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[2012] ZAGPPHC 304
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Bahre and Others v Royale Energy Ltd (73663/2010) [2012] ZAGPPHC 304 (23 November 2012)
REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
(NORTH GAUTENG HIGH COURT)
Case
Number: 73663/2010
DATE:23/11/2012
In
the matter between:
RICHARD
GERALD
BAHRE
...................................................................
1st
APPLICANT
RICHARD
GERALD BAHRE
N.O.
…......................................................
.2nd
APPLICANT
SUSANNA
FRANCINA BAHRE
N.O.
.......................................................
3rd
APPLICANT
and
ROYALE
ENERGY
LTD
.............................................................................
1ST
RESPONDENT
EYABANTU
PEROLEUM (PTY)
LTD
........................................................
2nd
RESPONDENT
SANCHIA
BAHRE
N.O.
..............................................................................
3rd
RESPONDENT
BAREND
JACOBUS STRYDOM
N.O.
.....................................................
4
th
RESPONDENT
BERTJAN
BOLINK
N.O.
.............................................................................
5
th
RESPONDENT
STEPHANUS
JAN NOTHNAGEL
N.O.
.....................................................
6
th
RESPONDENT
MARGARET
SUSAN NOTHNAGEL
N.O.
….............................................
7
th
RESPONDENT
PATILIZWE
CASWELL MDODA
N.O.
........................................................
8
th
RESPONDENT
LODEWICUS
JACOBUS
KRUGER
...........................................................
9
th
RESPONDENT
PATILIZWE
CASWELL
MDODA
.................................................................
10
th
RESPONDENT
JUDGMENT
Fabricius
J,
In
this application the Applicants seek an order that the First
Respondent make payment to the Bahre family trust in the amount
of
R15,400,000.00 within 30 days from the date of an order, that on
making payment, the family trust shall transfer all shares
it owns to
the First Respondent, and that it shall sign all necessary
documentation to reflect this transfer, and that in the event
of the
First Respondent failing to pay this amount, the First Respondent be
finally wound-up. A cost order is also sought if the
main relief is
granted.
2.
A
summary of Applicants case follows.: the family trust of which the
2nd and 3rd Applicants are the duly authorised trustees, holds
15.4%
shares in the First Respondent. A dispute arose between the First
Applicant and the First Respondent which, for present purposes,
I
classify as a dispute in the context of the Labour Relations Act. The
First Applicant referred this dispute to the CCMA, and
he alleges
that after certain negotiations a settlement agreement was reached.
It was alleged that in terms of this agreement the
said shareholding
would be purchased by the remaining shareholders, or failing them, by
the First Respondent at the selling prize
to be determined by an
independent auditor. The agreement provided that such valuation would
be final and binding on the parties,
and that no appeal or review
would lie against the process followed by the auditor or his finding.
The
independent auditor. Mr Harris, valued the said 15.4% shareholding in
the amount of R15,400,000.00. This evaluation was never
taken on
review by the Respondents. The other shareholders did not express any
interest to take up any of the shares, and accordingly
the First
Respondent was in terms of the said agreement obliged to take up the
shareholding, and liable for payment of the said
amount which was
payable by 25 October 2010.
3.
The
Respondents opposed the application on the following grounds: the
settlement agreement was void, alternatively unenforceable,
for the
following reasons:
1.1
The shareholders agreement stipulates that no agreement varying,
adding to, deleting or cancelling it shall be effective, unless
reduced to writing and signed by or on behalf of all the parties. Not
all the parties signed the settlement agreement;
1.2
There was no compliance with the provisions of the trust deed of the
Nothnagel Family Trust empowering the trustees to act on
behalf of
the trust in order to legally bind such trust;
1.3
The articles of association of the First Respondent contain no
provision for the acquisition of its own share as required by
Section
85(1) of the repealed Companies Act 61 of 1973, alternatively there
was no decision taken by a “substantial majority”
of the
shareholders to acquire its own shares as prescribed by the
shareholders agreement in respect of a “specially protected
matted as envisaged by Clause 10.2 of the shareholders agreement;
1.4
The First Respondent alleges that it is not bound by the valuation of
the shares by the said Harris as the valuation arrived
at by him was
irregular, unreasonable and improper;
1.5
It would not be just and equitable to liquidate the First Respondent;
1.6
There was a alternative to winding-up available i.e. a buy-out of the
shares of the Bahre family trust in terms of section 252
of the
repealed Companies Act at the price of R3,400,000.00. which price the
Respondents contend represents the correct, proper
en accurate value
of such shares as determined by a certain Prof. Steyn.
4.
