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[2018] ZASCA 170
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Freedom Stationery (Pty) Limited and Others v Hassam and Others (921/2017) [2018] ZASCA 170; 2019 (4) SA 459 (SCA) (30 November 2018)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 921/2017
In
the matter between:
FREEDOM
STATIONERY (PTY) LIMITED
FIRST APPLICANT
OYSTER
PLASTICS (PTY) LIMITED
SECOND APPLICANT
SA
FILE MANUFACTURERS (PTY) LIMITED
THIRD APPLICANT
MOSS
RIDGE PROPERTIES (PTY) LIMITED
FOURTH APPLICANT
SHAUKAT
ALLI MOOSA
(in
his capacity as a trustee of the Shaukat
Alli
Moosa Family Trust, IT
5931/1982)
FIFTH APPLICANT
GOOLAM
HOOSEN MOOSA
(in
his capacity as a trustee of the Shaukat
Alli
Moosa Family Trust, IT
5931/1982)
SIXTH APPLICANT
SALIM
MAHOMED MOOSA
(in
his capacity as a trustee of the Shaukat
Alli
Moosa Family Trust, IT
5931/1982)
SEVENTH APPLICANT
SHAUKAT
ALLI MOOSA
(in
his capacity as a trustee of the Goolam
Hoosen
Moosa Family Trust, IT 5928/1982)
EIGHTH APPLICANT
GOOLAM
HOOSEN MOOSA
(in
his capacity as a trustee of the Goolam
Hoosen
Moosa Family Trust, IT
5928/1982)
NINTH APPLICANT
SALIM
MAHOMED MOOSA
(in
his capacity as a trustee of the Goolam
Hoosen
Moosa Family Trust, IT
5928/1982)
TENTH APPLICANT
SHAUKAT
ALLI MOOSA
(in
his capacity as a trustee of the Salim
Mahomed
Moosa Family Trust, IT 5926/1982)
ELEVENTH APPLICANT
GOOLAM
HOOSEN MOOSA
(in
his capacity as a trustee of the Salim
Mahomed
Moosa Family Trust, IT 5926/1982)
TWELFTH APPLICANT
SALIM
MAHOMED MOOSA
(in
his capacity as a trustee of the Salim
Mahomed
Moosa Family Trust, IT 5926/1982)
THIRTEENTH APPLICANT
CASSIM
RASHID MOOSA
(in
his capacity as a trustee of the Cassim
Rashid
Moosa Family Trust, IT 5935/1982)
FOURTEENTH APPLICANT
IMRAAN
CASSIM RASHID MOOSA
(in
his capacity as a trustee of the Cassim
Rashid
Moosa Family Trust, IT 5935/1982)
FIFTEENTH APPLICANT
MAHOMED
IRSHAD MOOSA
(in
his capacity as a trustee of the Cassim
Rashid
Moosa Family Trust, IT 5935/1982)
SIXTEENTH APPLICANT
AKBAR
ALLI MOOSA
(in
his capacity as a trustee of the Akbar
Alli
Moosa Family Trust, IT 5934/1982)
SEVENTEENTH APPLICANT
MAHOMED
ZUBEIR MOOSA
(in
his capacity as a trustee of the Akbar
Alli
Moosa Family Trust, IT 5934/1982)
EIGHTEENTH APPLICANT
AHMED
SHOAIB MOOSA
(in
his capacity as a trustee of the Akbar
Alli
Moosa Family Trust, IT 5934/1982)
NINETEENTH APPLICANT
HAMIDA
BANU MOOSA
(in
her capacity as a trustee of the Akbar
Alli
Moosa Family Trust, IT 5934/1982)
TWENTIETH APPLICANT
ABDUL
RAZAK DAWOOD MOOSA
(in
his capacity as a trustee of the Akbar
Alli
Moosa Family Trust, IT 5934/1982)
TWENTY FIRST APPLICANT
ASHRAFF
YOUSOUF DAWOORD MOOSA
(in
his capacity as trustee of the Akbar
Alli
Moosa Family Trust, IT 5934/1982)
TWENTY SECOND APPLICANT
SULEMAN
HASSAM
(in
his capacity as a trustee of the Akbar
Alli
Moosa Family Trust, IT 5934/1982)
TWENTY THIRD APPLICANT
SULEMAN
HASSAM
(in
his capacity as a trustee of the Suleman
Hassam
Family Trust, IT 5930/1982)
TWENTY FOURTH APPLICANT
AKBAR
ALLI MOOSA
(in
his capacity as a trustee of the Suleman
Hassam
Family Trust, IT 5930/1982)
TWENTY FIFTH APPLICANT
ABDUL
RAZAK DAWOOD MOOSA
(in
his capacity as a trustee of the Suleman
Hassam
Family Trust, IT 5930/1982)
TWENTY SIXTH APPLICANT
OBEAD
MOOSA
(in
his capacity as a trustee of the Suleman
Hassam
Family Trust, IT 5930/1982)
TWENTY SEVENTH APPLICANT
