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[2009] ZAGPJHC 15
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Gold Reef Resorts Limited v Matlala and Others (12335/08) [2009] ZAGPJHC 15 (13 May 2009)
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IN THE SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE NO: 12335/08
In the matter between:
GOLD REEF RESORTS
LIMITED
Applicant
and
NANO MATLALA
1
st
Respondent
SECURITIES REGULATION PANEL
2
nd
Respondent
TSOGO SUN HOLDINGS LIMITED
3
rd
Respondent
J U D G M E N T
BLIEDEN, J
:
[1] This is an application brought by
Gold Reef Resorts Ltd (GRR) for the review and correction or setting
aside of the decision
of the Securities Regulation Panel (SRP) of 1
February 2008 in which it found that GRR was in breach of rules 13,
16, 19 and 20
of the Securities Regulation Code on takeovers and
mergers and ordered it to pay the costs of the SRP.
[2] The chairman of the SRP at the
time is the first respondent and he is cited in his official
capacity, while the SRP is the second
respondent. The third
respondent is Tsogo Sun Holdings Ltd (Tsogo).
[3] Tsogo has not sought to oppose the
relief claimed by GRR. It has filed no papers in this application
and no relief is claimed
from it.
The SRP and the Code and Rules
applied by it:
[4] The SRP was established and
continues to operate under the provisions of section 440 A to 440 N
of the Companies Act, No. 61
of 1973 (as amended) (The Act). The
panel has published the Code on takeovers and mergers together with
the Rules which regulate
such takeovers and mergers.
[5] Section 440 A of the Act is
concerned with “
affected
transactions
”. These
have been defined in the section as follows:
“
affected transactions”
means any transaction (including a transaction which forms part of a
series of transactions) or scheme,
whatever form it may take, which –
taking into account any securities
held before such transaction or scheme, has or will have the effect
of –
vesting control of any company
(excluding a close corporation) in any person, or two or more
persons acting in concert, in whom
control did not vest prior to
such transaction or scheme; or
any person, or two or more
persons acting in concert, acquiring, or becoming the sole holder
or holders of, all the securities,
or all the securities of a
particular class, of any company (excluding a close corporation);
or
involves the acquisition by any
person, or two or more persons acting in concert, in whom control of
any company (excluding a
close corporation) vests on or after the
date of commencement of section 1 (c) of the Companies Second
Amendment Act, 1990, of
further securities of that company in excess
of the limits prescribed in the rules; or
is a disposal as contemplated in
section 228”
.
[6] The Code and Rules have been
created with the purpose that they
“….will
operate principally to ensure fair equal treatment of all holders of
relevant securities in relation to affected
transactions”
.
The Code also provides an orderly framework within which affected
transactions are to be conducted (Section 1 of the Code).
[7] With special reference to the
present matter and in greater detail the Code’s objectives
include:
Offers for the acquisition of shares
should be made across the board to all shareholders and there should
not be favourable conditions
attached to that offer to only one or
some and not to all the shareholders. (Rule 13)
Information about companies involved
in an offer is to be equally available to all shareholders as nearly
as possible at the same
time and in the same manner. (Rule 16)
The board of an offeree company must
not, in the absence of approval by shareholders in general meeting,
take any of certain listed
steps that might frustrate the offer.
(Rule 19)
The documents issued to shareholders
should satisfy the highest standards of accuracy and the information
contained therein should
be adequately and fairly presented. (Rule
20)
[8] In summary the rules provide that
the obligations of the board of the offeree company arise under the
rules from the time an
approach is made to it. The approach may be
taken to occur either when the offer is made and put forward to the
board of the offeree
company or to its authorised advisers or when
there is the communication of a firm intention to make an offer or
when it may be
said that such an offer is imminent. Although some
steps may, in certain circumstances, occur even before this, it is
specifically
provided that where an approach is made to a board, the
board is entitled to be satisfied on reasonable grounds that the
offeror
is, or will be, in a position to implement the offer. The
board is required to act with complete transparency in its
relationship
with all shareholders.
[9] The members of the panel are
persons appointed
“in
the main from various bodies listed in clause 2 of the Code”
.
These bodies include organisations such as the Johannesburg Stock
Exchange, the South African Chamber of Business, the Merchant
Bankers
Association, the Association of Law Societies of South Africa and
other similar bodies. In the present case the panel
was made up of
five persons, all but one of whom were persons who had experience in
different commercial activities. The one exception
was a senior
counsel at the Johannesburg Bar.
The background to the present
application:
[10] On 13 November 2007 this Court
sanctioned the scheme of arrangement proposed by Fluxrab Investments
No. 159 (Pty) Ltd between
GRR and the holders of its ordinary shares
as more fully set out in its circular dated 5 October 2007 which had
been approved by
the SRP as required by the Act.