Applicants Argument:
The
settlement agreement did not vary, add, delete or cancel the
shareholders agreement, and the non-variation clause cannot have
any
effect on the settlement agreement arising out of the dispute between
the parties to the shareholders agreement. In this context
reliance
was placed on CHRISTIE, The Law of Contract in South Africa, 6th
edition, at pages 464 - 466, Brisley vs Drotsky 2002(4)
SA 1(SCA) and
Rand Coal Services Ltd vs Rand Gold and Exploring Company Ltd 1998(4)
$A 825 (A) at 841E - 842D. In this case it
was held that a
non-variation clause must be interpreted restrictively regarding the
subject matter of the agreement.
It
was also contended in the replying affidavit that the shareholders
agreement contained a tacit term to the effect that should
a dispute
arise between the parties, and should the dispute be settled by way
of a written settlement agreement, the non-variation
clause would not
be applicable. The founding affidavit is silent on this topic. To
support the submission, applicants relied on
Wilkens vs Voges 1994(3)
SA 130 (A) at 136 - 137. It will be convenient to paraphrase the
relevant finding of the Appellate Division.
A tacit term can be
actual or imputed, ft is actual, if both parties thought about the
matter which is pertinent but did not bother
to declare their assent.
It is imputed, if they would have assented about such matter if only
they have thought about it - which
they did not do because they
overlooked a present fact or failed to anticipate a future one. Being
unspoken, a tacit term is invariably
a matter of inference. It is an
inference as to what both parties must or would have had in mind. The
inference must be a necessary
one: after all, if several conceivable
terms are ail equally plausible, none of them can be said to be
axiomatic. The inference
can be drawn from the express terms and from
admissible evidence of surrounding circumstances. The onus to prove
the material from
which the inference is to be drawn rests on the
party seeking to rely on the tacit term. It is clear from the
settlement agreement
that only the First and Second Applicants were
parties thereto, together with the First Respondent.
As
I have said, the submission that a tacit term is contained in the
shareholders agreement was not debated in the affidavits. In
my view
a basis for any such terms is not properly laid in a replying
affidavit. No such tacit terms appear at all from the shareholders
agreement, and no-one would ever remotely have contemplated that an
agreement relating to an employment dispute in the future,
would have
such drastic and intrusive consequences for the shareholders in the
context of their agreement. In any event, whether
a tacit term can be
enforced depends on the interpretation of the document and not on
evidence, except on background circumstances.
See KPMG v Securefin
Ltd 2009(4) SA 399 SCA at 409 par 39 and 411 par 43. Applicants also
contended that to uphold the non-variation
clause under the
circumstances would also be contrary to Section 34 of the
Constitution, as well as against public policy, insofar
as it would
amount to a mala fide and fraudulent attempt to avoid a settlement
agreement to which all shareholders have agreed.
The founding
affidavit lays no basis for this contention. Section 34 of the
Constitution deals with access to Courts. During argument
I was
referred to Nyandeni Local Municipality v Hlazo 2010(4) S>4 261
E.C. (Full Bench). In that case section 34 was used, together
with
section 1(c) of the Constitution as the foundation to justify a
departure from the principle contained in SA Sentrale Ko-op
Graanmaatskappy Bpk v Shifren en Andere 1964(4) SA 790 (A). The
simple principle is that a non-variation clause which requires
a
variation in writing, cannot be varied orally. Applicants’
point was that in hoc casu Respondents defences were unconscionable
and, with reference to the now deceased exceptio doli (See; Bank of
Lisbon and South Africa Ltd v De Ornelas 1988(3) SA 580 (A))
and/or
the line of thinking followed in Nyandeni supra. I ought to dismiss
the defences as being against public policy. In my view
the facts in
Nyandeni were vastly different. Other policy considerations were
considered and applied. In my view that case ought
to have been
decided on a non-constitutional basis, and with great respect, its
reliance on section 34 of the Constitution is too
strained on the
facts of the case.
It
is clear that sound judicial policy requires Courts to decide only
that which is demanded by the facts of the case and is necessary
for
its proper disposal. See: ALBUTT v CENTRE FOR THE STUDY OF VIOLENCE
AND RETRIBUTION 2010(3) SA 293 (CC) AT 321 par 82.
Contextually
speaking, the point where we are in our law is the following- one can
regulate ones own affairs, contractually or otherwise.
That is part
of freedom, part of dignity.
See: Barkhuizen vs Napier 2007(5) SA
323 CC par 57,58; Bredenkamp v Standard Bank of South Africa Ltd
2010(4) SA 468 SCA at 50.
