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[2014] ZAGPPHC 418
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Off-Beat Holiday Club and Another v Sanbonani Holiday Spa Share Block Limited and Others (49588/2008) [2014] ZAGPPHC 418 (19 May 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
NORTH DIVISION PRETORIA
Case No
49588/2008
Date: 19 May 2014
In the matter
between:
OFF-BEAT HOLIDAY
CLUB
.................................................................................................
First
Applicant
FLEXI HOLIDAY
CLUB
.....................................................................................................
Second
Applicant
and
SANBONANI HOLIDAY
SPA SHARE BLOCK
LIMITED
............................................
First
Respondent
SANBONANI
DEVELOPMENT (PTY)
LIMITED
.......................................................
Second
Respondent
HANS MICHAEL
HARRI
..................................................................................................
Third
Respondent
HANS MICHAEL
HARRI N.O.
….................................................................................
Fourth
Respondent
HELEEN DUPORETHA
HARRI N.O.
…..........................................................................
Fifth
Respondent
VINCENT
CHRISTOPHER CALACA N.O.
…................................................................
Sixth
Respondent
SANBONANI HOTEL
MANAGEMENT (PTY)
LIMITED
.......................................
Seventh
Respondent
THE REGISTRAR OF
COMPANIES
.............................................................................
Eighth
Respondent
PHILIP
JOUBERT
..............................................................................................................
Ninth
Respondent
JUDGMENT ON
APPLICATION FOR LEAVE TO APPEAL
1. The matter has a
long and involved history. The applicants are minority shareholders
of the first respondent. They sought relief
against the respondents
in terms of sections 266, 267 and 252 of the old Companies Act 61 of
1973, based upon allegations that
the second to seventh respondents
as majority shareholders and as entities controlled by the third
respondent, acted to the detriment
of the first respondent. In
particular they alleged that:
(i) a Value Added
Tax refund was wrongfully diverted from first respondent to second
respondent;
(ii) a hotel was
constructed encroaching upon the first respondent’s property;
(iii) an amendment
of the first respondent’s articles of association was
manipulated and share blocks were unlawfully diverted
to legitimise
the encroachment of the hotel upon the first respondent’s
property;
(iv) shares
attaching to the share blocks affected by the wrongful construction
of the hotel were unlawfully transferred to a trust
controlled by the
third respondent;
(v) share blocks
were created in respect of common property affected by the hotel
construction and wrongfully manipulated for the
construction of the
hotel;
(vi) a loan account
was incorrectly reflected in the first respondent’s books
purporting to evidence a non-existent liability
to the first
respondent’s detriment.
2.
After argument had been heard, the court appointed a provisional
curator ad
litem
to
the first respondent and requested him to investigate whether there
were indeed grounds to proceed on behalf of the first respondent
against the third respondent or any entity controlled by him.
3.
The court further issued a rule
nisi
calling
upon all interested parties to show cause on the return day why the
allegedly unlawful steps taken in respect of the first
respondent’s
share blocks, shares and articles detailed above should not be set
aside and, where necessary, rectified; and
further why the shares
allegedly unlawfully issued should not be cancelled.
4. The return day
was defined as the date upon which judgment would be given once the
curator’s report had been received and
the parties had been
given an opportunity to file further papers.
5. The provisional
curator’s report concluded that the VAT refund plus interest
thereon remained an asset of the first respondent
that could be
reclaimed. It also confirmed that the construction of the hotel was
completed in conflict with the original diagram
and that the issue of
the additional shares and creation of additional share blocks was
unlawful, as was their transfer to a trust
under the control of the
third respondent. These actions caused financial prejudice to the
first respondent.
6.
The provisional curator
ad
litem
raised
further issues of manipulative action on the part of the hotel
operator which caused detriment to the first respondent. No
rental
had ever been paid by the hotel operator to the first respondent in
respect of the use of the first respondent’s immovable
property, while the first respondent had to pay rental to the hotel
operator for the use of the hotel’s laundry, linen storage
and
shelving facility, which rental was
prima
facie
exorbitant.
The loan account also constituted potential prejudice to the first
respondent.
7.
