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[2011] ZAKZDHC 40
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Kapsimalis NO and Others v Van Tonder and Others (9678/11) [2011] ZAKZDHC 40 (19 September 2011)
IN
THE KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC OF SOUTH AFRICA
CASE NO. 9678/11
In
the matter between:
STAMATIS
KAPSIMALIS N.O.
…..........................................................
First
Applicant
LYNDA
KAPSIMALIS N.O
….............................................................
Second
Applicant
ATHINA
ANANIADES N.O
…...............................................................
Third
Applicant
and
PIERRE
VAN TONDER
…..................................................................
First
Respondent
RONEL
VAN DIJK
….....................................................................
Second
Respondent
JOHN
DORY’S FRANCHISE (PTY) LTD
…........................................
Third
Respondent
SPUR
GROUP (PTY) LTD
…...........................................................
Fourth
Respondent
JUDGMENT
CORAM:
GYANDA J
HEARD:
13 SEPTEMBER 2011
DELIVERED:
19 SEPTEMBER 2011
[1] On the 30
th
August 2011, two urgent applications
were brought before me. The first being a case of:
Stamatis
Kapsimalis v the Spur Group (Pty) Ltd and 2 others
,
under case number 9624/2011 and the second being the present matter.
The first matter was one of
spoliation in which the applicant sought to be restored to the use
and enjoyment of his offices, from
which he had been excluded, as he
alleged, by the unlawful conduct of the respondents.
The second being the present
application in which he sought to interdict the respondents from
holding a meeting of the third respondent
in which they sought to
suspend him in his capacity as managing director of the third
respondent. The spoliation application was
disposed of by the taking
of a consent order between the parties which effectively allowed the
applicant to return to his offices
without any admission of liability
on the part of the respondents.
The present application was adjourned
until today for argument pending the filing of further affidavits and
heads of argument as
a matter of urgency as the intended meeting in
which it was sought to suspend the applicant as managing director of
the third respondent
was scheduled to be held on the 2
nd
September 2011, that date being
extended by agreement between the parties to the 16
th
September 2011. The costs in the
spoliation application, being reserved for determination by the court
disposing of the present
application.
[2] When the matter was argued before
me on the 13
th
September 2011, the parties had
agreed between themselves that the only issue that I should determine
at this stage is the relief
sought by the applicant interdicting the
respondents from holding a meeting of the third respondent at which
they intended to take
a decision relating to the suspension of the
applicant as managing director of the third respondent.
[3] The argument by the applicant is
simple in that the applicant in his capacity as managing director is
an officer of the third
respondent and in his capacity as such cannot
be suspended by decision of the “Company” taken by the
receiving two
directors.
Whereas the respondents argued that
the mere fact that the applicant is the managing director and as
such, an officer of the company,
does not mean that he cannot at the
same time be an employee of the company and be suspended in his
capacity as employee. The latter
aspect was never in issue before me.
[4] The respondents sought to argue
that the notice that was served on the applicant informing him of the
intended meeting of the
third respondent sought only to
suspend him in his capacity as
manager
and
employee of the third respondent and not in his capacity as director.
In this regard it was common cause that a managing director
per se is
an officer of the company and as such cannot be suspended from his
position but that he may be suspended
from the terms of his employment as manager if, indeed, he were
employed as a manager of the
company.
In this regard, reference was made to
the decision by
Friedman J,
(in which
Van
Heerden J
concurred) in
the matter of:
Oak
Industries SA (Pty) Ltd v John n.o. and another
1
where
Friedman
J,
said:
‘
In
the first case it was held that a director of a company was an
officer of the company
and
that as such, that is to say simply as a director, was not an
employee of the company. In the second case the position was taken
a
stage further with reference to a managing director of a company. In
the latter case it was held that the relationship between
a managing
director and a company was not one of mere employment; that the
managing director likewise was the holder of an office
in the
company. One cannot, in my view, quarrel in any way with the decision
in either of these two cases. The decisions appear
to me, if I might
say so with respect, to be somewhat self-evident but it does not
follow that, because a director or a managing
director is the holder
of an office, he cannot be and is not capable of being an employee of
the company. Indeed, neither case
went to that extent and there is an
abundance of authority referred to by Mr
Magid,
who appeared on
behalf of the second respondent, which reveals that a managing
director may hold two distinct positions, namely,
on the one hand,
that of the holder of the office of director and, on the other hand,
that of manager, and as manager the managing
director may be employed
by the company.