ZUBEDA
MOOSA
(in
her capacity as a trustee of the Suleman
Hassam
Family Trust, IT 5930/1982)
TWENTY EIGHTH APPLICANT
IQBAL
EBRAHIM HASSAM
(in
his capacity as a trustee of the Iqbal
Ebrahim
Hassam Family Trust, IT 1401/1997)
TWENTY NINTH APPLICANT
ABDUL
RAZAK DAWOOD MOOSA
(in
his capacity as a trustee of the Iqbal
Ebrahim
Hassam Family Trust, IT 1401/1997)
THIRTIETH APPLICANT
THE
TRUSTEES OF THE ABDOOL CARRIM
SACOOR
FAMILY TRUST
THIRTY FIRST APPLICANT
SHAUKAT
ALLI MOOSA
THIRTY SECOND APPLICANT
ABDOOL
CARRIM SACOOR
THIRTY THIRD APPLICANT
and
MAHOMED
ZUKERIA HASSAM
(in
his capacity as a trustee of the
Mahomed
Zukeria Hassam Trust, IT 592/1982)
FIRST RESPONDENT
ALTAF
HASSAM
(in
his capacity as a trustee of the
Mahomed
Zukeria Hassam Trust, IT 592/1982)
SECOND RESPONDENT
NADIM
HASSAM
(in
his capacity as a trustee of the
Mahomed
Zukeria Hassam Trust, IT 592/1982)
THIRD RESPONDENT
Neutral
citation:
Freedom Stationery & others v Hassam &
others
(921/2017)
[2018] ZASCA 170
(30 November 2018)
Coram:
Ponnan, Tshiqi, Van der Merwe and Schippers JJA and Carelse AJA
Heard:
6 November 2018
Delivered:
30 November 2018
Summary:
Practice – judgments and orders – uniform rule
42(1)
(a)
– order to which a party is procedurally
entitled not erroneously made in the absence of an affected party –
a party
that reconciles itself with a reasonable prospect that relief
may be granted not entitled to rescission under rule 42(1)
(a)
.
Company
law – wide powers of a court under s 252 of the Companies Act
61 of 1973
–
court
not limited to relief formulated by applicant.
ORDER
On
appeal from:
KwaZulu-Natal Division of the High Court, Durban
(Bezuidenhout J sitting as court of first instance):
It
is ordered that:
1. The application in terms of s
17(2)
(f)
of the
Superior Courts Act 10 of 2013
succeeds;
2. The refusal of leave to appeal by
this court is set aside and replaced with an order granting the
applicants’ leave to
appeal to this court;
3. The appeal is upheld with costs,
including the costs of the applications for leave to appeal;
4. The order of the court a quo is set
aside and replaced with an order dismissing the action with costs.
JUDGMENT
Van
der Merwe JA (Ponnan, Tshiqi and Schippers JJA and Carelse AJA
concurring)
[1]
This is an application for the reconsideration of an application for
leave to appeal brought in terms of
s 17(2)
(f)
of the
Superior
Courts Act 10 of 2013
. Maya P referred the application for oral
argument in terms of
s 17(2)
(d)
of the
Superior Courts Act and
also directed the parties to address the court on the merits if
called upon to do so. The matter came before this court in the
following manner. In an action instituted by the respondents against
the applicants and others, the court a quo (Bezuidenhout J
in the
KwaZulu-Natal Local Division, Durban) on 23 March 2017 set aside an
order of that division made earlier by Swain J on 8
December 2011.
The applicants applied to the court a quo for leave to appeal against
its order. The court a quo dismissed the application.
The applicants
then approached this court for leave to appeal in terms of
s 17(2)
(d)
of the
Superior Courts Act 10 of 2013
, but two judges of this
court refused leave to appeal. The determinative question before us
is whether the respondents were entitled
to rescission of the order
of Swain J. The question must be answered against the following
background.