After hearing further argument the court held in its judgment that
the rights sought to be enforced by the applicants through
the
appointment of the curator
ad
litem
had
prescribed and that only the failure to pay rental for the use of the
first respondent’s land and the enforcing of excessive
rental
payments against the first respondent had not prescribed. It was only
in respect of the pursuit of these two potential causes
of action
that the appointment of the curator ad litem was confirmed and in
respect of which he was empowered to institute action
on behalf of
the first respondent. The applicants’ further claims were held
to have prescribed and no authority was granted
to the curator to
proceed with any action in respect thereof.
8. In effect,
therefore, the court dismissed these claims on the ground of
prescription.
9.
The court’s judgment does not deal in as many words with the
rule
nisi
the
return day of which arrived with the handing down of the court’s
judgment. As a matter of law, the rule therefore expired
as it was
neither confirmed nor extended. In addition, the reason for the
issuing of the rule fell away once the court found that
the potential
causes of action in respect of which the rule called on interested
parties to make submissions were unenforceable.
Such conclusion
would, with respect to all concerned, appear to be trite.
10. The applicant’
legal advisers did not see matters in this light. They were of the
view that the rule remained in existence
because its fate was not
dealt with in the judgment. It was for this reason that no leave was
sought to appeal against its having
been set aside when the
applicants applied for leave to appeal against the court’s
judgment. Its fate was only referred to
in supplementary heads of
argument for the first time, when the proposition was advanced that
the rule should be confirmed at that
stage as it was still in
existence absent a specific finding to the contrary in the court’s
judgment.
11.
Only after the application for leave to appeal had been dismissed did
the applicants decide to seek condonation for the failure
to apply
for leave to appeal against the dismissal of the rule
nisi
within
the time limits prescribed by the Rules. The reason for this omission
was the mistaken view their legal advisors took of
the law relating
to provisional orders not dealt with by the court on their return
day. The condonation application was vigorously
opposed on the
grounds that the explanation for the failure to seek leave to appeal
against the court’s refusal to confirm
the rule was
unacceptable.
12.lt was
furthermore argued that the wording of Rule 49 of the Rules of Court
does not allow a piecemeal process of applying for
leave to appeal
and does not contemplate a second application for leave if not all
the grounds of appeal have been raised; or all
the issues needed to
be addressed in an appeal have not been covered in the first
application. The wording of the Rule does not
deal expressly with
this question. Given the conclusion to which the court has come in
respect of the other issues that need to
be addressed in this
application the court will assume, without finally deciding, that a
second application may be permissible
if the circumstances are such
that the interests of justice demand that an extraordinary leave to
appeal be granted.
13.
There is no debate about the fact that the reasons advanced for the
non-compliance with the aforesaid time limits in seeking
leave to
appeal are unusual, to say the least.
Non
constat,
however,
that the explanation lacks candour or
bona
fides.
Indeed,
the applicants’ view that the provisional order had survived
the judgment was advanced during argument on the original
application
for leave to appeal against the judgment already. In the light of
these facts the explanation is acceptable.
14.The next question
that needs to be considered is the prospect of success that the
proposed appeal against the dismissal of the
provisional order
enjoys. If there is no realistic prospect of success there is no
rational purpose in granting leave to appeal.
15.
The grounds advanced for granting leave to appeal against the refusal
to confirm the rule attack the court’s finding that
the causes
of action forming the subject matter of the rule
nisi
had
prescribed. As the court has already refused leave to appeal against
the judgment based upon these findings, it is clear that
no leave can
be granted on the merits of the issue sought to be appealed against.
Given the court’s finding that the above
mentioned causes of
action have prescribed, it would be absurd to confirm a rule that
could have no effect whatever on the dispute
between the parties.
16.The proposed
appeal is unlikely to succeed. The application for condonation for
the late launching of an application for leave
to appeal against the
court’s refusal to confirm the provisional order is dismissed
with costs, such costs to include the
costs of two counsel.
17.
The respondents argued with conviction that the costs should be
granted on a punitive scale if the application were to fail
because
of the extraordinary nature of the explanation that was proffered for
the delay in launching the latter. Unusual the explanation
certainly
was, but it was neither
mala
fide
nor
vexatious and thus no punitive costs order is called for. The costs
are to be taxed on the party and party scale.
The following order
is therefore issued:
1.
The application for condonation for the late launching of an
application for leave to appeal against the court’s dismissal
of the provisional rule granted when the provisional curator
ad
litem
was
appointed, is dismissed with costs, such costs to include the costs
consequent upon the employment of two counsel.
Signed at Pretoria
on this 19
th
day of May 2014.
E BERTELSMANN
Judge of the High
Court.