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[2013] ZAFSHC 42
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Firstrand Bank Ltd v Western Breeze Trading 213 (Pty) Ltd (5095/2010) [2013] ZAFSHC 42 (15 March 2013)

FREE STATE HIGH COURT,
BLOEMFONTEIN
REPUBLIC OF SOUTH AFRICA
Case No.:5095/2010
In the matter of:
FIRSTRAND BANK
....................................................................................
.Applicant
and
WESTERN
BREEZE TRADING 213 (PTY) LTD
.....................................
Respondent
__________________________________________________
JUDGEMENT BY:
MOLEMELA,
J
__________________________________________________
HEARD ON:
5 & 6
MARCH 2013
__________________________________________________
DELIVERED ON:
15 MARCH
2013
__________________________________________________
[1] This is an application for the
winding up of the respondent company on the basis that it is unable
to pay its debts. The applicant
brought the application on motion but
the respondent raised several factual disputes, as a result of which
this court, on the 30
th
August 2011, found that there was
a dispute of fact pertaining to the shareholding of the respondent
company and accordingly referred
the matter for oral evidence. About
a year and a half after this ruling, the applicant set the matter
down for a hearing. Four
witnesses testified at this hearing, two on
behalf of the applicant and two on behalf of the respondent.
[2] It is common cause that (i) HCL
Family Trust (“HCL Trust) was indebted to the applicant in the
amount of R3 712 544,50
inclusive of interest, in respect
of certain credit facilities that applicant had provided to it; (ii)
that at the time that such
indebtedness arose, one Hendrik Lamprecht
(“Mr Lamprecht”) was the sole director of the respondent
company and the
sole trustee of HCL Trust. (iii) that one of the
conditions of the agreement in terms of which the applicant granted
such facilities
to HCL Trust was that this indebtedness would be
secured by way of a suretyship, as a result of which Mr Lamprecht
signed a deed
of suretyship which purported to bind the respondent as
the surety of HCL Trust (exhibit “G”); that Mr Lamprecht
also
signed a document headed “Consent in terms of section 226
of the Companies Act, 1973” (exhibit “E11”)
(hereafter
referred to as “the section 226 Consent”). The
section 226 consent
inter alia
stated as follows:
“
We,
being all the members of the company [respondent], hereby consent to
the company signing a suretyship for the liabilities of
HCL Family
Trust (“the debtor”) to First Rand Bank Limited in the
sum of R3 500 000,00 plus such further
sum or sums, of
interest on that amount and all charges and costs as may from time to
time become due and payable by the said debtor.”
At the bottom of this document,
provision was made for shareholders of the respondent company to
sign. Mr Lamprecht wrote down his
name at the blank space intended
for the name of shareholder and then attached his signature on the
space intended for such shareholder’s
signature. The same
document made provision for certification of shareholders by an
auditing firm. A firm by the name of CAP Charted
Accountants affixed
its company stamp on the space allocated for the auditor’s
signature.
Ex facie
the document, the stamp was affixed on the
23
rd
April 2009.
[3] The respondent resisted the
application for the respondent’s liquidation on the following
grounds:
(i) That Mr Lamprecht was never the
shareholder of the respondent;
(ii) the correct shareholder of the
respondent company was Vorprecht Besigheids Trust) (“Vorprecht
Trust”) and its trustees
were Mr Lamprecht and one Mr Andries
Vorster (“Mr Vorster”). The respondent contended that
insofar as Vorster, being
one of the trustees of the Vorprecht Trust
did not co-sign the deed of suretyship, there was no valid consent
contemplated in terms
of section 226 of the Companies Act 1973
(“Companies Act”);
(iii) that there was therefore no
valid suretyship that was concluded, with the result that the
respondent is not indebted to the
applicant in any way, such that it
cannot be regarded as unable to pay its debts as contemplated in
section 345(1) of the Companies
Act.
[4] The respondent’s defence is
based on acceptance that section 226 of the Companies Act is
applicable to this matter. It
is apt to refer to the provisions of
section 226 of the Companies Act. The relevant parts of this section
provide as follows:-
Section 226
“
Prohibition
of loans to, or security in connection with transactions by directors
and managers
.
(1) No company shall
directly or indirectly make a loan to-
(a) any director or
manager of-
(i) the company; or
(ii) its holding company;
or
(iii) any other company
which is a subsidiary of its holding company; or
(b) any other company or
other body corporate controlled by one
or more directors or
managers of the company or of its holding
company or of any company
which is a subsidiary of its holding
company; or provide any
security to any person in connection with an obligation of such
director, manager, company or other body
corporate.