Background
[2]
The matter concerns the shareholding in four companies. They are
Freedom Stationery (Pty) Ltd (Freedom Stationery), Oyster Plastics
(Pty) Ltd (Oyster Plastics), SA File Manufacturers (Pty) Ltd (SA
File) and Moss Ridge Properties (Pty) Ltd (Moss Ridge). As its
name
suggests, Freedom Stationery is engaged in the business of
manufacturing and supplying stationery. Oyster Plastics mainly
manufactures plastic products. The principal business of SA File is
the manufacturing of files. Moss Ridge owns industrial and
commercial
properties. I refer to these four companies collectively as the
Freedom Group. At all relevant times hereto, the directors
of all
four companies in the Freedom Group were Mr Abdool Sacoor and Mr
Shaukat Alli Moosa.
[3]
Prior to the events that I shall describe shortly, the shares in each
of the companies in the Freedom Group were held as set
out below. Six
family trusts each held 8 per cent of the shares. They were:
(a) The Shaukat Alli Moosa Family
Trust (the S A Moosa Trust);
(b) the Goolam Hoosen Moosa Family
Trust (the G H Moosa Trust);
(c) the Salim Mahomed Moosa Family
Trust (the S M Moosa Trust);
(d) the Suleman Hassam Family Trust
(the S Hassam Trust);
(e) the Iqbal Ebrahim Hassam Family
Trust (the I E Hassam Trust); and
(f) the Akbar Alli Moosa Family Trust
(the A A Moosa Trust).
[4]
A further five family trusts each held 6,4 per cent of the shares in
the Freedom Group. They were:
(a) The Abdul Kader Moosa Family Trust
(the A K Moosa Trust);
(b) the Cassim Rashid Moosa Family
Trust (the C R Moosa Trust);
(c) the Dr Aziz Ahmed Moosa Family
Trust (the Dr A A Moosa Trust);
(d) the Sikander Amod Hassam Family
Trust (the S A Hassam Trust); and
(e) the Mahomed Zukeria Hassam Family
Trust (the M Z Hassam Trust). The trustees of these 11 trusts are all
close relatives of each
other.
[5]
Four individual members of the Akoo family (the Akoo’s) each
held 1,25 per cent of these shares. The remaining 15 per
cent of the
shares were held by the Abdool Carrim Sacoor Family Trust (the A C
Sacoor Trust).
[6]
The present applicants are: the four companies in the Freedom Group;
the six trusts referred to in para 3 above; the trustees
of the C R
Moosa Trust; the trustees of the A C Sacoor Trust; and Mr Sacoor and
Mr Shaukat Moosa in their personal capacities as
directors of the
companies. The trustees of the M Z Hassam Trust are the respondents
herein. At all relevant times they were Mr
Mahomed Zukeria (MZ)
Hassam and his two sons. For reasons that shall become apparent, the
A K Moosa Trust, the Dr A A Moosa Trust
and the S A Hassam Trust are
not parties to these proceedings.
[7]
The Articles of Association of each of the companies in the Freedom
Group provides that, if a member of the company desires
to sell any
of his shares in the company, such member shall give written notice
of his intention to sell to the directors of the
company and state
the price that he requires for the shares. The directors shall within
one month of the date of receipt of the
written notice, advise every
other member of the company of the contents thereof and each member
shall be entitled to acquire the
shares so offered within one month
after the date of receipt of such advice. If the members of the
company are unable to agree
upon the selling price of the shares, the
auditor of the company may be requested to determine the true and
fair value thereof
and the members shall accept that value as the
selling price of the shares. Only if none of the members of the
company offers to
purchase the shares as aforesaid, may the member
offer the shares or the remaining portion of the shares for sale to
any other
person.
[8]
The Freedom Group was a successful concern and over a number of years
its shareholders received handsome dividends. During 2010,
however,
some of the shareholders of the Freedom Group became discontented.
They believed that the directors of the Freedom Group,
with the
backing of the majority shareholders, conducted its affairs in an
oppressive and unfairly prejudicial manner, within the
meaning of s
252 of the Companies Act 61 of 1973 (the Act). They consequently
launched an application under s 252 of the Act (the
section 252
application). These shareholders were the Akoo’s, the trustees
of the S A Hassam Trust and the trustees of the
A K Moosa Trust (the
section 252 applicants). As I have set out, the section 252
applicants held 17,8 per cent of the shares in
the Freedom Group.