[11] With reference to the above
scheme of arrangement on 20 January 2008 the SRP published a notice
in which it announced that
it had received an objection
“…relating
to certain terms of a scheme settlement consideration paid to Gold
Reef’s non executive chairman,
M Krok”
.
It invited written submissions in regard to the complaint by a
specified date and any response to such submissions three days
later,
and scheduled a hearing on Thursday 31 January 2008.
[12] Written submissions were received
from Tsogo and they were duly responded to by GRR. The hearing took
place on 31 January
2008. Both Tsogo and GRR were represented by
senior and junior counsel. The written submissions, documents
produced by the parties
and the arguments of counsel on behalf of
their respective clients resulted in the ruling and the subsequent
reasons therefore
which is the subject matter of the present
application.
[13] In order to place this
application into perspective it is necessary to describe and deal in
some detail with the three parties
who constitute the parties
involved in the hearing before the SRP. They are GRR, who is the
present applicant, Bidco, the entity
who was the successful bidder of
the GRR shares, and Tsogo. Each of these entities will be dealt with
separately.
Gold Reef Resorts Ltd (GRR):
[14] It is a public listed company
carrying on the business of a casino operator. During 2007 it wished
to dispose of its business
to interested purchasers.
[15] At the material time the shares
in GRR were heavily concentrated in the hands of three entities –
the Krok family entities,
representing 25,9% of the share capital;
the BEE shareholders, being members of a consortium holding shares
representing 24,9%
of the share capital; Casinos Austria, a foreign
investor, holding shares representing 21, 7% of the share capital.
[16] The non executive chairman of GRR
was Maxim Krok, he was also one of the trustees of the trusts held
for the Krok family entities.
[17] The board of GRR consisted of
four executive and eight non executive directors. The Chief
Executive Officer of GRR was Steven
Joffe (Joffe).
[18] During 2007 Merrill Lynch was
appointed by GRR’s board to conduct a process in which it would
approach various potential
buyers of the applicant’s shares to
enquire from them whether they were interested in acquiring GRR and
thereafter to consider
any such enquiries or offers and to advise
GRR’s board in regard thereto. The fees of Merrill Lynch were
calculated by reference
to the price to be offered: the higher the
price, the larger the fee.
Bidco:
[19] This was the name given to
Fluxrab Investments No 159 (Pty) Ltd, also known as the “Ethos
Consortium”.
[20] Bidco sought to propose a scheme
of arrangement between GRR and its shareholders in order to enable it
to obtain effective
ownership and control of the underlying business
and assets of GRR through the acquisition of scheme shares.
[21] Bidco was to offer R34 per Gold
Reef share subject to an incremental increase during a specified
period.
[22] Certain executives of GRR would
acquire an interest in Bidco. These included Joffe. These
executives had reached an agreement
with Bidco in terms of which they
undertook directly or indirectly to subscribe for and hold shares in
the issued share capital
of Holdco, the holding company of Bidco.
[23] Bidco submitted its offer to the
GRR board for the GRR shareholders, through Merrill Lynch, pursuant
to the process initiated
by GRR.
[24] The Bidco offer was discussed and
considered at GRR’s board meeting held on 10 August 2007.
[25] GRR’s board resolved to
recommend to shareholders the acceptance of the Bidco offer.
[26] It was a condition of the Bidco
offer that the scheme was subject to fulfilment by Thursday 31
January 2008, although this
cut off date could be extended by
agreement between GRR and Bidco.
[27] The Bidco offer was communicated
to the shareholders pursuant to the scheme of arrangement sanctioned
by the court, but the
conditions precedent were not fulfilled in time
and the scheme has lapsed.
Tsogo
:
[28] It was and is a competitor of
GRR. It had on a number of occasions made offers to purchase GRR’s
business. Some of
these offers had resulted in GRR using Tsogo’s
bids as a means to evoke interest in other parties for the purchase
of GRR’s
business. It was for this reason that it had decided
not to initially deal with the GRR board or Merrill Lynch, but to
instead
approach the representatives of the three controlling
shareholders who have already been referred to.
[29] On 8 August 2007 Merrill Lynch
wrote a letter to Tsogo, in which it stated:
“Potential
Sale of Gold Reef Resorts Limited (“GRR” or the
“Company”)
We understand that the Tsogo Sun
Group (“Tsogo”) has been in discussion with certain key
shareholders of GRR in respect
of a potential offer to acquire a
stake in the Company. You are also aware that the Board of GRR has
been running a process whereby
it has separately solicited offers for
the Company. In terms of this process the board is expecting to
receive a final fully funded
bid by no later than 12 noon on Friday
10 August 2007. The bid submitted will incorporate the necessary
details to enable the
board to assess whether it wishes to pursue the
bid. It will also include a timetable and conditions precedent to
both announcement
and closing.