(1A) For the purpose of
subsection (1)-……..
(1B) The provisions of
subsection (1) and of paragraph (b) of subsection (1A)
shall not be construed as
prohibiting a company from making a loan to, or providing security to
any person in connection with an
obligation of, its holding company
or subsidiary or a subsidiary of such holding company;
(2) The provisions of
subsection (1) shall not apply-
(a) in respect of-
(i) the making of a loan
by a company to its own director or manager;
(ii) the provision of
security by a company in connection with an obligation of its own
director or manager;
(iii) the making of a
loan by a company to any other company or other body corporate
controlled by one or more of the directors
or managers of the
first-mentioned company; or
(iv) the provision of
security by a company in connection with an obligation of any other
company or other body corporate controlled
by one or more of the
directors or managers of the first-mentioned company,
with the prior consent of
all the members of the company or in terms of a special resolution
relating to a specific transaction:
Provided that in respect of any
such loan made or security provided at any time before
the date of commencement
of the Companies Amendment Act, 1992, such consent shall be deemed to
have been given if the transaction
concerned has subsequently,
whether before or after that date, been
ratified by all the
members of the company; or ………..”
[5] The applicant contends that the
provisions of section 226 of the Companies Act are not applicable to
a trust as a trust is not
a body corporate as envisaged in section
226 of the Companies Act. It was argued that since a trust does not
fall in any of the
categories against which a prohibition arises in
section 226(1) of that Act, section 226 of the Act was not applicable
ex lege
and the applicant was accordingly not bound by its
provisions, with the result that a defence based on the lack of any
proper authorisation
in terms of section 226 ought to fail.
[6] I agree that it is clear from the
text of this section that the ambit of its prohibition does not
extend to a trust. Consequently,
this section cannot, in my view, be
considered to apply to the parties’ agreement
ex lege.
This
does not, however, detract from the fact that the applicant and
respondent in their agreement, which was drafted by the applicant
and
in terms of which the applicant agreed to grant certain facilities to
the HCL Trust, expressly agreed that the provisions of
this section
would be applicable. This condition was couched as follows: “
With
the specific provision that Western Breeze Trading 213 (Pty) Ltd
provides the bank with the prior written consent of its shareholders

in terms of section 226 of the Companies Act…”
In
my view, the parties, by their own volition, simply agreed that the
respondent’s suretyship would be subject to the respondent

obtaining the prior written consent of its shareholders.
[7] The applicant argued that even if
section 226 of the Companies Act was found to be applicable, this
provision was in any event
for the benefit of the applicant and the
applicant could thus waive compliance therewith. In my view, there is
nothing in the parties’
agreement that suggests that compliance
with this clause was intended only for the benefit of the applicant.
As compliance with
that section could also equally benefit the
respondent’s shareholders, a determination of whether the
respondent’s
shareholder had given valid consent to the
suretyship was therefore crucial.
[8] The applicant contended that
section 226 of the Companies Act had, in any event, been complied
with given that Mr Lamprecht
had, in his capacity as the sole
director and sole shareholder of the respondent, signed the section
226 consent. The applicant
further contended that insofar as Mr
Lamprecht had, by filling in his name at the space allocated for the
shareholders of the respondent
company, represented himself as a
shareholder to the applicant, the respondent was estopped from
denying that Mr Lamprecht was
a shareholder of the respondent.
[9] The main dispute between the
parties pertains to the respondent’s shareholding as at the
time the section 226 consent
and the deed of suretyship were signed,
i.e. 3 April 2009. Much of the respondent’s denial of the
validity of the consent
purportedly granted by Mr Lamprecht was based
on the argument that CAP Chartered Accountants were not or could not
have been the
auditors of the respondent company as at the date on
which their stamp was affixed on the section 226 consent. One of the
partners
of that firm (i.e. of CAP Chartered Accountants), viz Mr
Geyer, testified that that firm was indeed the respondent’s
auditor
at that time. Significantly, this evidence was not contested
at all, which led me to believe that this aspect was merely a red
herring that sought to create a factual dispute. That is just a
remark I make in passing. The fact of the matter is that the dispute

pertaining to the respondent’s shareholding could not be
resolved on the papers and was accordingly referred for oral
evidence.
The parties subsequently adduced the evidence of four
witnesses. Surprisingly, Mr Lamprecht was not one of these witnesses.
