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[2014] ZAFSHC 207
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Eden Rose Mining Resources (Pty) Ltd and Others v Michau Exploration & Drilling (Pty) Ltd and Another (1590/2014) [2014] ZAFSHC 207 (11 December 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Appeal
No.: 1590/2014
DATE:
11 DECEMBER 2014
In
the matter of:
EDEN
ROSE MINING RESOURCES (PTY) LTD
..............................
First
Applicant
JOHAN
MYNHARDT
...................................................................
Second
Applicant
RAMUNLAL
MAHADEVEY
...........................................................
Third
Applicant
ASHWANI
PATHAK
.....................................................................
Fourth
Applicant
And
MICHAU
EXPLORATION & DRILLING (PTY) LTD
.................
First
Respondent
HALOGLO
(PTY)
LTD
............................................................
Second
Respondent
CORAM
:
VAN DER MERWE, J
JUDGMENT
:
VAN DER MERWE, J
HEARD
ON
: 30 OCTOBER 2014
DELIVERED
ON
: 11 DECEMBER 2014
[1]
This started out as an application for the final liquidation of the
first respondent (the company). However, at the hearing
counsel for
the applicants eventually asked only that the matter be referred for
the hearing of oral evidence on the issue of the
locus standi of the
applicants. I accordingly set out the background of the matter in so
far as it is relevant to this question.
[2]
At the hearing I made an order striking out the replying affidavit of
the second applicant and I gave reasons for that order.
The matter
must therefore be decided on the founding and answering affidavits
and annexures thereto. In the result the fourth and
fifth sets of
affidavits prepared by the company and the applicants respectively,
were not admitted. It follows that each party
should bear his/its own
costs in this regard.
[3]
During the period January to August 2012 Indian Technomac South
Africa (Pty) Ltd (Itcol SA), the company and the second respondent
entered into an arrangement which is inter alia embodied in three
written agreements. At the time all the issued shares in the
company
were held by Ms M S E Michau and she and her husband, Mr C C Michau,
were the directors of the company. These agreements
are by no means
models of clarity, but it appears to be common cause that essentially
the following was intended. In return for
payment by Itcol SA of the
amount of R20 million, 70 per cent of the shares in the company would
be transferred to Itcol SA. The
other 30 per cent of the shares in
the company would be transferred to the second respondent. Mr Michau
and the second applicant
would each obtain 50 per cent of the shares
in the second respondent. The board of directors of the company would
consist of two
directors appointed by Itcol SA and two directors
appointed by the second respondent.
[4]
Whether or to what extent effect was given to this arrangement is
heavily in dispute. In particular Mr and Ms Michau maintain
that the
arrangement was not implemented because it was subject to several
conditions, including full payment of the amount of
R20 million by
Itcol SA. It is common cause that Itcol SA only paid an amount of R7
million.
[5]
It appears to be common cause that the company is solvent. In the
founding affidavit the applicants relied on s 81(1)(d)(ii)
and
81(1)(e)(i) and (ii) of the Companies’ Act 71 of 2008 (the
Act). In terms of s 81(1)(d)(ii) a company, one or more
of its
directors or one or more of its shareholders may apply to the court
for an order to wind up the company on the ground that
the
shareholders are deadlocked in voting power. Section 81(1)(e)(i) and
(ii) provide for an order of winding-up of a company on
application
of a shareholder thereof on the grounds that the directors or other
officers in control of the company are acting in
a manner that is
fraudulent or otherwise illegal or the company’s assets are
being misapplied or wasted.
[6]
This court has a discretion to refer the matter for oral evidence. In
the exercise of this discretion the court should be guided
to a large
extent (but not exclusively) by the prospects of
viva
voce
evidence
tipping the balance of probabilities in favour of the applicants. It
follows that it must be considered what the prospects
are that
viva
voce
evidence will
show that at least one of the applicants is either a shareholder or a
director of the company.
[7]
There is no prospect that any of the applicants will be found to be a
shareholder of the company. The case for the applicants
is that Itcol
SA and the second respondent are the shareholders of the company. It
is clear however, that neither has been entered
as shareholders in
the securities register of the company and that neither fall within
the definition of shareholder in s 1
of the Act. But this is
beside the point, as neither Itcol SA nor the second respondent
applies for the liquidation of the company.