Absent
any incapacity, undue pressure and fraud (for example), a Court will
not find that misty infinite considerations allegedly
relating to
ever-changing public policy concerns, will make (a voluntary)
agreement unenforceable. If there is to be a change it
needs to be
done extremely circumspectly for very sound objective reasons, and
only after the relevant cause of action or defence
has been properly
pleaded. After all, the real public interest is very concerned with
sanctity of agreements.
See
for instance the reasoning of Brand JA (with which I agree), In South
African Forestry Co. Ltd v York Timbers Ltd 2005(3) SA
323 (SCA) at
par 27.
7.
Nyandeni
does not assist the Applicants. The effect of their prayers and
arguments is that I must also incisively intrude into the
articles of
association, and the shareholders agreement as well, besides ignoring
the relevant provisions of the Companies Act.
This I decline to do.
The articles of association of First Respondent were annexed to the
founding affidavit. They do not provide
for the purchase by it of its
own shares. At common law such an acquisition was illegal and
therefore void.
See:
The Unisec Group Ltd and Others v Sage Holdings Ltd 1986(3) 259 T at
264 H-265B. (Full Bench).
The
Companies Act of 1973 (now repealed) made provisions for such an
acquisition in section 85(1), stipulating strict prerequisites
however.
It
must be common cause that none of those prerequisites have been met
herein.
The
result is that any such agreement is illegal and unenforceable.
See:
Capitex Bank Ltd v Qorus Holdings Ltd and Others 2003(3) SA
302 Wat
308-309.
8.
The
relevant shareholders agreement was also annexed to the founding
affidavit. It is necessary to refer to certain of its provisions.
7.1
A “Specially Protected Mattel means any of the matters set out
in annexure 1.2.37 thereto. In terms of par 7 "the
purchase by
the Company of any of its Shares in terms of section 85 of the Act
and/or the distribution by the Company of any assets
or amount to a
Shareholder in terms of section 90 of the Act, other than in terms of
the Company’s dividend policy or as
otherwise identified in the
approved business plan or the annual budget”.
7.2
Paragraph 10 deals with “Approvals Framework And Specially
Protected MattersClause 10.2 reads as follows: "Notwithstanding
anything to the contrary contained in the Approvals Frame work, in
order to be of any force or effect, resolutions of the Company
and/or
the Shareholders relating to Specially Protected Matters must be
approved by a Substantial Majority of the Shareholders.
Notwithstanding anything to the contrary contained herein or in law,
a resolution in respect of any Specially Protected Matter
shall not-
constitute a valid decision of the Company and/or the Shareholders,
as the case may be. unless or until that resolution
has been approved
as contemplated in this clause 10.2. ”
7.3
Clause 22.2 and 22.3 are also relevant. Clause 22.2 reads “Save
as provided in this agreement no equity may, without
the prior
written signed consent of all the shareholders, be transferred
pledged or otherwise encumbered1In terms of clause 22.3
the
Board
may not register any transfer of shares unless such transfer is
pursuant to a disposal which is permitted in terms of the
agreement.
It
should be obvious does all the mentioned prerequisites do not exist,
and, should I grant prayer 1, I would intrusively invade
the
provisions of an agreement relating to the rights and duties of
shareholders who were not even party to the settlement agreement.
7.4
Clause 26.3 is headed “entire contract and reads as follows:
“this Agreement contains all the provisions agreed
on by the
Parties with regard to the subject matter of the Agreement and the
Parties waive the right to rely on any alleged provision
not
contained in the AgreementClause 26.5 deals with variation,
cancellation, suspension and waiver and reads as follows: ‘Wo
contract varying, adding to, deleting from or cancelling this
Agreement, and no suspension or waiver of any right under this
Agreement,
shall be effective unless reduced to writing and signed by
or on behalf of the Parties " As I have said, the Respondents
contend
that the settlement agreement is void, alternatively
unenforceable, insofar as it constitutes a variation or amendment of
the existing
shareholders agreement, while the settlement agreement
does not comply with the prescripts of the shareholders agreement for
amendment
thereof. It was contended that one shareholder Eyabantu did
not sign the settlement agreement at all; another shareholder, the
Nothnagel Trust did not properly sign the agreement insofar as only
one of its two trustees signed, while there was no compliance
with
the legal requirements for the signatory to represent the said Trust,
as stipulated in the trust deed and required by law,
and further that
a settlement agreement in any event purported to be an agreement
between the first two Applicants and the First
Respondent only. In
this context reliance was placed on the dictum appearing in Thorpe
and Others v Trittenwein and Another 2007(2)
SA 172 (SCA) at par 14
and 15. On the facts this is so.
9.
Respondents
also contended that the purchase of its own shares by First
Respondent is in conflict with the provisions of Section
85(1) of the
repealed Companies Act, and is therefore invalid, not binding on the
First Respondent and unenforceable.
