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2013
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[2013] ZANCHC 8
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NAFCOC Northern Cape and Another v Modise NO and Others (6/2013) [2013] ZANCHC 8 (27 March 2013)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN
CAPE HIGH COURT, KIMBERLEY)
CASE NO.: 6/2013
Case heard:
18-01-2013
Date delivered:
27-03-2013
In the matter between:
NAFCOC
NORTHERN CAPE
...................................................................................
1
st
Applicant
NAFCOC
INVESTMENTS HOLDING COMPANY LIMITED
......................
2
nd
Applicant
And
ROSEMARY ELFREDA MODISE N.O
..................................................
1
ST
Respondent
MABOTSA DANIEL ALEX MABOTSA N.O
..........................................
2
nd
Respondent
NAFCOC NORTHERN CAPE INVESTMENT TRUST
...........................
3
rd
Respondent
MASTER OF THE HIGH COURT, NORTH GAUTENG
HIGH COURT (PRETORIA)
...................................................................
4
th
Respondent
HOSKIN CONSOLIDATED INVESTMENTS
TREASURY LTD
.....................................................................................
5
th
Respondent
CORAM: C.C WILLIAMS J:
J
U D G M E N T
WILLIAMS J:
1. This application was
brought on an urgent basis on Friday, 18 January 2013 for the
following relief:
“
2. Directing
that the first and Second Respondents who are the remaining trustees
of the Third Respondent in office are not competent
or entitled to
pass a resolution that propose to sell or acquire share on behalf of
the Trust, including the HCIT deal.
2.1. Alternatively to
prayer 2 above, and only in the event that the remaining Trustees in
office had already met and adopted or
passed a resolution for the
sale of the trust shares to the Fifth Respondent,
2.1.1. Directing that
the purported adoption or passing of a resolution by the First and
second respondents for the sale of trust
shares to the Fifth
Respondent is hereby declared null and void.
2.2. Further
alternatively to payer 2 above, and only in the event that the Fifth
Respondent had already bought the Trust shares
at the time of hearing
of this application,
2.2.1. Directing that
the purported purchase of the Trust shares by the Fifth Respondent
shall not be implemented.
3. Directing that the
order in terms of prayer 2 above be an interim order, pending the
outcome of a declaratory relief to be brought
by the Applicants in
respect of the interpretation of clause 7 of the Deed of Trust, read
with clause 6.2 thereof.
4. Directing that the
Applicants shall bring the application for a declaratory relief in
terms of prayer 3 above within 25 (twenty
five) working days from the
date of this Court order.
5. Directing that in
the event that the Applicants fail to bring the declaratory relief
within 25 (twenty five) working days as
contemplated at prayer 4
above, the interim order shall automatically lapse.
6. Directing that the
First and Second respondents, or any other Respondent, pay the costs
of this application, jointly and severally,
the one paying the other
to be absolved, in the event of any opposition by them.”
2. After hearing argument
for both sides, I due to the urgent nature of the matter, made an
order herein on Monday, 21 January 2013
in which the application was
dismissed and that the deponent to the founding affidavit and the
second applicant pay the costs of
the application jointly and
severally, the one paying the other to be absolved. I reserved my
reasons for the order which now follow.
3. The first applicant in
NAFCOC, Northern Cape, a voluntary association and a beneficiary of
the third respondent, NAFCOC Northern
Cape Investment Trust (“the
Trust”).
4. The second applicant
is NAFCOC Investments Holding Company Ltd (“NAFHOLD”),
the founder of the Trust.
5. The first and second
respondents are trustees of the trust and are cited in their capacity
as such.
6. The first and second
respondents opposed the application on the following grounds:
6.1 The application,
although in form for interim relief, is in fact final in effect and
fails to comply with the requirements for
a final interdict; and
6.2 The applicants lack
the requisite
locus
standi
to bring the application.
7. Before dealing with
the issues raised by the respondents it is necessary to give a brief
background of the events leading to
the application.
8. The Trust is the owner
of preference shares in Tsogo Investment Holdings Limited (“
TIH”
).
During the course of 2012 the fifth respondent, Hoskin Consolidated
Investments Treasury Limited (“
HCIT”
) offered to
purchase the Trust’s shares in TIH for a purchase price of
about R20 million. At the time the Trust had three
trustees, the
first and second respondents and a certain Mr Kabelo Makaudi. The
offer to purchase, or the HCIT deal, as it is referred
to in the
papers, appears to have completely polarised the trustees who seem to
have already had a rather strained relationship.
9. On 12 November 2012
Makaudi, purporting to act on behalf of the Trust, launched an urgent
application together with NAFHOLD against
the first and second
respondents, wherein the applicants sought
inter alia
an
interim interdict in the form of a
rule nisi,
preventing the
first and second respondents from dealing with the Trust’s
financial affairs and management of its income.