[10] The applicant’s main
contention is that since Mr Lamprecht was the sole trustee of HCL
Trust, which was the sole shareholder
of the respondent, he
accordingly had the necessary authority to sign the section 226
consent on behalf of HCL Trust, which he
indeed signed on the 3
rd
April 2009, by so doing giving valid consent for the respondent to
stand suretyship. The respondent, on the other hand, denies
that as
at the 3
rd
April 2009 HCL was the sole shareholder of the
respondent. According to the respondent, during 2006, the shares that
were held
by HCL Trust were transferred to Vorprecht Trust by virtue
of a donation made by Mr Lamprecht and that consequently, all the
trustees
of the Vorprecht Trust (viz Mr Lamprecht and Mr Vorster)
ought to have signed the section 226 consent on behalf of the
Vorprecht
Trust. In so far as Mr Vorster did not sign, so the
argument goes, then there was no valid consent for the respondent’s
suretyship,
with the result that there was no valid suretyship on
which the respondent can be held liable for HCL Trust’s
indebtedness.
[11] The evidence of the four
witnesses rendered the following aspects to be common cause:
(i) That neither the respondent’s
company secretary (Mr Vermaak) nor Mr Vorster had ever seen a signed
share certificate issued
to the Vorprechts Besigheids Trust
(“Vorprecht Trust”), nor was there any evidence that
share certificate no 2, issued
to HCL Trust, was ever cancelled;
(ii) According to Vorster’s
evidence, the alleged shareholding of the Vorprecht Trust was never
reflected in the financial
statements of the Vorprecht Trust, the
reason being that the Trust never had the share certificate;
(iii) Mr Lamprecht was left in total
control of the recording of transactions, specifically the donation
that formed the
causa
for the transfer of shares into
Vorprecht Trust’s name and the recording of underlying
transactions (donations) in terms
of which 2 farms were transferred
into the respondent’s name. It was further left to Mr Lamprecht
to decide the time and
manner in which these transactions would be
recorded;
(iv) That Mr Lamprecht was the
respondent’s sole director until his sequestration in 2010; Mr
Vorster replaced him as sole
director in June 2010.
(v) All the affairs of the respondent
company were left in control of Mr Lamprecht even after the alleged
transfer of shares into
the name of Vorprecht Trust; Whereas the
shares were transferred to Vorprecht Trust in 2006 already, one of
the farms was only
transferred into the respondent’s name only
in 2009 when the bond was registered;
(vi) That Mr Lamprecht was the sole
trustee of HCL Family Trust, which by the respondent’s own
admission, held the shares
of the respondent company immediately
after the respondent company was purchased from a shelf company
warehouse.
[12] It is trite that in a civil
trial, the question is whether the evidence adduced is, on
probabilities, correct. Credibility
findings are to be considered in
light of proven facts. In Santam BPK v Biddulph
2004 (5) SA 586
(SCA)
it was held that the proper test for a witness’ credibility is
not whether the witness is truthful or indeed reliable
in all that he
or she said, but whether, on a balance of probabilities, essential
features of his / her testimony are true.
[13] Alana Fourie, a former employee
of the firm Cap Chartered Accountants, testified that she would not
have reflected Lamprecht
as the sole shareholder in the suretyship
document if she had not received a share certificate confirming such
from the respondent.
She conceded that she did not have a
recollection of the date that appeared in the share certificate in
question, the number of
such share certificate or who issued or
signed the said share certificate. The share certificate she was
testifying about was not
an annexure to the application; nor was it
handed up during the proceedings. In my view, this witness did not
take the case any
further and behoves no further mention.
[14] Mr Gustav Geyer, testified that
his firm, CAP Chartered Accountants was, at the time of the signing
of the suretyship document
by Mr Lamprecht, the respondent’s
official auditors duly appointed in compliance with the Companies
Act. This aspect was
borne out by the CM31 form issued by the
Registrar of Companies, which was not disputed by the respondent. His
evidence of his
prior knowledge of Mr Lamprecht and involvement in
his companies was not disputed. His evidence that he knew Mr Vorster
and that
he was nothing more than an employee of Lamprecht, was also
not disputed. Similarly, his evidence that he returned all the
respondent’s
documents to Mr Lamprecht was not disputed.
Nothing in his evidence suggested that he was not an honest and
credible witness and
I accordingly regard him as such.