[9]
In prayers 1 to 5 of their notice of motion, the section 252
applicants sought orders: declaring that the affairs of Freedom
Stationery were being conducted in a manner unfairly prejudicial,
unjust or inequitable to the applicants; that Mr Shaukat Moosa
and Mr
Sacoor be removed as directors; that Mr Shaukat Moosa and Mr Sacoor
be interdicted from occupying the position of a director
of Freedom
Stationery for a period of three years from date of the order; that
two independent directors be appointed; and that
the shareholders be
directed to appoint a director to serve on the board together with
the two independent directors. Two further
prayers of the notice of
motion read as follows:
‘
6.
Alternatively to paragraphs 2 to 5 above, ordering the majority
shareholders to purchase the shares and loan accounts of the
Applicants at a purchase consideration to be determined by an
independent firm of Auditors to be elected by the Applicants.
7.
Alternatively to para 6 above by the senior partner or senior
director of the auditing or corporate services division Deloittes
or
KPMG or Ernst and Young.’
[10]
Freedom Stationery, all of its other shareholders and Mr Shaukat
Moosa and Mr Sacoor were cited as respondents in the section
252
application. Oyster Plastics, SA File and Moss Ridge were not cited
as respondents and no relief was claimed against them in
the notice
of motion.
[11]
The section 252 application was duly served. Mr M Z Hassam did not
read the papers but arranged for it to be delivered to his
attorney,
Mr Iqbal Ganie. After taking advice from Mr Ganie, the trustees of
the M Z Hassam Trust resolved not to oppose the application.
It
should be mentioned that the section 252 applicants included the
family trusts of two of Mr M Z Hassam’s brothers. The
Dr A A
Moosa Trust, the family trust of another brother of Mr M Z Hassam,
was the only other shareholder that did not oppose the
section 252
application. The section 252 application was opposed by Mr Shaukat
Moosa, acting also for Mr Sacoor and the remaining
69,4 per cent
shareholders.
[12]
In circumstances that I shall return to, Swain J issued an order in
the section 252 application on 8 December 2011 (the section
252
order). In a nutshell, the section 252 order provided that the
trustees of six of the respondent trusts purchase the shares
and loan
accounts of the section 252 applicants in the Freedom Group, at a
price to be determined by a chartered accountant appointed
by the
chairperson of the South African Institute of Chartered Accountants.
[13]
The section 252 order was fully given effect to. The 17,8 per cent
shares of the section 252 applicants in the Freedom Group
were valued
at R51,3 million, as follows: Freedom Stationery R44,32 million;
Oyster Plastics R1,27 million; SA File R2,17 million;
and Moss Ridge
R3,54 million. In terms of resolutions dated 9 November 2012 these
shares and loan accounts were transferred to:
the S A Moosa Trust (3
per cent); the G H Moosa Trust (3 per cent); the S M Moosa Trust (3
per cent); the S Hassam Trust (3 per
cent); the A A Moosa Trust (3
per cent) and the C R Moosa Trust (2,8 per cent). For convenience, I
refer to these trusts as the
purchasing respondents. The two other
trusts that opposed the section 252 application, namely the I E
Hassam Trust and the A C
Sacoor Trust, were eventually not interested
in purchasing the shares.
[14]
However, on 27 March 2013, and despite their deliberate decision not
to oppose the section 252 application, the trustees of
the M Z Hassam
Trust instituted an action aimed at overturning the section 252 order
and reversing its implementation. They alleged
that the section 252
applicants and the purchasing respondents had concluded a sale of
shares agreement in breach of the rights
of the M Z Hassam Trust
contained in the Articles of Association of the companies in the
Freedom Group; that the agreement was
therefore invalid and of no
force and effect; and that the parties to that sale of shares
agreement ‘wrongfully and unlawfully
procured the granting’
of the section 252 order.
