reasonable attitude being adopted by the first
respondent and
second respondent to cooperate in the matter. All such
invitations have however been declined. The applicant has referred to
these
invitations all being devoid of any specific defences being
raised by the first and/ second respondent to the delivery of any of
the estate property to the applicant. Regardless of whether
these invitations to meet suggest a reasonable attitude or not,
the
reality is that nothing has been resolved thus resulting in a stale
mate situation in the administration of the deceased’s
estate.
[7]
Eventually the applicant launched the present application in which
she claims the
following relief:
‘
1.
The First Respondent alternatively the Second Respondent
alternatively both the First
and Second Respondents be and are hereby
directed to deliver to the Applicant:
a.
one 2012 Toyota Hilux 2.0 VVTI pick up single cab motor vehicle which
is still
financed with the Fifth Respondent under account number
[….];
b.
one Volkswagen Polo motor vehicle bearing registration numbers and
letters [….]
c.
copies of all financial records of the Second Respondent;
d.
copies of all joint venture contracts concluded between the
Second Respondent
and any other entity from the period September 2016
to date including but not limited to copies of all contracts
concluded between
the Second Respondent and Uzamile Trading CC.
2.
The First Respondent be and is hereby directed to sign all documents
necessary
which are attached hereto marked “A1-A4” hereto
and to do all things necessary to cause the applicant in her capacity
as Executrix of Estate Late Hamilton Velenkosini Mncwango to be
registered as a fifty percent member of the Second Respondent,
upon
service of this order.
3.
In the event that the First Respondent fails to comply with paragraph
2 above,
the Sheriff of this Court is hereby authorised and directed
to sign the documents referred to in paragraph 2 above.
4.
The First Respondent alternatively the Second Respondent
alternatively both the
First and Second Respondents jointly be
directed to pay all arrears owed to the Fifth Respondent in respect
of the Toyota motor
vehicle upon presentation of a Statement of
Account issued by the Fifth Respondent and upon delivery thereof by
the Applicant on
the First Respondent.
5.
The Third Respondent be and is hereby directed to link the
Applicant’s
cellphone number: [….] to its inContact
service associated with the Second Respondent’s bank account
held with the
Third Respondent under account number: [….].
6.
The First Respondent be and is hereby directed to pay the costs of
this application
on an attorney and client scale,
Alternatively and only in the event
that any other Respondent opposes the relief sought herein;
7.
Then, such Respondent or Respondents be directed to pay the costs of
this application
with the First Respondent on an attorney and client
scale jointly and severally, the one paying the other to be
absolved.’
[8]
The relief in paragraphs 1(a) and (b) of the notice of motion is
opposed in the answering
affidavit of the first respondent on the
basis that the first respondent maintains that although he admits
that the Hilux is being
used in the business of the second respondent
which trades as a construction company and that the Polo is in the
possession of
the second respondent, an agreement was concluded with
the deceased which entitles him to retain these vehicles in exchange
for
two of the second respondent’s vehicles namely a Toyota
Hilux 4x4 vehicle (‘the 4x4’) and a Subaru sedan having
been provided to the deceased as a trade-off (it seems that the
Subaru might since have been used by the deceased’s sister).
The first and second respondents indicate that they have no objection
to the return of the Polo to the deceased’s estate
if the
second respondent’s vehicles being the 4x4 and Subaru are
simultaneously returned to the second respondent.
No tender is
made by the first and second respondents in respect of the Hilux, on
the basis that it is claimed that it is the fifth
respondent that is
entitled to that vehicle.
[9]
The issue thus becomes one as to whether there was such an agreement
in terms of which
the first and/or second respondents would be
entitled to retain the Hilux and the Polo under any contract, right
of retention,
or attachment.
[10]
The fact that the Polo and the Hilux are in the possession of the
second respondent and are used
by the second respondent and that the
Subaru is in the possession of the deceased’s sister,
apparently in Nongoma, are objective
facts which, prima facie, give
some support to the first and second respondent’s version that
such an agreement as contended
for him was concluded and implemented.
[11]
The applicant was however critical of the first second respondent’s
version that there
was such an agreement, pointing to the following:
(a)
That the first respondent made no mention of this version in any of
the correspondence exchanged
between the parties prior to deposing to
his answering affidavit;
(b)
That the first respondent does not deny the Polo log book, nor any of
the content thereof,
and therefore admits that the deceased is listed
as the registered owner of the Polo;
(c)
That the first respondent does not take this court into his
confidence by alleging
when the deceased concluded this agreement to
swop vehicles, or who represented the parties, or where such an
agreement was concluded;
(d)
That the first respondent has not attached any form of proof of
ownership (or licensing
document) pertaining to the Subaru and the
4x4;
(e)
The first respondent has not bothered to file any counter application
for the return of
the motor vehicles he claims the deceased swopped
in support of his version;
(f)
The first respondent acknowledges that the second respondent would
institute proceedings
for the return of the second respondent’s
motor vehicles.