It
is, however, in the view I take of the matter, unnecessary to enter
into a detailed consideration of any of these authorities
or to
express any final view on them or on precisely what was decided in
them. The question in this case is not whether the second
respondent
held an office with the applicant or was an office-bearer in the
applicant. I am prepared, for the purposes of this
judgment, to
assume that he was such an office-bearer. The question is whether or
not at the same time, or in addition, he was
an ‘employee’
within the meaning of that term as defined in the Labour Relations
Act. As I conceive the position, there
is no absolute rule of law
such as that contended for by Mr
Van
Deventer
, namely that
a managing director of a company cannot be an employee of that
company quite apart from and irrespective of any definition
of the
word ‘employee’ as might be contained in any particular
statute
’
.
[5] Mr
Van Niekerk
for the
respondent argued that the fact that the applicant was also an
employee in addition to being managing director is to be
found in the
fact that there was an employment agreement between him and the third
respondent as evidence by annexure “SK2”
to the founding
papers. Mr
Moosa
for the applicant did not put into issue the
fact that there was this employment agreement as evidenced in
annexure “SK2”
but argued that the terms of the agreement
were such that one cannot from that fact alone draw the inference
that the “employment
contract” was a document which made
the applicant an employee of the third respondent.
[6] In his heads of argument Mr
Moosa
drew particular attention to various facets in the “employment
agreement” which militated against the inference being
drawn
that the applicant was employed by the third respondent. These are:
‘
(a)
An employee renders personal services and his work is not directed to
a specified result. Clauses 7.4 and 7.5 of the employment
agreement
provide that the applicant will promote and extend the business
interests and welfare of
John
Dory’s
and
that he will conduct, improve, develop, extend and promote the
goodwill, growth and prosperity of
John
Dory’s;
(b)
An employee performs the services personally and does not perform
through others. It is clear from the papers that the applicant’s
relationship with the franchisees is critical to his intended
delivery;
(c)
An employee is obliged to perform lawful commands and instructions of
the employer. It is not disputed that the applicant has
never been
given instructions. The allegation contained in the email of 31
st
May 2011 from
the
applicant to
Van
Tonder,
with
particular reference to the third paragraph on page 117, was never
disputed. Here the applicant makes it clear that he has
never been
instructed to do anything as an employee is;
(d)
An employment contract terminates on the death of the employee. The
so called “employment agreement” provides in
clause 2.4
at page 71 of
the
papers that the agreement is binding on the estates, the executors,
the administrators, the liquidators, the trustees or assigns
of the
parties.’
[7] I am in agreement with the
submissions made by Mr
Moosa
in this regard. However, in the
view that I take of the notice “SK19” at page 127 of the
indexed papers, it is not
necessary for me to decide the question
whether or not the applicant was an “employee” of the
respondent.
[8] In annexure “SK19” at
page 127 of the papers, addressed to the applicant by
Ronel Van
Dijk
, a director of the third respondent and the second
respondent herein, the first sentence of the letter states:
‘
This
serves to give you notice that the
company
(my underling) is contemplating suspending you
from
your employment with John Dory’s and your position as managing
director
(my underlining) on full pay’.
Further, in the said letter in the
third paragraph thereof, the second respondent continues:
‘
It
is the
company’s
view
that it will be untenable for
you
to continue to perform your duties as the managing director of
John
Dory’s
(my underlining) whilst the disciplinary proceedings against you are
pending’.