[15]
Based essentially only on these allegations, they claimed an order
setting aside the section 252 order. They also claimed ancillary
relief consisting of an order declaring ‘the agreement in
respect of the sale of shares referred to in the order . . . as
invalid and of no force or effect’; that the purchasing
respondents deliver an account of all the dividends which they had
received in respect of the shares purchased in terms of the sale of
shares agreement; and that the Freedom Group take whatever
steps may
be necessary to rectify their respective share registers to give
effect to the order. The action was defended by the
present
applicants and the matter went to trial. Mr M Z Hassam and Mr Iqbal
Ganie testified for the respondents. The applicants
called Mr Shaukat
Moosa and his brother, Mr Salim Moosa, as witnesses. At the
conclusion of the trial, the court a quo granted
all the orders
claimed in the action, with costs.
Rescission
of court orders generally
[16]
As a general rule, a court has no power to set aside or alter its own
final order, as opposed to an interim or interlocutory
order. The
reasons for this age-old rule are twofold. First, once a court has
pronounced a final judgment, it becomes
functus officio
and
its authority over the subject matter has ceased. The second reason
is the principle of finality of litigation expressed in
the maxim
interest rei publicae ut sit finis litium
; it is in the public
interest that litigation be brought to finality. See
Firestone
South Africa (Pty) Ltd v Genticuro AG
1977 (4) SA 298
(AD) at
306F-G and 309A;
Minister of Justice v Ntuli
[1997] ZACC 7
;
1997 (3) SA 772
(CC) paras 22 and 29;
Zondi v MEC, Traditional and Local
Government Affairs, and others
2006 (3) SA 1
para 28.
[17]
There are exceptions to this general rule. The requirements for
relief under these exceptions depend on whether the judgment
was
given on the merits of the dispute between the parties after evidence
had been led or whether the order was made in default
of appearance
of the party that seeks to have it rescinded. In respect of the first
category the test is stringent. Such judgment
can only be set aside
on the ground of fraud or, in exceptional circumstances, on the
grounds of
justus error
or the discovery of new documents. See
Childerley Estate Stores v Standard Bank of SA Ltd
1924 OPD
163
at 168 and
De Wet & others v Western Bank Ltd
1979 (2)
SA 1031
(A) at 1040E-1041B. A default judgment, on the other hand,
may be set aside in terms of Uniform Rule 31(2)
(b)
, rule 42 or
the common law. Only rule 42(1)
(a)
or the common law rules in
respect of rescission of a default judgment could possibly be
applicable to the section 252 order.
[18]
Rule 42(1)
(a)
provides:
‘
(1)
The court may, in addition to any other powers it may have,
mero
motu
or upon the application of any party affected, rescind or
vary:
(a)
An order or judgment erroneously sought or erroneously granted in
the absence of any party affected thereby; . . . .’
As
Streicher JA explained in
Lodhi 2 Properties Investments CC &
another v Bondev Developments (Pty) Ltd
2007 (6) SA 87
(SCA)
paras 25-27, the phrase ‘erroneously granted’ relates to
the procedure followed to obtain the judgment in the
absence of
another party and not the existence of a defence to the claim. See
also
Colyn v Tiger Food Industries Ltd t/a Meadow Feed Mills
(Cape)
2003 (6) SA 1
(SCA) paras 6 and 9. Thus, a judgment to
which a party was procedurally entitled, cannot be said to have been
erroneously granted
in the absence of another party.
[19]
It follows from what I have said that the invalidity of an antecedent
sale of shares agreement could not, by itself, entitle
the M Z Hassam
Trust to rescission of the section 252 order. It had to bring its
case within the requirements of rule 42(1)
(a)
or the aforesaid
common law rules. The alleged invalidity of an agreement has no
bearing on rule 42(1)
(a)
and could only satisfy the second
common law requirement. Yet, the M Z Hassam trust relied only on the
invalidity of the alleged
sale of shares agreement for the setting
aside of the section 252 order. The particulars of claim in the
action made no reference
to the requirements of rule 42(1)
(a)
or
the common law rules relating to rescission of default judgment. It
follows that the particulars of claim did not disclose a
cause of
action. As the M Z Hassam Trust in any event did not present a
reasonable and acceptable explanation for its default in
evidence, it
did not make a case for the setting aside of the section 252 order.
This should have been the end of the matter.
[20]
Despite all of this, the court a quo not only set aside the section
252 order in terms of rule 42(1)
(a)
but also declared the sale
of shares agreement to be invalid. This it did without consideration
of the evidence and without making
any finding of credibility. In
these circumstances I propose to deal firstly with whether an
antecedent sale of shares agreement
was in fact entered into and
secondly with the approach of the court a quo in respect of rule
42(1)
(a)
.