[12]
In motion proceedings the affidavits contain both the pleadings and
the evidence. The criticisms
expressed by the applicant, in
relation to the agreement for the swop of the vehicle, do have some
substance. However, on probability,
when weighed against the
objective factors referred to in paragraph 10 above, which are
consistent with such a possible agreement
being implemented, I do not
consider them individually or collectively to negate the first
respondent’s allegations under
oath of the agreement contended
for by the first respondent, even with the lack of particularity with
which it is raised in the
answering affidavit, to conclude on the
affidavits alone that the first respondent’s version falls to
be rejected.
[13]
Motion proceedings are not suited to resolving material disputes of
fact. Where there is
a material dispute of fact, then the
respondent’s version must prevail – see
Plascon
Evans Paints (Pty) Ltd v Van Riebeeck Paints Limited.
[1]
[14]
The applicant requested that if this Court was not prepared to reject
the first and second respondent’s
version regarding such an
agreement, to refer that issue for the hearing of oral evidence.
[15]
The interests of justice require that such an order be granted. A
suitable order referring this
dispute to oral evidence is made below
in respect of the claims of paragraphs 1(a) and (b) of the
applicant’s notice of motion.
[16]
Regarding the relief claimed in paragraphs 1(c) and (d), 2, 3 and 5
the position in my view is
as follows.
[17]
It is not disputed that the deceased was a 50% registered member in
the second respondent.
[18]
On his death, the provisions of
inter alia
s 29
and s 35 of
the Close Corporations Act 69 of 1994 would find application.
[19]
The relevant parts of s 29(2) and (3) are as follows:
‘
(2)
The
following persons shall qualify for membership of a corporation
;
(a)
…
(b)
…
(c)
a natural or
juristic person,
nomine
officii,
who, in the case of a member who is insolvent, deceased
,
… is a …
executor
or curator in respect of such member or is otherwise a person who is
his or her duly appointed or authorized legal representative
.
(3)
(a)
The membership of any person qualified therefor in terms of
subsection (2) shall commence on the date of the registration of a
founding statement of the corporation containing the particulars
required by section 12 in regard to such person and his or her
member's interest
.
(b)
Where any person is
to become a member of a registered corporation the existing member or
members of the corporation shall ensure
that the requirements of
section 15 (1) regarding the lodging of an amended founding statement
with the Registrar are complied
with
.
(c)
A … executor …
referred
to in subsection (2)
(c)
,
in respect of any member of a corporation, who is not obliged or who
does not intend to transfer the interest of the member in
the
corporation in accordance with the provisions of this Act within 28
days of his or her assuming office to any other person,
shall within
that period, or any extended period allowed by the Registrar on
application by him or her, request the existing member
or members of
the corporation to lodge with the Registrar in accordance with
section 15 (1) an amended founding statement designating
him or her,
nomine
officii,
as representative of the member of the corporation in question
.
(d)
…
(e)
The provisions of
paragraphs
(c)
and
(d)
shall not affect the power of such representative, as from the date
of his or her assuming office, and whether or not any such
amended
founding statement has been lodged, to represent the member concerned
in all matters in which he or she himself or herself
as a member
could have acted, until the interest of that member in the
corporation has in accordance with the provisions of this
Act been
transferred to any other qualified person
.’
[20]
Section 35 provides for the disposal of the interest of a deceased
member, the relevant portions
thereof reading as follows:
‘
Subject
to any other arrangement in an association agreement, an executor of
the estate of a member of a corporation who is deceased
shall, in the
performance of his or her duties-
(a)
cause the deceased
member's interest in the corporation to be transferred to a person
who qualifies for membership of a corporation
in terms of section 29
and is entitled thereto as legatee or heir or under a redistribution
agreement, if the remaining member
or members of the corporation (if
any) consent to the transfer of the member's interest to such person;
or
(b)
if
any consent referred to in paragraph
(a)
is not given within 28 days after it was requested by the executor,
sell the deceased member's interest-
(i) to the
corporation, if there is any other member or members than the
deceased member;
(ii) to any other
remaining member or members of the corporation in proportion to the
interests of those members
in the corporation or as they may
otherwise agree upon; or
(iii) to
any other person who qualifies for membership of a corporation in
terms of section 29, in which case the
provisions of subsection (2)
of section 34 shall
mutatis
mutandis
apply in respect of any such sale
.’
