About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2018
>>
[2018] ZAFSHC 103
|
|
Letanta v Standard Bank (Pty) Ltd and Others (5125/2017) [2018] ZAFSHC 103 (7 June 2018)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 5125/2017
In
the matter between:
TSIETSI
BENJAMIN LETANTA
Applicant
and
STANDARD
BANK (PTY) LTD
1
st
Respondent
MOHKAT
(PTY) LTD
2
nd
Respondent
JANE
PEDZISAI
3
rd
Respondent
HERBERT
NEMATO
4
th
Respondent
CORAM:
MHLAMBI J,
HEARD
ON:
17 MAY 2018
DELIVERED
ON:
07 JUNE 2018
MHLAMBI,
J
[1]
The applicant, as director and shareholder of the second respondent,
approached this court on application seeking the following
relief:
“
1.
That the First Respondent be ordered to provide Applicant with the
bank statements in respect of the following bank account statements
in the name of the Second Respondent;
a)
[....]
b)
[....]
2. The Third Respondent
to provide the books of accounting in respect of all liabilities;
expenses and profit in respect of the
Second Respondent from
inception to date of judgment herein.
3. The Third
Respondent to provide the lease agreement for the premises shared by
the Second Respondent and the Third
Respondent’s law firm, that
which the Applicant was contributing half of regarding rental
fee.
4. The Third
Respondent to provide the mandates, either to sell or lease, granted
to the Second Respondent in respect
of properties listed in annexure
5 attached to this application.
5. The Third
Respondent to provide a list of properties leased and sold by the
Second Respondent, from inception to
date of judgment herein.
6. Costs
against the Third Respondent and, any other party opposing this
application, jointly and severally, one pays
others to be absolved.
7. Further
and/or alternative relief.”
[2]
The applicant, third and fourth respondents are shareholders and
directors of the second respondent, which conducted or whose
line of
business would be the establishment of an estate agency. The third
respondent was mandated by way of a resolution dated
9 April 2014 to
open a bank account on behalf of the second respondent which mandate
was duly discharged.
[3]
The applicant and the third respondent agreed that the premises of
her law firm would be used to house the second respondent
and the
applicant would pay half of the office space rental. Both parties
would share the costs of salaries of the individual who
would solely
attend to the activities of the second respondent. The applicant’s
contributions were deposited into the third
respondent’s bank
account by the applicant.
[4]
During February 2016 matters came to a head as the applicant alleged
that the third respondent channelled the second respondent’s
funds through her firm’s trust account without his consent. The
applicant accused the third respondent of either failing
to account
or accounting “erratically” in the form of spreadsheets
which lacked sufficient detail.
“
The
Third respondent appears to have been creative and/or dishonest in
her accounting and this is to the detriment of the Applicant
and
Second respondent.”
[1]
[5]
On 30 July 2017, the applicant was provided with bank statements by
the first respondent in respect of one bank account and
advised that
all three bank accounts held with the first respondent were closed. A
letter was addressed to the third respondent
by the applicant’s
attorneys on 16 may 2017 demanding to be furnished with financial
records of the company from the date
of the opening of the account to
date on or before 31 May 2017. Attached to the letter was a copy of
the resolution of 9 April
2014. The third respondent responded in
writing as per the letter dated 17 May 2017 and advised
that:
“
We do not have
any financials as we never appointed any accountant to do that.
Since your client does
not want to speak to me, may you convey this message to him. I think
the best thing to do is for him
to resign as director of
Mohkat. I will be able to assist him with the forms and will request
the accountant who assisted us with
the registration of the company
to attend to the matter. Kindly inform if your client agrees.
”
[2]
[6]
The third respondent opposed the application and stated that, as both
shareholder and director, the applicant was not entitled
to the
relief sought as he should have called a directors’ meeting and
requested the documents. Upon termination of the business
relationship, she had called him for a meeting to address the second
respondent’s business affairs, clarify all issues and
close
shop; but the applicant failed to attend. Besides, the applicant was
at liberty to request the documents from the second
respondent’s
employees. It was clear from the founding affidavit that the
respondent was already in possession of the second
respondent’s
records and bank statements.
[7]
The third respondent admitted to having been mandated to open a
banking account but such mandate did not extend to the management
of
the affairs of corporate entity nor conferred on her the functions,
powers and rights to administer the said entity. As there
was no
start-up capital available, the administrative and support staff were
employed and financed by the applicant and herself
on a 50/50 basis.
Expenses and other responsibilities were shared on the same basis.
[8]
It transpired that the company did not comply with the prescripts of
the estate agency board and could therefore not conduct
the business
of an estate agent as planned. In order to avoid that the business
should stagnate, it was agreed by both parties
that she should use
her fidelity fund certificate issued by the Law Society and her
professional company, Pedzisai Pion Incorporated
Attorneys. This
would facilitate the receipt of funds from clients which would be
deposited into the said firm’s trust account.