[15] Mr Vermaak, an auditor at the
firm Vermaak & Associates, testified that in 2006 he was Mr
Lamprecht’s internal auditor
and performed various tasks for
his companies. He was the one who assisted Lamprecht with the
purchase of the respondent company,
which was then a shelf company.
His firm was the respondent’s company secretary. After the
respondent company was purchased
as a shelf company from one Mr Gouws
in 2006, he (Mr Vermaak) transferred the shares of the respondent
company from the erstwhile
shareholder to HCL Family Trust and issued
share certificate number 2 to that effect. In November 2006 Mr
Lamprecht instructed
him to transfer the shares from HCL Family Trust
to Vorprecht Trust. He thereafter issued a share-certificate in the
name of Vorprecht
Trust. It was share certificate number 3. He then
gave this share certificate to Mr Lamprecht. He conceded that the
details of
the Vorprecht Trust were wrongly recorded in that share
certificate as Vorprecht Familie Trust instead of Vorprecht
Besigheids
Trust. He also conceded that he never cancelled
certificate no 2 nor saw to the signature of share certificate no 3.
He did not
advance any reason for this lack of compliance with
statutory requirements. Under cross-examination, Mr Vermaak testified
that
when it came to the recording of the information in the share
register, he correctly captured the details of the Vorprecht Trust.

This was due to the fact that Mr Vorster had brought the error
regarding the description of the trust to his attention. In 2007,
on
the instructions of Mr Lamprecht, he returned the respondent’s
file to one Nerina Boshoff at Mr Lamprecht’s office.
This
included the respondent’s share register in which the
shareholder was properly recorded as Vorprecht Besigheids Trust.
He
returned these documents at Mr Lamprecht’s instructions. He
conceded that before Cap Accountants’ appointment as
the
respondent’s auditors, a firm called LDP was the respondent’s
duly appointed auditors.
[16] While I will not go as far as
branding Vermaak a liar, I cannot say that his evidence was
satisfactory. It was riddled with
improbabilities and
inconsistencies. I find it strange that being a qualified accountant
who was engaged by the respondent as a
company secretary, he issued
share certificates willy nilly without adhering to the statutory
requirements. There seems to have
been a litany of other
non-compliances. By his own admission, he issued a third certificate
immediately when Mr Lamprecht told
him to do so. By his own
admission, he did not see to the cancellation or withdrawal of the
second share certificate. He made no
mention of completion of the
necessary share-transfer documents, nor did he mention what the
underlying transaction for the transfer
of the shares from HCL Trust
to Vorprecht was. Although he personally issued an unsigned share
certificate no 3 in the name of
Vorprecht Trust, he subsequently
recorded the transfer in the share-register without ever having seen
the signed share certificate.
[17] There is also a material
discrepancy between his evidence and that of Mr Vorster pertaining to
the contact they might have
had regarding the rectification of
Vorprecht Trust’s particulars in the share register. He
testified that Mr Vorster brought
the error to his attention in 2006.
This was not alluded to at all in Mr Vorster’s answering
affidavit, yet Mr Vermaak deposed
to a confirmatory affidavit stating
that he agreed with everything that Mr Vorster had stated in the
answering affidavit. Supposing
that this was a mere oversight, what
is surprising is that Mr Vorster, who had all along being present in
court when Mr Vermaak
testified, offered no testimony to that effect
at all. It was clear from Mr Vorster’s evidence that the only
contact he had
with Mr Vermaak pertaining to the respondent was
during the year 2010. I also find it strange that Mr Vermaak, having
handed all
the respondent’s documentation to Mr Lamprecht in
2007, he would still happen to have possession of the unsigned share
certificate
no 3 the respondent’s 2007 annual returns three
years down the line. In my view, these improbabilities in Mr
Vermaak’s
evidence and the material discrepancy between his
evidence and that of Mr Vermaak militate against the acceptance of
his evidence
as the correct account of events and thus calls for the
rejection of aspects of his evidence that are in dispute.
[18] As stated before, Mr Vorster, who
was present in court when Mr Vermaak testified, did not testify about
any interaction he
had with Mr Vermaak pertaining to the issuance of
the share certificate in the name of Vorprecht Trust. All that is on
record from
him pertaining to this particular aspect is what he
stated in the answering affidavit, which was that he contacted Mr
Vermaak regarding
the respondent’s company documents in 2010.