The first applicant is
not a shareholder of the company. It is a minority shareholder in
Itcol SA. The third and fourth applicants
are shareholders and
directors of the first applicant. The majority shareholder of Itcol
SA is an Indian company (Itcol India).
Why the first applicant is a
party to this matter is therefore not easy to comprehend.
[8]
The second applicant stated that he brings the application in the
capacity of director of the company. Although one may read
between
the lines that they regarded themselves as directors of the company
together with the second applicant and Mr Michau, there
is no
statement under oath by the third applicant or the fourth applicant
that any of them act in the application in a capacity
of director of
the company. This is significant in the light of the following.
According to the applicants the third and fourth
applicants would
have been appointed as directors of the company by Itcol SA. Attached
to the answering affidavit is a letter from
Dr R K Sharma, chairman
and managing director of Itcol India, in which he states that the
third and fourth applicants are no longer
directors of Itcol SA and
have no role to play in the affairs of the company. Moreover, Itcol
SA has since been placed in business
rescue and its business rescue
practitioner has given written notice of his opposition to the
liquidation of the company on the
ground that it is not in the
interest of of Itcol SA. There is thus little or no prospect that the
third or fourth applicant will
at the hearing of oral evidence be
authorised or able to act as director of the company or to apply for
its liquidation.
[9]
Before this application was launched, the applicants were aware that
Mr Michau denies that the second, third or fourth applicants
were
appointed as directors of the company. Correspondence to that effect
was in fact attached to the founding affidavit. Nevertheless
there is
not a shred of evidence in the founding affidavit as to how, where
and when the alleged new directors of the company were
appointed. The
only piece of evidentiary material in this regard is a sentence in a
document purporting to be minutes of a meeting
of the board of
directors of the company held on 5 February 2014, attended by the
second, third and fourth applicant, but not Mr
Michau. This sentence
reads:
‘
The
directors of MED had been appointed by a resolution dated 17 February
2012 but there has been no information forthcoming from
Wimpie
Bardenhorst whether the formalities of their appointments were duly
completed.’
‘
MED’
is a reference to the company and ‘Wimpie Bardenhorst’ to
its auditor. This sentence, tucked away in an annexure
and not
referred to in the founding affidavit, did not call for an answer by
the company.
[10]
As far as is presently relevant, s 66(7) of the Act provides
that a person becomes entitled to serve as a director of
a company
when that person has been appointed in accordance with Part F of
Chapter 2 of the Act and has delivered to the company
a written
consent to serve as its director. On the case for the applicants the
appointment of the third and fourth applicants as
directors of the
company could only have been made by Itcol SA and that of the second
applicant by the second respondent. In terms
of s 57(1) of the
Act Itcol SA and the second respondent had for this purpose either to
have been shareholders of the company
as defined in s 1 of the
Act or entitled to exercise voting rights in relation to the company,
irrespective of the form, title
or nature of the securities to which
those voting rights are attached. As I have said, neither Itcol SA
nor the second respondents
are shareholders as defined. The founding
affidavit contains no allegation that when appointing directors of
the company, Itcol
SA and the second respondent exercised any voting
rights nor of any particulars of such voting rights. Crucially,
assuming that
they could exercise voting rights, there is no evidence
at all by the applicants that the alleged resolution of 17 February
2012
was taken by Itcol SA and/or the second respondent. On the other
hand, Mr Michau stated that he is the holder of 50 per cent of
the
shares in the second respondent, that the second respondent could
therefore not appoint the second applicant as director of
the company
without his approval and that no such resolution was taken by the
second respondent. And finally there is in any event
no evidence
before me that the second, third or fourth applicant has delivered to
the company a written consent to serve as its
director.
[11]
In the circumstances I find the case of the applicants on this issue
so vague and unconvincing that I am not persuaded to refer
it for the
hearing of
viva voce
evidence.
[12]
The application is dismissed with costs.
C
H G VAN DER MERWE, J
On
behalf of the appellants: M G Roberts SC (with him E Roberts)
Instructed
by:
Bokwa
Attorneys
BLOEMFONTEIN
On
behalf of the first respondent: F W A Dansfuzz SC
Instructed
by: Bezuidenhout’s Inc
BLOEMFONTEIN
mvheerden