The
rule nisi
was granted on 13 November 2012 in the absence of the two
respondents. The respondents opposed that application and on 11
December
2012 the
rule nisi
was discharged with costs.
10. On 14 December 2012
NAFCOC, Northern Cape, purportedly represented by Mr Tshepo Smith and
NAFHOLD launched an urgent application
against
inter alia
the
three trustees, seeking to prevent the trustees from holding meetings
or taking decisions as trustees of the Trust pending
an application
for the removal of the three trustees, alternatively an order that
first and second respondents comply with their
duties as contemplated
in clause 18 of the Deed of Trust. On 20 December 2012 the
application was postponed to 15 February 2013
for argument.
11. On 27 December 2012
Makaudi tendered his resignation as trustee of the Trust “
with
immediate effect notwithstanding the provisions of clause 12.9 of the
Deed of Trust.”
The letter of resignation was delivered to
the first respondent as chairperson and trustee of the Trust.
12. On 28 December 2012
and on the instructions of the first and second respondents, the
Trust’s attorneys informed Makaudi
in writing that in terms of
the Trust Deed he would cease to be a trustee only thirty days after
giving notice of this intention
to resign and accordingly remained a
trustee and was obliged to comply with his duties as such until 26
January 2013.
13. On the same day (28
December 2013) the first respondent convened a meeting of the
trustees to take place on 8 January 2013.
The items on the agenda
were
inter alia
the consideration of the HCIT deal and whether
it should be accepted by the Trust. Makaudi did not attend the
meeting. The first
and second respondents, of the view that they were
entitled thereto as the majority of trustees in office, resolved at
that meeting
to accept the HCIT offer.
14. The applicants are of
the view that since the Trust Deed (clause 7) provides for a minimum
of three trustees to be in office
and Makaudi had resigned on 27
December 2012, the two remaining trustees were not competent to pass
a resolution to sell the TIH
shares on behalf of the Trust, hence
this application.
15. The first issue to be
decided is whether the relief sought is of an interim nature or
whether it is final in effect, as argued
by Mr Currie for the
respondents. If the relief sought is final in substance the
requisites for a final interdict have to be present.
16. In this regard
applicants were well aware of the fact that the HCIT offer was to
expire at 17h00 on Monday, 21 January 2013.
This was also one of the
main reasons for the application to be heard on a “
semi-urgent”
basis on 18 January 2013, during the court recess. The relief sought
i.e. preventing the implementation of the resolution passed
by the
first and second respondents pending the finalisation of an
application for declaratory relief to be instituted within 25
days,
would have the result of the offer lapsing before the finalisation of
the future application, thus effectively preventing
the HCIT deal.
The relief sought would thus be final in effect.
17. Another factor which
militates against this application being for interim relief is that
the intended future application is
not determinant of the principal
dispute between the parties. In fact the interpretation of clause 7
read with clause 6.2 of the
Trust Deed is not in dispute at all.
Clause 7 of the Trust Deed states the following:
“
7. MINIMUM AND
MAXIMUM NUMBER OF TRUSTEES
Notwithstanding
anything to the contrary in this deed there shall at all times be at
least three and not more than nine trustees
in office; provided that,
pending the appointment of trustees in terms of 6.2 and
notwithstanding 10.1, the trustee/s remaining
in office (or if no
trustee remains in office, the trustee/s whose term of office has
expired in terms of 6 so that the minimum
requirement under this 7 is
no longer met) shall form a quorum for the purposes of trustees
meetings and shall be empowered to
act in the preservation and
necessary formal administration of the trust assets until a
sufficient number of trustees have been
appointed in terms of 6.2 and
(if required in terms of the Act) letters of authority have been
issued in respect of such trustees
by the Master in terms of the
Act.”
And Clause 6.2 thereof
that;
“
6.2 Each of the
trustees, other than the initial trustees, shall (subject to 1.2 and
7) be appointed from time to time after the
signature date in terms
of a resolution of the executive committee for a period of three
years from the date of such resolution.:
18. Both sides are in
agreement that in terms of clause 7 there must be a minimum of three
trustees in office. The dispute between
the parties is therefore not
about the interpretation of clause 7 but whether there were in fact
three trustees in office when
the resolution to accept the HCIT offer
was passed on 8 January 2013, a dispute which I was informed by Mr
Mkhabela for the applicants,
I need not decide upon in this
application. The anticipated application for declaratory relief as to
the interpretation of clause
7 read with clause 6.2 would not dispose
of the main dispute between the parties and in the absence of a
future application which
would actually finally determine the dispute
between the parties, the
interim interdict
is of a final
nature and such an order cannot be made based on a
prima facie
case. See
Botha v Maree en ‘n Ander 1964(1)SA 168(O).