[19] By his own admission, Mr Vorster
gave Mr Lamprecht free reign regarding what to do and the timing of
what was to be done on
behalf of the respondent. According to him, he
simply believed that Mr Lamprecht would fulfil his promises. It is
highly unlikely
that he would have insisted on the rectification of
Vorprecht Trust’s details in 2006 as suggested by Mr Vermaak
and then
reverted to the supine attitude he had displayed all along.
He (Vorster) was cross-examined at length on his lack of interest in

the affairs of the respondent, his lengthy explanation at no stage
included a request for the rectification of the name error in
the
share certificate. On the contrary, his testimony was that the reason
why Vorprecht Trust’s interest in the respondent
was not
reflected in any of the Vorprecht Trust’s financial statements
to date was that he was waiting for a share certificate
to be issued
in the name of Vorprecht Trust. This is how he testified on this
aspect under cross-examination as it appears on p.
79, line 3 –
9 of the record)
“
Maar
die punt is u het nog nooit so ‘n aandelesertifikaat in die
naam van die Vorbrecht Besigheidstrust gesien nie? --- Nee
Dit is nr.
1. Nr. 2
u het
state afgeteken vir al die jare waar daardie aandele nooit getoon
word as ‘n bate in die Vorbrecht Besigheidstrust
nie. --- Dit
is korrek.
Ons het gewag vir die aandelesertifikaat
.”
(my emphasis)
[20] He would not have testified in
the afore-mentioned manner if (i) he had seen the share certificate
(ii) had picked up the error
and insisted on its rectification. In my
view, it can safely be concluded that Mr Vorster had not had any
interaction with Mr Vermaak
pertaining to the respondent’s
affairs before the year 2010.
[21] It must be borne in mind that Mr
Vorster was not a novice when it came to financial matters. According
to him, he and Mr Lamprecht
met 17 years ago when he (Vorster) was
working as a clerk at an auditing firm. He was at that stage charged
with the preparation
of financial statements and book-keeping in
respect of a number of Mr Lamprecht’s companies. He
subsequently obtained a diploma
in internal auditing. His evidence
revealed that he was meticulous enough to ensure that the amount that
he personally contributed
for the buying of cattle on behalf of the
Vorprecht Trust was reflected as a loan account in the books of the
Vorprecht Trust.
He conceded under cross-examination that Vorprecht
Trust’s shareholding in the respondent was never reflected as
an asset
in any of Vorprecht Trust’s financial statements. I
find it hard to believe that a man of his qualifications and
experience
would, subsequent to landing such a windfall by virtue of
being one of the beneficiaries of the Vorprecht Trust, fail, from
2006
right up to the hearing of this matter, to record such
shareholding in the books of the Vorprecht Trust. After all, he was
one
of the trustees of the Vorprecht Trust and was actively involved
in its farming operations.
[22] Although Mr Vorster was, in his
evidence-in-chief and during the initial stages of cross-examination,
steadfast that he did
not make any enquiries from Mr Lamprecht about
the issuing of shares and other compliances, with the progression of
cross-examination
he changed tack and asserted that he was concerned
and made regular enquiries, to no avail. It is apt to quote from Mr
Vorster’s
evidence on this aspect, which appears from p. 82 to
p. 84 of the record.
“
Maar
in u eedsverklaring gebruik u dit duidelik en ek gaan nie weer na
daardie paragraaf verwys nie, paragraaf 10, miskien verwys
ek u
daarna; ‘Gedurende 2005 (begin by paragraaf) het ons besluit om
die boerderybedrywighede in the Vorbrecht Besigheidstrust
te
beoefen.’
U koop toe die beeste.
--- Dit is korrek.
En hy stel die plase
waarop die trust boer, beskikbaar. --- Korrek.
Om te gebruik. ---
Korrek.
En hulle beetaal huur.
--- Ons betaal huur.
Nou skielik in 2006 gaan
hy die helfte van hierdie eiendom vir u gee, want dit is letterlik
waarop dit neerkom – sonder enige
leningsrekenings, sonder
enigiets. Hy gaan die helfte van daardie eiendom vir u gee en nie
alleen dit nie, hy gaan ook die skenkingsbelasting
en die
oordragkoste betaal want dit is waarop dit neerkom. --- Dit was die
reeling.
Dit was die reeling en
nie op skrif gewees nie? --- Dit was ‘n mondelingse ooreenkoms.
Nie een enkele skrywe wat
dit uiteensit nie? --- Dit was ‘n mondelingse ooreenkoms.
Hy het ook nie daaraan
voldoen nie vir meer as drie jaar? --- Dit is korrek.
Daar is nog steeds nie ‘n
skrywe nie. --- Nee.