In order to afford to Tsogo the
opportunity to get equal and fair consideration, we kindly request
that you to submit your offer
by no later than 12 noon on Friday 10
August 2007. Your offer may either be submitted to one of the key
shareholder(s) or hand
delivered in a sealed envelope to the offices
of Merrill Lynch South Africa located at 138 West Street, Sandown and
marked for
the attention of Philip R Noblet. Your bid should inter
alia contain a timetable and conditions to announcement and closing.
The board will meet at around 13h00
on the same day to consider offers received and determine a way
forward”.
[30] On 9 August 2007 a meeting took
place between Tsogo and the controlling shareholders. M Krok
represented the Krok interests.
At that meeting a “
deal
”
was proposed to the shareholders as follows:
Tsogo would offer a purchase price of
R34.50 per GRR share.
Various conditions relating to
regulatory approvals and certain “
competition
issues
” were
proposed.
The suggested offer would not be
made to the board unless there was an irrevocable commitment from
the controlling shareholders
to support the Tsogo offer. This was a
prerequisite to any offer made by Tsogo to the GRR board. (My
underlining)
It also disclosed to the shareholders
two funding letters from two recognised merchant banks indicating
that it was in a financial
position to fulfil its proposed offer.
At the meeting concerned, Tsogo
provided Krok, in his capacity as chairman of GRR, with a letter
(dated 10 August 2007), for delivery
to the board the next day, to
coincide with the GRR meeting scheduled for the following day to
decide on all offers for its shares.
This letter reads as follows:
“
The Chairman
Potential
sale of Gold Reef Resorts Limited
We advise that we are in
discussions with the major shareholders of Gold Reef Resorts which if
successfully concluded to our satisfaction
may result in an offer
being presented to the board
.”.
The Merrill Lynch letter of 8 August
2007 was not responded to save for the above letter.
The GRR board meeting of 10 August
2007 and its consequences
:
[31] On 10 August 2007 the GRR board
met to consider the offers. It had only one offer before it, namely
that of Bidco which offered
R34.00 a share. It was made aware by
representatives of the three majority shareholders of the Tsogo
proposed offer in the amount
of R34.50 a share. The letter from
Tsogo referred to in the previous paragraph was handed in. The
representatives of the three
shareholders who were at the meeting,
after having considered the Tsogo proposal decided that they were not
prepared to give the
irrevocable undertaking required by Tsogo as
they had doubts about the Competition board’s attitude to a
takeover by Tsogo
and the consequent delays which this could cause.
This was made plain to the other members of the board.
[32] After having reconsidered the
Bidco offer, which was the only offer on the table, the board
resolved to recommend to shareholders
that it be accepted.
[33] At the same meeting, at the
instance of Joffe, the board further resolved to pay M Krok the sum
of R12 000 000.00 in appreciation
for his contribution to GRR over
the years and also because of the part he had played in achieving the
offer which had now been
accepted.
[34] Because of the attitude adopted
by the three majority shareholders, Krok that same afternoon, on
their behalf, telephoned the
chief executive officer of Tsogo, Mr
Mabuso, and informed him that if Tsogo was prepared to increase its
offer by 10 to 15 percent
the three shareholders would provide the
irrevocable undertaking requested. This was not acceptable to Tsogo
and was rejected.
Tsogo’s complaint to the SRP:
[35] It questioned the “
real
”
purpose and nature of the payment of R12 000 000.00 to Krok as
recorded in GRR’s minutes of the board meeting already
referred
to. It sought to answer its question by saying that there had been
two offers for the shares of GRR, one by it and one
by Bidco. It had
offered to purchase the shares at R34.50 a share while Bidco had
offered R34.00 a share. It claimed that this
payment to Krok was
made by GRR to get the board to prefer the Bidco offer above that of
the Tsogo offer although it was less than
the Tsogo offer by
compensating him and the Krok entities for their loss in accepting
the lower offer. This payment, consequently,
it was claimed was in
breach of SRP Rule 13. It also sought to prove that if one accepted
certain tax obligations the R12, 000,
000 paid to Krok closely
represented the difference to the Krok entities between the two
offers.
[36] Tsogo further complained that its
offer, which it categorised as the higher offer, was intentionally
withheld from GRR shareholders
in the circular published by GRR in
terms of section 440 of the Act, and this was in breach of SRP Rules
16, 19 and 20. As is
plain from what is stated above, the basis of
the Tsogo complaint is that it had made a competing offer for GRR.
This was made
clear in paragraph 49 of the Tsogo submission:
“
“….