Sale
of shares agreement?
[21]
The affidavits in the section 252 application demonstrated that the
relationship of trust and goodwill between the section
252 applicants
and the directors of the Freedom Group had dissipated. The majority
of the shareholders of the Freedom Group, however,
supported the
directors. Mr Shaukat Moosa was firmly of the view that the only
viable solution was to take up the offer in the
section 252
application to purchase the shares in Freedom Stationery. He
insisted, however, that the section 252 applicants should
sell their
shares in the Freedom Group. This was accepted by the section 252
applicants. In the result, Mr Shaukat Moosa arranged
that all the
other shareholders be contacted to ascertain which of them would be
interested in purchasing these shares. As I shall
set out later in
more detail, the M Z Hassam Trust declined to participate in the
collective effort to purchase the shares within
the context of the
section 252 application.
[22]
Having agreed in principle that the shares of the section 252
applicants in the Freedom Group would be purchased by the other
shareholders so interested, negotiations ensued between these
parties. Whilst the section 252 application was pending, each side
produced a draft consent order aimed at settling the application.
Neither side, however, was prepared to accommodate the other’s
proposal. As a result no agreement was reached and the section 252
application was enrolled for hearing on 8 December 2011. What
happened on that date, appears from the clear and uncontroverted
evidence of Mr Shaukat Moosa. He said that after counsel for both
sides attended on Swain J in chambers prior to the hearing, the
parties were informed that Swain J had directed them to attempt
to
agree the terms of a consent order and had indicated that in the
absence of such agreement he would rule on the matter. The
matter
stood down and the legal representatives of the section 252
applicants prepared a new draft consent order. The parties then
considered this draft consent order. Mr Shaukat Moosa testified that
the new draft consent order was also not agreed to. He said
that when
his objections to a number of provisions thereof were conveyed to the
section 252 applicants, they shook their heads
and said ‘no
ways, no ways’. This caused him to comment that the parties
were wasting their time and that the matter
should be argued. Thus,
no binding agreement had been reached by the time that Swain J
entered the court room.
[23]
In court, Swain J enquired whether the parties had been able to reach
agreement. Counsel responded that they had not. Swain
J asked whether
a consent order had been drafted and upon affirmation hereof, the
consent order drafted earlier that morning, was
handed up. Swain J
proceeded to work through the draft consent order, inviting
submissions from counsel on both sides on the matters
that the
parties had been unable to agree on. The court accordingly heard
argument and made rulings on a number of issues. These
rulings
included: that the costs of the valuer are to be borne in equal
shares by the section 252 applicants and the purchasing
respondents
and that the valuer is not afforded the power to summon persons to
appear before him to provide information or evidence
nor to inspect
personal statements of affairs or liabilities. Swain J effected these
and other amendments to the draft consent
order in manuscript and
proceeded to make the amended document an order of court. In the
circumstances it is of no moment that
the section 252 order continued
to be headed ‘Consent Order’ and still bore a resemblance
to an agreement. For these
reasons as well, the M Z Hassam Trust did
not prove the agreement that they alleged and there was thus no basis
for a declaration
of invalidity.
Section
252 order erroneously granted?
[24]
It remains to deal with the court a quo’s approach in respect
of rule 42(1)
(a)
. It reasoned that the section 252 order
differed materially from the relief claimed in the section 252
application in two respects,
namely that the section 252 order
provided for the sale of the shares and loan accounts in Oyster
Plastics, SA File and Moss Ridge
and for the purchase thereof only by
the purchasing respondents. Therefore, so the court a quo reasoned,
the section 252 order
had erroneously been made in the absence of the
M Z Hassam Trust.
[25]
As I have said, when an affected party invokes rule 42(1)
(a)
,
the question is whether the party that obtained the order was
procedurally entitled thereto. If so, the order could not be said
to
have been erroneously granted in the absence of the affected party.