Het u geweet in 2006 dat
daar opdrag gegee is dat die aandele oorgedra moet word na die
Vorbrecht Trust toe? --- Nee, ek het aanvaar
hy sal dit doen. Dit is
wat hy gesê het hy gaan doen.”
[23] Furthermore, in Mr Vorster’s
affidavit, at par 14 on p. 106 of the record, Mr Vorster averred as
follows pertaining to
what transpired in 2006 after the respondent
was purchased from Mr Gouws:
“
14.
Al die dokumentasie van die betrokke maatskappy [respondent] is toe
versend na Adriaan Vermaak ‘n rekenmeester wat as
sulks
praktiseer as A Vermaak en Assosiate BK te Pretoria te gebou 16
Central Office Park, Jeanlaan257, Centurion met die versoek
dat alle
tersaaklike dokumentasie voltooi moet word sodat die Vorprecht
Besigheidstrust die enigste aandeelhouer in die Respondent
word en
dat Lamprecht aangestel word as direkteur van die betrokke
maatskappy. Dit was soos ek en Lamprecht ooreengekom het.”
[24] What I find strange is why, when
Mr Lamprecht and Mr Vorster had already agreed before the purchasing
of the respondent that
Vorprecht Trust would be the sole shareholder
and that Mr Lamprecht would be sole director, would Mr Lamprecht, who
had the assistance
of both a firm of auditors and a professional
company secretary, have instead registered HCL Family Trust as the
sole shareholder,
only to require that it be transferred to Vorprecht
Trust in a few months time.
[25] Furthermore, if Mr Vermaak had
actually informed Mr Vorster and Mr Lamprecht that the registration
of the shareholding was
done on the 1
st
November 2006, as
Mr Vorster would later in his evidence have us believe, why would he
thereafter be making enquiries to Mr Lamprecht
about it knowing that
he had already complied? This is a material inconsistency between
what Vorster stated in his affidavit on
3 November 2010 and his
testimony in court on the 5
th
March 2013.
[26] In the answering affidavit Mr
Vorster created the impression that CAP Chartered Accountants were
only appointed as the respondent’s
auditors on 13 July 2009. Mr
Vorster’s averments on that aspect turned out to be nothing but
a red herring intended to create
a dispute of fact, as Mr Geyer’s
evidence that CAP Chartered Accountants was appointed as the
respondent’s auditors
on 9 April 2009 was left unchallenged.
Furthermore, the respondent sought to rely on documents that were not
fully completed, viz
an undated transfer certificate in which he
signed as a chairperson of the respondent; an incomplete and unsigned
“auditor’s
report”, a similar document dated 19
November 2008, in which Mr Lamprecht purported to sign in the same
capacity of “chairman/secretary”
of the respondent,
accompanied by an incomplete and unsigned “auditor’s
report”. These documents were of no probative
value and
consequently no weight was attached to them.
[27] Counsel for the respondent
conceded that the share certificate annexed to the respondent’s
papers is unsigned and does
not suffice as
prima facie
evidence of the title of the Vorprecht Trust as a member of the
respondent as contemplated in section 94 of the Companies Act.
He,
however, contended that the fact that a signed share certificate in
the name of Vorprecht Trust or the respondent’s share
register
were not furnished by the respondent did not serve to weaken the
respondent’s version in any way. According to the
respondent,
what was crucial was that Mr Lamprecht and Mr Vorster had verbally
agreed that transfer would be effected and that
consensus sufficed as
proof. As authority for this proposition, counsel for the respondent
relied on the case of
BOTHA V FICK
[1994] ZASCA 184
;
1995 (2) SA 750
(A).
In
that case it was,
inter alia
, held that mere consensus is
sufficient to constitute a cession of rights attaching to a share;
that a cession of these rights
takes place by means of a transfer
agreement which will coincide with, or be preceded by, a
iusta
causa
and that the duty of registered shareholders to deliver
share certificates and completed transfer forms to a buyer is not a
requirement
for the validity of a cession in terms of which rights
and title in relation to the shares are transferred, but stems from
the
sale transaction creating the obligation.
[28] I agree with the principle laid
down in the case of Botha v Fick (
supra)
i.e. that mere
consensus is sufficient for a valid cession of the rights attaching
to a share and that registration of transfer
in the share register or
delivery of the share certificate to the cessionary is not necessary
for acquisition of the rights of
a shareholder. A shareholder’s
rights are indeed rights of action and the share certificate is a
mere
prima facie
evidence of the member’s title to the
shares. The crucial question that remains for consideration in this
matter is whether
such consensus, which the respondent sought to
prove via the evidence of Vorster and Vermaak, was proven in this
matter.