Section
85(1) of the repealed Companies Act reads as follows: “(1)
subject to the provisions of the section and any other
applicable
law. a company may by special resolution of the company, if
authorised thereto by its articles, approve the acquisition
of shares
issued by the company.
The
Articles of Association of First Respondent does not provide for the
purchase by it of its own shares. Neither the directors,
nor the
shareholders could therefore have legally bound the First Respondent
to acquire its own shares. In order to do so, the
Articles of
Association of First Respondent needed to be amended and/or augmented
by special resolution in compliance with section
87 and 88 of the
said Companies Act. Such a special resolution which has its own
requirements also, was not taken. It was furthermore
contended that
the acquisition of its own shares by the First Respondent is
specially protected matter as defined in the Shareholders
Agreement,
and that a substantial majority, again as defined in the Shareholders
Agreement, was required to approve such an acquisition.
No such
substantial majority was called for/or obtained. In the context of
the mentioned Clause 10.2 of the agreement, it was contended
that
First Respondent had no approved dividend facility/plan.
10.
The
result of these contentions which, I may add, can factually not be
disputed, is that for the settlement agreement to be valid
and
binding, the shareholders agreement clearly places an obligation on
the First Respondent to only acquire its own shares if
such
acquisition was approved by 75% of the First Respondent shareholders.
Since the authorised representatives of Eyabantu did
not sign the
settlement agreement, there was no substantial majority approval. The
settlement agreement also indicates that it
is between the first two
Applicants and First Respondent. It must of course also be seen in
the context of the dispute that was
between these parties at the
time, which was a labour dispute, if I can refer to it as such. This
is clear from Clause 11.1 of
the agreement which reads as follows:
“this agreement settles any and all disputes between the
parties, whether it be as
a result of delict, contract or otherwise.
It is specifically recorded that the unfair dismissal dispute
referred by Mr Bah re
to the CCMA would be viewed as settled once the
provisions of this agreement relating to the sale of shares are
complied with."
I am therefore of the view that the Applicants
reliance on the decision in
Rand
Coal Services supra is misplaced in this specific context, and the
mentioned dispute between Applicant and First Respondent.
11.
Applicants,
in answer to the Respondents defence, purport to make out a case
based on estoppel. It was alleged that all relevant
parties to the
settlement agreement assured Applicants representatives that they
were in agreement therewith, and that they would
be bound thereby.
Neither estoppel, quasi-mutual assent or the Turquand Rule can assist
the Applicants herein. The majority of
shareholders were not party to
the agreement. They made no representation. The Applicants all have
intimate knowledge of internal
functioning of the Company, and are
not bona fide outsiders who relied on express or implied
representations.
12.
In
my view the Applicants have not discharged the onus of showing that
the shareholders agreement contains the tacit terms contended
for. In
my view it could not have been an impugned term that if a labour
dispute arose between
certain
parties, and was settled, such could lawfully amount to a variation
of the shareholders agreement without further ado. Accordingly,
Applicants reliance on the authorities that I was referred to in this
context is totally misplaced in my opinion.
13.
The
result is that no case has been made out by the Applicant for the
main relief sought in this Application.
14.
As
far as the prayer for winding up is concerned there is again a
factual dispute on the affidavits, which I must decide according
to
the mentioned principles announced in Plascon-Evans Paints Ltd v van
Riebeek Paints (Pty) Ltd 1984(3) SA 623 AD at 634 In my
view no
proper case has been made out for the winding up on the First
Respondent on the basis that it is just and equitable, and
in any
event, if I had to exercise a discretion in this context on the facts
contained in the affidavits before me, which I do,
I exercise such
discretion in favour of the Respondents on the basis that no
justifiable case has been made out in the founding
affidavit for such
relief. Having regard to the conflicting versions of the parties in
this context, I must rely on Respondents
version. In any event
Respondent has placed sufficient documentation before me to convince
me that there is no basis for such a
winding-up.
15.
As
far as the provisions of s252 of the Companies Act (as repealed) are
concerned I do not, as I have said, intend making an order
which
would alter the shareholders agreement, and ignore the mentioned
statutory provisions. Applicants have other remedies.
In
the result the application is dismissed with costs including the cost
of two counsel, including costs previously reserved.
JUDGE H J FABRICIUS
JUDGE
OF THE NORTH GAUTENG HIGH COURT
Date
of hearing: 6 November 2012
Date
of Judgment: 23 November 2012
Applicants
Counsel: Adv. R. du Plessis SC
Adv
R. Grundling Instructed by:de Lange Attorneys
Pretoria
Respondents
Counsel: Adv. de Koning SC
Adv.
B Stroop
Instructed
by:Thomas Grobler Attorneys
Polokwane