An applicant or plaintiff would be procedurally entitled
to an order
when all affected parties were adequately notified of the relief that
may be granted in their absence. The relief need
not necessarily be
expressly stated. In my view it suffices that the relief granted can
be anticipated in the light of the nature
of the proceedings, the
relevant disputed issues and the facts of the matter. In this regard
it would be useful to enquire whether
the relief could have been
granted without amendment of the process in question. If so, the
failure of an affected litigant to
take steps to protect his
interests by joining the fray, ought to count against him. I agree
with what Didcott J said in
Ex parte Mason
1981 (4) SA 648
(D)
at 651C-D, namely:
‘
The
creditor who is not a character from some fairy tale protects his
interests by keeping in touch with the application’s
progress
and, once his opposition to it is serious, by joining the fray. On
the advertised date he appears or is represented in
Court, to
discover for himself whether the proceedings will be abandoned. If he
has held back his affidavits in the meantime, he
will have no
difficulty in defending his caution and, should the case continue, in
persuading the Court to allow him the opportunity
to file them after
the security is furnished.’
In
circumstances such as these, a party who did not oppose or
participate in the proceedings, would not be entitled to relief under
rule 42(1)
(a)
. This is not only logical and fair, but accords
with the fundamental principle of finality of litigation.
[26]
Section 252 was repealed by the Companies Act 71 of 2008 (the new
Act). Section 252 was substantially re-enacted in s 163 of
the new
Act. Despite its repeal, s 252 remained applicable to the
respondents’ action by reason of the provisions of Item
10 of
Schedule 5 to the new Act. Section 252(1) of the Act provides that a
member of a company who complains of oppressive or unfairly
prejudicial conduct, may make an application to the court for an
order under s 252. Section 252(3) provides:
‘
(3)
If on any such application it appears to the Court that the
particular act or omission is unfairly prejudicial, unjust or
inequitable,
or that the company's affairs are being conducted as
aforesaid and if the Court considers it just and equitable, the Court
may,
with a view to bringing to an end the matters complained of,
make such order as it thinks fit, whether for regulating the future
conduct of the company's affairs or for the purchase of the shares of
any members of the company by other members thereof or by
the company
and, in the case of a purchase by the company, for the reduction
accordingly of the company's capital, or otherwise.‘
[27]
Once it appears to a court that there was oppressive or unfairly
prejudicial conduct within the meaning of s 252(1), s 252(3)
provides
a court with very wide powers to make an order that it considers just
and equitable in the circumstances. It may make
such order as it
deems fit for bringing an end to the matters complained of. The court
is not limited to the kind of order specifically
mentioned in s
252(3). The words ‘or otherwise’ should not be construed
eiusdem generis
to those preceding it. See
Bader &
another v Weston & another
1967 (1) SA 134
(C) at 147F-G
(dealing with the identically worded s 111
bis
of the Companies
Act 46 of 1926);
Louw v Nel
[2010] ZASCA 161
;
2011 (2) SA 172
(SCA) paras 21 and 23;
Off-Beat Holiday Club & another v
Sanbonani Holiday Spa Share Block Ltd & others
[2017] ZACC
15
;
2017 (5) SA 9
(CC) paras 27 and 28. This wide discretion empowers
a court, for instance, to oblige even a minority shareholder to
purchase the
shares of a majority shareholder (
Bayly v Knowles
[2010] ZASCA 18
;
2010 (4) SA 548
(SCA) para 27), or to grant
relief against an oppressor who is not a direct shareholder of the
company concerned (
Bader
at 148A-C). Section 252 has to
be given a construction that will advance the remedy rather than
limit it. This statement in
Donaldson Investments (Pty) Ltd &
others v Anglo-Transvaal Collieries Ltd – SA Mutual Life
Assurance Society & another
intervening
1979 (3) SA 713
(W)
at 719F has expressly been approved in
Off-Beat
para 27.
[28]
In line herewith, an argument that the powers of a court under s 252
are restricted to orders relating to the pursuance of
the objects
contained in a company’s memorandum of incorporation was
rightly rejected by Jones J in
Gatenby v Gatenby & others
1996
(3) SA 118
(E). For these reasons, counsel for the MZ Hassam Trust
correctly conceded that in principle a court may order a purchase of
shares
under s 252(3) without compliance with the Articles of
Association of a company. In the light hereof, I agree with what was
said
in Blackman et al,
Commentary on the Companies Act,
vol
2, p 9-6 and 9-46, namely that although an applicant under s 252
ought to state in clear terms the general nature of the relief
sought, the court’s discretion is not limited by such
formulation. See also
Breetveldt & others v Van Zyl &
others
1972 (1) SA 304
(T) at 315C-E;
Heckmair v Beton en
Sandstein Industrieë (Pty) Ltd & andere
(1)
1980 1 SA
350
(SWA) at 353A-B. The nature of the section 252 application
manifested the reasonable prospect that, without amendment thereof,
an order may be made obliging only those shareholders that
participated in the application to purchase the shares of the section
252 applicants.