[29] Significantly, there is no proof
of the transaction creating the obligation, which according to Mr
Vorster, was a donation.
None of the series of the donations alleged
by Mr Vorster were backed up by any records. We are expected to rely
on Mr Vorster’s
say-so. I agree with the applicant’s
contention that donations are generally not presumed. As the
underlying transaction
was said to be a donation, the respondent had
the evidential burden to show that these donations indeed occurred.
[30] Furthermore, the respondent did
not call Mr Lamprecht as its witness but criticised the applicant for
not doing so. According
to the respondent, Mr Lamprecht knows he
acted fraudulently and would therefore not take the witness stand for
fear of self-incrimination
that would make him liable for criminal
prosecution. This postulation amounted to speculation as it was not
supported by any facts.
Even if that postulation were to be accepted
as correct, it needs to be borne in mind that the information
pertaining to the alleged
donations is information that would have
been exclusively known to the respondent. The least that the
respondent could have done
would have been to request Mr Lamprecht to
depose to a confirmatory affidavit in which he confirmed Mr Vorster’s
averments.
Perhaps such an affidavit would have sufficiently
clarified the matter and rendered the referral of the matter for oral
evidence
unnecessary. Deposing to an affidavit would certainly not
have rendered Mr Lamprecht vulnerable to self-incrimination as there
would not have been any cross-examination.
[31] The alternative would have been
for the respondent to obtain and then discover documents evidencing
the donations, e.g. proof
of payment of donations tax which,
according to Vorster, was paid. This was not done, although it was
feasible, given Vorster’s
evidence that a meeting was held
between him, Mr Lamprecht and the respondent’s legal
representative, viz Mr van Zyl at the
time when he (Vorster) was
taking the directorship of the respondent over. I find that the
respondent has not, on a preponderance
of probabilities, discharged
the evidential burden of proving the underlying contract of donation
that formed the basis or
iusta causa
for the cession of the
rights by HCL Trust in favour of Vorprecht Trust. This obviously
impacts negatively on the respondent’s
assertion of there
having been a consensus to transfer the shareholding from HCL Trust
to Vorprecht Trust.
[32] Given the views I have already
expressed regarding Mr Vermaak and Mr Vorster’s evidence, the
probabilities are clearly
highly stacked against the consensus that
the respondent seeks to rely on. The probabilities are more in favour
of a conclusion
that the only relationship between Mr Vorster and Mr
Lamprecht as at the 3
rd
April 2009, when Mr Lamprecht
signed the section 226 consent and the deed of suretyship on behalf
of the respondent, was that of
co-trustees of Vorprecht Trust and
nothing more and that Mr Vorster’s involvement in the
respondent company commenced only
on the 24
th
June 2010
when he took over its directorship from Mr Lamprecht pursuant to his
sequestration. In so far as Mr Vorster tried to
create the impression
that the Vorprecht Trust was the shareholder of the respondent, he
has been shown to have lied. Whether these
lies were because of
misplaced loyalty to Mr Lamprecht or out of self-interest on the
realisation that Vorprecht Trust was about
to lose out on the farming
operations carried out on the farms that the respondent bonded in
favour of the applicant or for any
other reason, is immaterial.
[33] I therefore find that as at the
time that Mr Lamprecht signed the suretyship document, the only
shareholder of the respondent
was HCL Trust, of which Mr Lamprecht
was the sole trustee. I agree with the applicant’s counsel that
there is no formality
regarding how the shareholder is to signify his
consent in a document in terms of section 226 of the Companies Act.
The form in
which such consent must be given is not prescribed. The
content of such form is also not prescribed. Contrary to the
respondent’s
argument, this section does not prescribe that the
consent be in the form of an affidavit. Even though Mr Lamprecht
filled in his
own details under “shareholder”, the fact
is that the right person with the authority to act on behalf of the
shareholder
(HCL Trust), did in fact sign the document, thus
signifying the prior written consent of the shareholder. This, in my
view, suffices
as compliance with the parties’ agreement. I
therefore find that the applicant has shown on a balance of
probabilities that
Mr Lamprecht, in his capacity as the sole trustee
of the HCL Trust, had the authority to sign the suretyship on behalf
of the respondent
and in fact lawfully bound the respondent in
respect of HCL Trust’s indebtedness. He would in any event be
deemed to have
given valid consent on the basis of estoppel, as
correctly argued by the applicant. I disagree with the respondent’s
contention
that reliance cannot be placed on the doctrine of estoppel
because the formalities for a valid suretyship were not complied
with.
