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[2018] ZAFSHC 147
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Letanta v Standard Bank (Pty) Ltd and Others (5125/2017) [2018] ZAFSHC 147 (7 June 2018)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates:
YES/NO
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)
041243579
b)
140383425
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