[29]
It appears from the evidence that the affairs of Freedom Stationery,
Oyster Plastics, SA File and Moss Ridge were closely interrelated.
The latter three companies were acquired or incorporated with funds
emanating from Freedom Stationery and without any financial
contribution by the shareholders. Oyster Plastics and SA File were
described as the ‘manufacturing arms’ of Freedom
Stationery and Moss Ridge owned the properties in which the other
three companies did business. The shareholders and directors
of these
companies were exactly the same. General meetings of the Freedom
Group took place at the same time. Although Oyster Plastics,
SA File
and Moss Ridge were not cited in the section 252 application, it was
stated in the founding affidavit that their affairs
were closely
intertwined with that of Freedom Stationery and that the conduct
complained of, also related to these three companies.
It therefore
came as no surprise that Mr Ganie testified that had these three
companies been cited in the section 252 application
‘. . . it
most probably would have made no difference’ to his advice to
the M Z Hassam Trust. In these circumstances,
it is clear that the
trustees of the M Z Hassam Trust must have at least realised or
ought to have realised that an order
in terms of the section 252
application might relate to the purchase of shares in the Freedom
Group as well.
[30]
But this is not the end of the matter. Mr Salim Moosa testified that
his brother, Mr Shaukat Moosa, requested him to contact
all the
shareholders of the Freedom Group to ascertain whether they would be
interested in purchasing the shares of the section
252 applicants in
the Freedom Group. Mr Salim Moosa said that he telephoned Mr M Z
Hassam for this purpose. He said that this took
place around May
2011. He told Mr Hassam that the
Freedom Group shares would be coming up for sale
and asked whether
the M Z Hassam Trust would be interested to take up its allocation.
Mr Salim Moosa testified that Mr Hassam responded
in an abrupt manner
and said that the shares held by the trusts of his brothers Mr A H
Moosa and Mr S A Hassam belonged to their
family and that no one else
could buy them. Mr Salim Moosa said that he told Mr Hassam to go
ahead and do so and that that was
the end of the conversation.
[31]
In his evidence Mr M Z Hassam confirmed the approach by Mr Salim
Moosa and that his response was essentially as related by
Mr Salim
Moosa. The only material difference in the evidence of these
witnesses in this regard was that Mr M Z Hassam said that
reference
had only been made to Freedom Stationery shares. It is clear,
however, that this conversation took place well after Mr
Shaukat
Moosa had deposed to his answering affidavit in the section 252
application, where he expressed the firm view of the majority
shareholders that the shares in the Freedom Group should be
purchased. The probabilities are therefore overwhelming that Mr Salim
Moosa referred to the shares of the Freedom Group, as he had been
instructed to do. Even though Mr M Z Hassam expressed entitlement
to
purchase the shares of his brothers’ trusts, the M Z Hassam
Trust did nothing about it. It could hardly have expected
the court
to order it to purchase the shares in its absence.
[32]
For these reasons I find that when the trustees of the M Z Hassam
Trust took the considered decision not to participate in
the section
252 application, they reconciled themselves with the reasonable
prospect that the court could in the exercise of its
wide discretion
under s 252 order that the shares in the Freedom Group be purchased
by the purchasing respondents. In the result
the section 252 order
was not erroneously made in their absence.
[33]
It follows that the order of this court refusing the application for
leave to appeal, should be set aside, that leave to appeal
should be
granted and that the appeal should be upheld.
[34]
It is ordered that:
1. The application in terms of
s
17(2)
(f)
of the
Superior Courts Act 10 of 2013
succeeds;
2. The refusal of leave to appeal by
this court is set aside and replaced with an order granting the
applicants’ leave to
appeal to this court;
3. The appeal is upheld with costs,
including the costs of the applications for leave to appeal;
4. The order of the court a quo is set
aside and replaced with an order dismissing the action with costs.
____________________
C
H G van der Merwe Judge of Appeal
APPEARANCES
For
Applicants: A R Sholto-Douglas SC
Instructed
by:
M
S Omar & Associates, Durban
Webbers,
Bloemfontein
For
Respondents: C J Hartzenberg SC
Instructed
by:
Shaukat
Karim & Co, Durban
Honey
Attorneys, Bloemfontein