[34] Terms which are essential for the
material validity of a contract of suretyship are the identity of the
creditor, the surety
and the principal debtor as well as the
identification of the principal debt. The parties’ deed of
suretyship complies with
all these formalities. It sets out the
details of the creditor (First Rand Bank (the applicant), the debtor
(HCL Trust), the debt
(R3 500 000.00) and the surety (Western Breeze
123 (Pty) Ltd (i.e. the respondent). The terms of the suretyship are
clear and there
is nothing to suggest that formalities were not
complied with. Thus, the respondent’s reliance on the case of
STEWART &LLOYDS OF SA LTD v CROYDON ENGINEERING & MINING
SUPPLIES (PTY) LTD & OTHERS
1981(1) SA 305 (W), was obviously
misplaced.
[35] The respondent contended that no
proper case for winding up was made as the debt owed to the creditor
(applicant) was not its
own debt as contemplated in section 345 of
the Companies Act. The fallacy underlying this argument is borne out
by the content
of the deed of suretyship signed by Mr Lamprecht on
behalf of the respondent, in terms of which the respondent bound
itself as
co-principal debtor and renounced the benefits of division
and excussion. The very nature of a suretyship is that the surety
binds
himself/herself/itself as debtor to the principal creditor to
render the whole or part of the performance due to the creditor (in

this context payment of the debt due to the creditor) by the
principal debtor if the principal debtor fails, without lawful
excuse,
to perform (in this context, to pay)
.
By virtue of
renouncing the benefits of excussion and division vis-a-viz the
creditor the surety becomes liable jointly and severally
with the
principal debtor. See
LAWSA (Vol 26)
at par 294 and the cases
referred to in footnote no 1. The respondent’s contention
therefore holds no water. Having considered
all the circumstances of
this case, I am satisfied that the applicant has, on a balance of
probabilities, established a proper
case for the granting of a
winding up order.
[36] Whereas the applicant had, in its
Notice of Motion, prayed for a provisional order of liquidation, at
the conclusion of the
hearing of oral evidence, counsel for the
applicant requested this court to grant a final order on account of
the discretion courts
have in this regard. Although the practice in
the Free State division is to first grant a provisional order of
liquidation, I am
of the view that the circumstances of this case
warrant the granting of a final order.
[37] This conclusion is based on the
following: (i) I have already found that the only shareholder of the
respondent company was
HCL Trust, whose sole trustee was Mr
Lamprecht, the very man who signed the deed of suretyship as well as
the Section 226 Consent.
Mr Lamprecht is aware of this litigation and
chose not to be involved in any way. (ii) The current director of the
respondent deposed
to an affidavit and also testified. He made no
mention of other creditors. Neither did he make any averments that
suggested that
a final liquidation order would be prejudicial. The
respondent’s defence of this matter was based purely on the
alleged non-indebtedness
of the respondent and on no other ground.
(iii) Service of the application papers was effected on the South
African Revenue Services
and the Master of the High Court and they
chose not to file any reports. The sheriff also filed a return of
service stipulating
that the respondent has no employees. (iv)
Although the matter was brought on motion, the application was
referred for oral evidence
and evidence was subsequently led. I am
satisfied that issues have been fully ventilated and it is highly
unlikely that further
facts will be forthcoming. (v) Liquidation
applications are by their nature urgent. Even though no reasons were
advanced for the
delay in setting the matter down for the hearing of
oral evidence, the fact of the matter is that a period of 19 months,
which
is a relatively long period, has already passed between the
judgment referring the matter for oral evidence and the hearing of
oral evidence. Based on the reasons I have alluded to, I am of the
view that no practical purpose would be served by granting a

provisional order.
[38] I therefore grant the following
order:
38.1 The respondent company is hereby
placed under final liquidation;
38.2 The respondent is ordered to pay
the costs of this application.
___________________
M. B. MOLEMELA, J
On behalf of the applicant: Adv. D. M.
Leathern SC
Instructed by:
Symington & De Kok Attorneys
BLOEMFONTEIN
On behalf of the respondent: Adv. B.
Pretorius
Instructed by:
Christo Dippenaar Attorneys
BLOEMFONTEIN
/eb