19. In my view Mr Currie
is correct that in these circumstances a clear right must be shown by
the applicants on a balance of probabilities.
20. The right which the
applicants rely upon is the right that the Trust be administered in
accordance with the Trust Deed.
21. The first and second
respondents have contested the
locus standi
of the applicants
on the basis that:
21.1. While conceding
that the first applicant, as a beneficiary of the Trust, would
ordinarily be entitled to enforce the Trust
Deed, the authority of
the deponent to the founding affidavit Mr Smith, to act on behalf of
the first applicant is disputed;
21.2. The second
applicant, as the founder of the Trust, in the absence of a provision
in the Trust Deed contrary thereto, is functus
officio in relation to
the affairs of the Trust.
22. Mr Smith purports to
have the authority to institute and defend legal proceedings on
behalf of the first applicant by virtue
of him being the duly elected
general secretary of the first applicant. Smith contends that the
executive committee of NAFCOC,
Northern Cape, as elected during March
2010 in terms of the 2008 NAFCOC Constitution, and whose term was to
expire during March
2013, was removed from office at the annual
general meeting of NAFCOC, Northern Cape held on 30 November 2012. At
this meeting
a new executive committee was elected with one Bandile
Deke as president and himself as general secretary.
23. The legitimacy of the
election of the new executive committee and the elected individuals
have been placed in dispute in the
pending application referred to in
paragraph 10 above as well as in this application. In terms of the
2008 NAFCOC Constitution,
which Smith relies upon, the removal of the
president and executive committee, before the expiry of their terms
of office requires
a resolution of the Council of the affiliate
(first applicant). In terms of clause 23.3 of the Constitution the
president can only
be removed from office on a resolution of a two
thirds majority of the members present at a meeting of the Council
specifically
convened for that purpose. Likewise, the election of a
president and executive committee are done by the Council of first
applicant.
24. Smith does not claim
in his founding affidavit, neither in the replying affidavit, that
the president or executive committee
were removed by the Council of
first applicant or that a new leadership was duly elected by the
Council. Instead Smith refers to
an annual general meeting of the
first applicant where “
members”
elected the new
leadership. Smith’s only response to the attack on the validity
of the meeting and the election is that there
was no challenge to the
validity of the proceedings of 30 November 2012 by the former
president and executive committee until the
first applicant launched
the previous application. Smith states in his replying affidavit
that: “
Mr Morudi’s (the previous president of the
applicant’s) decision to question or cast a doubt on our
election as the
Executive of NAFCOC Northern Cape, is an afterthought
designed to thwart and create confusion to his Honorable Court about
the
correct representatives of NAFCOC Northern Cape.”
And
“
the inference must be that until the recent litigation, he
had accepted that he was no longer the president of NAFCOC Northern
Cape.”
25. Besides the fact that
a mere two weeks had elapsed after the annual general meeting of 30
November 2012 and Smith’s launching
the pending application
where the challenge to the validity of the election was made in the
opposing papers, it does not follow
that the perceived acceptance by
Morudi of the election (which Morudi denies), could render invalid
proceedings valid. In my view
Smith has failed to establish his
authority to bring the application on behalf of the first applicant.
26. As far as the second
applicant is concerned, it is simply alleged by Smith in his founding
affidavit that the second applicant,
as a founder and donor of the
Trust, supports the application. The Chairman of the second applicant
simply confirms this allegation
in a confirmatory affidavit. The
position seems to be however that once a trust is created, the
founder has no further jurisdiction
over it and is functus officio
unless certain powers have been specifically reserved in the Trust
Deed. (See
Honore’s South African Law of Trusts
5th
edition, p 418).
In casu
the only right reserved for the
founder in the Trust Deed is the requirement that its written
permission be obtained before disposal
of the Trust shareholding in
NAFHOLD (the founder’s) shares. The second applicant therefore
has no right generally to enforce
the terms of the Trust Deed and
consequently lacks the
locus standi
to bring this application.
For the above reasons
I ordered that:
The application be
dismissed and Mr Tshepo Smith, the deponent to the founding
affidavit, be personally held liable with the second
applicant
(Nafcoc Investments Holding Company Limited) for the costs of the
application. I deemed it unfair to saddle the first
applicant
(Nafcoc, Northern Cape) with the costs of an application brought by
an individual with no proper authority to do so.
_________________________
C.C WILLIAMS
JUDGE
For Applicants: Adv R.B
Mkhabela
Selepe Attorneys
For 1
st
and
2
nd
Respondents: Adv I Currie
Edward Nathan Sonnenbergh
Inc
c/o Duncan & Rothman
inc