[21]
It has been said, and this is no doubt correct, that sections 29 and
35 must be read together.
[22]
The first respondent has indicated that he will not consent to any of
the intestate heirs (which
would in any event also depend on the
solvency of the deceased estate, a matter yet to be determined after
the lodging of all the
claims) being substituted as members of the
second respondent in the place of the deceased. No transfer as
contemplated in s 35(8)
would therefore follow. Ultimately the
deceased’s members interest in the second respondent will have
to be sold by
the applicant as contemplated in terms of s 35
(b)
.
[23]
The first and second respondents have however been critical of the
applicant’s claims in
this regard referring
inter alia
to the decision in
Business Partners Limited v World Focus 754 CC
2015 (5) SA 525
(KZD) at para 8 that the affidavits in motion
proceedings contain both the pleadings in evidence. Specifically
attention was drawn
to the absence of any reference in the founding
papers to the provisions of the Close Corporations Act. Applicants’
counsel
conceded that the Close Corporation’s Act was only
referred to in the replying affidavit.
[24]
It is however also a principle of our law that although ideal, the
relevant statutory provision
upon which a party relies need not be
specifically pleaded, provided that a factual basis for its
application is laid. An
expressed reference to the applicable
statutory provision is certainly of assistance and incorporating same
in affidavits constitutes
a salutary practice. But the absence
thereof is not necessarily fatal.
[25]
The first and second respondents could not have been in any doubt
that the transfer of the deceased’s
member’s interest to
the applicant was being claimed pursuant to the provisions of s 29 of
the Act. There is no other legal
provision which could possibly
justify such a claim.
[26]
The first and second respondents have resisted such a claim for
transfer of the deceased’s
members interest to the applicant in
her representative capacity on the basis that:
(a)
The transfer was not claimed within 28 days as provided for in s
29(3)(c) and that no extended
period allowed by the Registrar and
application by ‘him or her’ had been requested;
(b)
That as the issue in due course would be one of a proper valuation of
the deceased’s
members interest in the second respondent, that
I should model a practical and expeditious remedy to bring an end to
the protracted
litigation, along the lines of what was granted by
Roelofse AJ in
Electronic
Mining Supplies CC v Mabelane N.O. and Another
.
[2]
[27]
As regards the latter, at a practical level there is certainly much
to commend it. However
in
Electronic Mining Supplies
specific relief was claimed pursuant to s 37 of the Close
Corporation’s Act, including that the value of the shares be
determined
and that the procedure for establishing the value of the
shares be provided. The parties counsel in that matter had no
objection
to the granting of an order with reference to s 35 of the
Act.
[28]
As in that matter, the present matter relating to the transfer of the
deceased’s membership
interest has delayed for too long and the
matter should have been put to rest much sooner. The failure to have
engaged on the valuation
of the deceased’s members interest,
however, appears to have stemmed largely from the attitude adopted by
the first and second
respondents to the registration of the
deceased’s membership interest in the applicant, and the
exercise of her rights whether
pursuant to s 29(3)
(c)
, or
otherwise. The implications of the provisions of s 29(3)
(e)
appear to have been disregarded. An order as was granted in
Electronic Mining Supplies
would certainly provide a practical
resolution of the matter. However, where this has not been the
subject of specific relief,
claimed in this application, I am of the
view that absent consent between the parties that I make such an
order (which the applicant
did not agree to) it would be improper to
do so without first allowing the parties, with full realisation of
their respective rights,
pursuant to s 29 (in the case of the
applicant), to determine and hopefully compromise on a value for the
deceased’s members’
interest.
[29]
The kind of order granted in
Electronic Mining Supplies
will
no doubt act as a convenient guide to the parties and hopefully sense
will prevail, a limited time should be permitted to
see whether the
parties might not compromise on the value and reach agreement, and
that failing agreement, consideration then being
given to commence
proceedings for such kind of relief or some variation thereof.
[30]
As regards the argument in para 26(a) above, the registration of the
deceased’s members
interest was indeed sought shortly after his
death, possibly not pursuant to s 29, but it resulted in the
membership of the deceased
being registered in the applicant’s
name, albeit erroneously in her personal capacity and not her
representative capacity
‘NO’.
[31]
It seems to me that the reliance on the 28 days provision is probably
misplaced. To the
extent that it is not, the Registrar defined
as the Commissioner, has been cited as the fourth respondent in this
application.