The applicant
misconstrued the deposits as constituting returns on investments and
that she was accountable to him for such funds.
This attitude led to
the proposition by her that they should part ways.
[10]
In both written and oral arguments, it was argued on behalf of the
applicant that the third respondent effectively hijacked
the
applicant’s investments to further her own business venture
while pretending to further their joint venture. Relying
on
Makanda
and others v Afrinnai Health (Pty) Ltd & others
[3]
and Section 24, 25,
26 and 163 of the Companies Act 71 of 2008 (the Act), it was
submitted that the applicant was, as director,
shareholder and
investor, entitled to the documents sought in prayers 1-5 of the
Notice of Motion as they related to the financial
records of the
second respondent.
[11]
In the supplementary heads of argument, it was argued on behalf of
the third respondent that the applicant, in his reply, rehashed
the
contents of his founding papers and left a myriad of issues
unexplained. The focus of the supplementation was that the statutory
element and the reference to the remedy relied on in the
Companies
Act, was
raised for the first time in the heads of argument. As a
shareholder, it was submitted that the applicant had a right of
access
to the company records and to enquire into the financial
affairs of the second respondent. However, this right could only be
given
credence and effect only if the company itself complied with
its statutory duty to keep proper books and records as required by
the relevant legislation. Except for the opening of the bank account,
no mandate was expressly given to any director to perform
any of the
company’s juristic acts.
[12]
It was contended further that there was no evidence adduced
demonstrative of a mandate to any natural person to keep financial
records and cause that financial statements be produced. It stood
uncontroverted that the company did not hold directors meetings,
kept
records, appointed any person to take care of the statutory duties,
caused the audit of the financial records etc. Therefore,
it begged
the question why the applicant asserted the right of access of
company records against the third respondent? Even more,
why did the
applicant try to access company records that he knew did not exist?
[13]
The following paragraph was quoted from
S
v Coetzee
[4]
that “
those
who choose to carry on their activities though the medium of an
artificial persona must accept the burdens as well as the
privileges
which go with the choice.”
It
was submitted that applicant, just as any other of his
co-directors and/or co-shareholders was equally culpable in
that they abdicated their statutory obligation and could not seek to
pontificate by deflecting such obligation onto the third respondent.
[14]
It remained the weakest point of the applicant’s case that he
failed to refer to the company’s constitutive document
such as
the Memorandum of Incorporation and that the rights of the members of
a company vis-à-vis each other are to be found
in the
constitutive document. It was argued that, in the circumstances, such
document was indispensable in the determination of
the issues as it
bound the company and its members inter se.
[15]
It was submitted that the applicant had not formulated its
application in terms of
section 163
of the
Companies Act which
provided for a shareholder or a director of company to approach the
court for relief against conduct of a company which was oppressive
or
unfairly prejudicial to the interests of such a shareholder or
director. This remedy was not available to the applicant in the
present case.
[16]
I agree with the submissions made on behalf of the third respondent.
Reliance on
Makanda
,
supra,
by the applicant was misplaced. Section 163 of the Act refers to the
relief from oppressive or prejudicial conduct or from abuse
of
separate juristic personality of the company. The applicant failed to
show in his papers that the conduct he complained of did
resort under
section 163(1) of the Act in order to qualify for the so-called
oppression remedy or that it attracted the orders
the court could
make in terms of section 163 (2). Furthermore, the
Makanda
case
was squarely based on the provisions of the Act, unlike the present
case.
[17]
It is evident that no relief is sought against both second and fourth
respondents. The applicant, despite maintaining that
he is a director
in the second respondent, failed to execute his duties as a director
as required by the Act. It would seem that
he disregarded the legal
personality of the second respondent and pursued a partnership
relationship with the third respondent.
In my view, this application
should never have served before the court and stands to be dismissed
for lack of substance.
[18]
In the result, the costs should follow the event.
[18]
I therefore make the following order:
Order
The
application is dismissed with costs.
____________
MHLAMBI,
J
Counsel
for the Applicant:
Adv. H De La Rey
Instructed
by:
Motaung Attorneys
Shop 2 Albany Court
80 West Burger Street
Bloemfontein
Counsel
for Respondents:
Adv. J Nkhahle
Instructed
by:
Lekhotla Attorneys
609 Forum Building
20 Aliwal Street
Bloemfontein
[1]
Founding
Affidavit paragraph 24 page 11
[2]
Page 155 of the Bundle
[3]
[2015] ZAFSHC 6
[4]
1977 (3) SA 527
(CC) at 98