And in the final paragraph of that
letter, the second respondent goes on to state:
‘
In
the interim pending the board meeting referred to above, you are
provisionally suspended from your duties
as
managing director
(my underlining) and you are not to attend at any of the premises of
John
Dory’s
or
Spur
Group
(as the majority shareholder) or any
John
Dory’s Franchise
,
excepting those franchises in which you have a personal equity, or
contact any employees of
John
Dory’s
or
Spur
Group,
any franchisee or employee of any franchisee, again with the
exception of the franchises in which you have a personal equity,
pending the above board meeting and a decision as to whether to
suspend you or not, further pending a disciplinary enquiry.’
[9] In the first place, annexure
“SK19” makes it clear that the second respondent is
informing the applicant of the
company’s decision suspending
the applicant from his employment with
John Dory’s
and
(my emphasis) his position as managing director on full pay. The
clear wording of that first portion of the letter quoted above
is
unambiguous, and, it is further clear that the writer thereof is well
aware of the difference between the applicant’s
employment with
John Dory’s
and his position as managing director.
Furthermore, it was the company’s contemplation to suspend the
applicant, both from
his employment with the applicant as well as his
position as managing director. What is said by the second respondent
in annexure
“SK19” is confirmed by the contents of her
affidavit at paragraph 165 of the answering affidavit where she says:
‘
Dealing
with the first sentence in paragraph 35, I submit that we are
entitled to and have validly suspended the first applicant.’
And further at paragraph 31 of the
answering affidavit on page 164, she says:
‘
As
far as the first applicant’s contention that a director cannot
in law be suspended from his office as director, I dispute
this
submission.’
In the light of the decision in
Oak
Industries
referred to above, it is quite clear that the
contention of the second respondent is wrong and that the third
respondent, purported
through the offices of the first and second
respondents to suspend the applicant in his capacity as “managing
director”
and therefore an “officer” of the third
respondent, which is clearly untenable. Mr
Van Niekerk
for the
respondents accepted this and, therefore did not even attempt to
submit that the suspension of a director was possible
in these
circumstances. Nor, has any legal or factual basis been advanced by
the respondents justifying that a director may be
suspended in these
circumstances.
[10] What is more, is that the second
respondent purports to act on behalf of the company, namely the third
respondent, in acting
as she does in conveying to the applicant the
decision to suspend him. It is apparent that this conduct on behalf
of the first
and second respondents acting as the “company”
is clearly unlawful. There is no evidence that the company had
convened
any meeting or taken any resolution in
regard to the proposed suspension.
Nor is there any evidence that a company resolution at a duly
constituted meeting was taken to
the effect that it was untenable for
the applicant to continue to perform his duties as managing director.
There never was a decision
of the Board of Directors to that effect.
It is clear that the first and second respondents had acted
unlawfully in suspending
the applicant provisionally and in
preventing him access to his offices and from performing his duties
as managing director. It
is abundantly clear from clause 8.9 of the
shareholders agreement at page 51 of the papers, that any resolution,
decision, or act
of the board which is passed in breach of any of the
provisions of clause 8 shall be of no force or effect.
[11] In my view, therefore, it is
abundantly clear that the respondents are not entitled to hold any
meeting at which any decision
to suspend the applicant as managing
director of the third respondent may validly be taken. The applicant
is therefore entitled
for the interdict that he seeks.
[12] As regards the spoliation
application, under case number 9624/2011, Mr
Van Niekerk
in
his heads of argument on behalf of the respondents submitted in
paragraph 3 thereof:
‘
On
Wednesday the 24
th
August 2011,
Van
Tonder
and
Van
Dijk
by way of an email at pages 127 to 128, annexure “SK19”
gave notice of a meeting of directors of
John
Dory’s
to
be held on Friday the 26
th
August 2011 for the purpose of considering whether to suspend
Kapsimalis
’.
That notice also served as notice of his suspension pending the
holding
of that meeting and in accordance with that decision,
Kapsimalis
was prevented from obtaining access to
John Dory’s
offices
at Westville.’