He has not raised any objection to the claim for
the deceased’s membership interest to be registered in the name
of the applicant
‘NO’. It would involve simply an
unnecessary additional cost if the matter was to be adjourned to
request such leave,
if indeed it is required.
[32]
The applicant in my view is entitled to the relief in paragraph 2 and
the consequential relief
in paragraph 3 of the notice of motion.
[33]
Pursuant to the provisions of s 29(3)
(e)
of the Close
Corporations Act
the applicant would, even pending registration
of the deceased’s members interest in her name, be entitled ‘to
represent
the member concerned in all matters in which he or she
himself … as a member could have acted, until the interest of
that
member in the corporation has in accordance with the provisions
of this Act been transferred … to her’. In that
capacity,
although not clearly alleged in the founding affidavit, she
was entitled to copies of all financial records of the second
respondent
and to joint venture contracts and other documents as
contemplated in paragraphs 1(c) and (d) of the notice of motion.
She
would be entitled to exercise her rights
qua
member to
claim access to these records and any other records to which a member
would normally be entitled. In that capacity
she would also be
entitled to exercise rights relating to any inContact service
associated with the second respondent’s bank
account held with
the third respondent.
[34]
She is accordingly entitled to the relief claimed in paragraphs 1(c)
and (d) and 5 of the notice
of motion.
[35]
No sustainable legal basis could be advanced for the claim in
paragraph 4 of the notice of motion
being granted in motion
proceedings. The submissions advanced by the applicant
vacillated between it being a contractual
claim for damages, or an
enrichment claim. Neither can, and should be pursued by way of
application procedure. If so advised,
then it should be pursued by
way of action. The instalments payable in terms of any credit
agreement are not necessarily the measure
of any actual enrichment.
The relief claimed in paragraph 4 is accordingly dismissed.
[36]
In the light of my aforesaid conclusions, the applicant has been
partially successful in respect
of the claim to registration of the
deceased member’s interest in her name, in her representative
capacity, but unsuccessful
in regard to the relief in paragraph 4 of
the notice of motion. The costs relating to the referral to oral
evidence of the relief
in paragraphs 1(a) and (b) of the notice of
motion must obviously be decided by the court hearing that evidence.
[37]
In the exercise of my discretion on costs I direct that the first and
second respondents jointly
and severally pay 50% of the applicant’s
costs to date, such costs excluding those relating to the hearing of
the issue referred
for the hearing of oral evidence.
[38]
The order I grant is therefore as follows:
1. The
issue whether an agreement was concluded between the first and/or
second respondents
with the deceased in terms whereof the first
and/or second respondents would be entitled to the continued
possession and use of:
(a)
the 2012 Toyota Hilux 2.0 VVTI pickup single cab vehicle; and
(b)
the Volkswagen Polo vehicle with the registration [….];
as a trade-off for the
deceased having been given possession of a Toyota Hilux 4x4 vehicle
and a Subaru sedan, is referred for the
hearing of oral evidence on a
date to be arranged with the Registrar.
2. The
evidence relating to the issue in paragraph 1 above shall be that of
witnesses
who have deposed to affidavits and any further witnesses
the parties may wish to call provided that a summary of such
witnesses’
evidence has been delivered to the opposing party 15
days prior to the oral evidence, unless the witness has to be
subpoenaed.
3. The
provisions of Rule 35, 36, 37 and 38 shall apply to the hearing of
the oral
evidence.
4.
The costs relating to the relief claimed in paragraphs 1(a) and (b)
of the Notice
of Motion are reserved and shall be determined by the
court hearing the oral evidence.
5. An
order is granted in terms of paragraphs 1(c) and (d), 2, 3 and 5 of
the Notice
of Motion.
6. The
relief claimed in paragraph 4 of the Notice of Motion is dismissed.
7. The
first and second respondents jointly and severally are directed to
pay two-thirds
of the applicant’s costs to date but excluding
the costs relating to the relief claimed in paragraphs 1(a) and (b)
of the
Notice of Motion reserved in paragraph 4 above.
KOEN J
Appearances
FOR
APPLICANT:
MR. M SEWPAL
INSTRUCTED
BY:
ATTORNEYS MURUGASENS
Ref.:
DM/NV/M5/12
Tel.:
031 -4001616
FOR
1
ST
and 2
nd
RESPONDENTS:
MR S HOAR
INSTRUCTED
BY:
BOWMAN GILFILLAN INC
Ref.:
B Robertson
Tel.:
(031) 265 0651
[1]
[1984] ZASCA 51
;
1984 (3) SA 623
(A).
[2]
[2018] ZAGPPHC 648 at
page 14.