It is clear therefore that the
respondents prevented the applicant from having access to his offices
subsequent to the posting of
the notice annexure “SK19”
to him. That conduct was likewise unlawful in view of the fact that
the first and second
respondents could not have taken any decision on
behalf of the third respondent in the absence of a validly
constituted meeting
or resolution to suspend him or prevent him from
having access to his offices at Westville.
The first, second and fourth
respondents are therefore liable to the applicant for the costs
incurred in launching the spoliation
application under case number
9624/2011. Clearly, the applicant was entitled as managing director
of the third respondent to have
access to the offices he utilized on
behalf of the third respondent in his capacity as managing director
and that the first, second
and fourth respondents conduct in
preventing him access to such offices was unlawful.
[13] In my view it would serve no
purpose in granting a provisional order for the interdict relief
sought by the applicant in the
present application, in as much as it
is clear that any meeting that the first and second respondents want
to hold of the third
respondent, to consider the suspension of the
applicant as
managing director
of the third respondent is
unlawful and will remain so.
[14] In my view, it is clear that the
first and second respondents by their own conduct have already made
up their minds in relation
to the suspension of the applicant and
that whether or not the applicant attends any meetings of the third
respondent intended
to be held by the first and second respondents,
it would serve no purpose. Nothing fruitful can be achieved thereby
in as much
as:
(a) It is common cause on the papers
before me that the parties are
ad
idem
that they should
part ways in the light of their differences and that the relationship
can no longer continue; and
(b) In the light of the conduct of
the respondents hitherto, it is unlikely in the extreme that anything
the applicant can say or
advance at any meeting will change their
minds.
[15] In the light of the common view
of the parties that the relationship between them must terminate.
They would be best advised
to adopt and undertake that process to
finality as swiftly as possible.
[16] As the regards the costs of the
application, counsel for both parties had argued that in the event I
were to hold in favour
of them in the present application, I ought to
order costs against the unsuccessful party, such costs to include the
costs of two
counsel, as two counsel were in fact used by both sides.
I am in agreement with this
suggestion. In addition, Mr
Van
Niekerk
for the respondents argued that in as much as a consent
order was taken in the spoliation application, I should order each of
the
parties to bear their own costs in that matter as there was
clearly a rider that undertakings were given without any admission of
liability.
[17] However, in the light of the
argument in paragraph 3 of the respondent’s heads of argument
to which I have already referred,
it is quite clear that the conduct
of the respondents in preventing the applicant access to his offices
at
John Dory’s
was unlawful, the applicant was entitled
to bring the spoliation application, and therefore, the respondents
should bear the costs
of that application.
The applicants have asked for costs
to be awarded on the attorney and client scale. I see no reason why
the applicant should bear
any costs in a matter such as this where
the first, second and fourth
respondents have clearly acted unlawfully and, moreover, have
persisted in arguing the correctness
of their unlawful action.
In the circumstances, I made an order
on 13 September 2011:-
‘
(a)
Interdicting and restraining the first, second and fourth respondents
from purporting to hold a meeting of the Directors of
the third
respondent at 08h30
on
Friday the 2
nd
September 2011 at 14 Edision Way, Century
Gate Business Park, Century City, Cape Town, or at any other future
date and time and
venue,
for
the ostensible purpose of suspending the first applicant in his
capacity as managing director of the third respondent; and
(b)
Directing the first, second and fourth respondents to pay the costs
of this application on an attorney and client scale, such
costs to
include those costs consequent upon the employment of two counsel and
those costs reserved in respect of the spoliation
application under
case number 9624/2011.’
[18] These are the reasons I had
undertaken to provide in support of the order that I
made on 13 September 2011.
_________________________
S. GYANDA
JUDGE
Counsel
for Applicants: Mr O. A. MOOSA SC
(with Ms M. A. Konigkramer/ Mr A.J.
Boulle)
Counsel
for the Respondents: Mr G. O. VAN NIEKERK SC
(with
Mr G. R. Thatcher)
1
1987(4)
SA 702 at 704 D-J