We submit that it is simply disingenuous for [Gold Reef] now to
contend that Tsogo’s offer did not exist
as it was not a “firm
intention to make an offer”… This issue, we submit, is
important because it is the very
knowledge by the [Gold Reef] board
of the Tsogo offer, which led to the decision by the board to succumb
to Krok’s demands
and to pay him a separate bonus in a
carefully calculated amount, so that it would equate to his higher
consideration under the
Tsogo offer. It is also important because,
on its own, the failure by the “[Gold Reef] board to disclose
the Tsogo offer
and its details to the [Gold Reef] shareholders,
constitutes a material breach of the code and the rules which on its
own warrants
the impugning of the transaction.”
[37] The significance of the
underlying premise was similarly emphasised in paragraph 2.2 of the
Tsogo submission:
“
The additional consideration paid to Krok, became necessary because
of a contemporaneous higher offer Tsogo had made for
the [Gold Reef]
shares. That higher offer, which led directly to the additional
consideration, on its own, constitutes material
and relevant
information, which was intentionally withheld from [Gold Reef]
shareholders (and indeed from the panel itself).”
GRR’s response to Tsogo’s
complaint
:
[38] This response made at the hearing
before the SRP can be summarised as follows:
Tsogo had made no offer to GRR’s
board for its shareholders; whether it might do so Tsogo had told
the board depended on
whether the controlling shareholders would
provide an irrevocable undertaking to support the proposals Tsogo
had made to them.
Without such undertaking no offer would be made.
It was emphasised that this was a precondition to any offer being
made.
At the board meeting those
representing the three shareholders concerned had told the board
that they were not prepared to give
the irrevocable undertaking
required by Tsogo to support the Tsogo proposal. In the
circumstances there was no offer or possibility
of an offer from
Tsogo before the board.
There was no need
“
to entice “
Krok
from Tsogo’s offer. This was because there was never an offer
in the sense referred to in the Code.
It was further pointed out that even
if there had been an attempt to make the offer, and there was this
“
enticement
”
of Krok this would not be effective as all three shareholders and
not only the Krok entity would have to be “
enticed
”
to accept the bid of Bidco in place of that of Tsogo. There were no
suggestion that anything of the sort had occurred.
It was further stated that the origin
of the board decision regarding the payment to Krok came from the
informal suggestions on
the part of Joffe and some of the members of
management, who were aware of Krok’s contribution to GRR,
including his role
in securing the expected Bidco offer at R34.00 a
share and who thought that it was appropriate that such contribution
should
be acknowledged.
It was further explained that the
alleged correlation of the after tax amount payable to Krok was
incorrect and reasons were furnished
for this.
The SRP findings and the reasons
therefore
:
[39] Although the panel made its
finding the day after the hearing, that is on 1 February 2008, it
gave its “
full
reasons
” on 14 April
2008. It is the latter document which it the subject matter of the
present review. It should be mentioned
that an answering affidavit
to this application brought by GRR was filed on behalf of the SRP in
which these “
reasons
”
were elaborated upon. In my view what was stated in the answering
affidavit takes the matter no further even if it was
admissible for
the SRP to file any additional reasons, which I seriously doubt.
[40] In its reasons the SRP found that
it was not disputed that:
”7.
Tsogo
Sun submitted a funded offer of R34.50 per share to Krok on 9 August
2007 at a meeting held in Sandton, which offer was subject
to certain
conditions”.
“8. The offer of Tsogo
Sun was rejected on 10 August 2007 by the board of Gold Reef on the
advice of its financial adviser
and sponsor, Merill Lynch”
and further found as an issue between
the parties
“5.
whether
Tsogo Sun had submitted a funded offer, although conditional, to Gold
Reef or to the Board of Gold Reef and the failure
by Gold Reef to
make this disclosure in the Cautionary Announcement and in the
Circular constituted a breach of Rules 16.1, 20.1
or 20.2”.
[41] As is plain from its finding the
SRP held that Tsogo had made a rival offer. Both parties to the
present application correctly
agreed that without such a finding the
SRP would have not been entitled to make the order which it did.
The SRP’s justification for
the order made by it:
[42] These are contained in the
reasons to which reference has already been made, as well as to the
arguments submitted on behalf
of the SRP by its counsel in the
present proceedings. They can be summarised as follows:
In terms of the definitions of the
provisions of the Code “
offer
includes an offer in respect of an affected transaction, however
effected
.”
This is a most extensive definition,
including even an oral offer such as was made to the major
shareholders and conveyed to the
board.
It is not the existence of an offer
in the legal sense that triggers the duties in the code. This
emerges from a number of the
provisions in the Code;
inter
alia
a general principle
which requires equality of information to all shareholders and
speaks of “during the course of an offer,
or where an offer is
in contemplation”.
General principle 3 of the Code
refers not only to the announcement of an offer but also of the
intention to make an offer.
General principle 7 triggers the
duties in the Code “
after
a bona fide offer has been communicated to the board of the offerree
company
” and imposes
duties when an offer of that nature “
might
be imminent
”,
demonstrating that the applicability of the Code is to affected
transactions which arise even before any offer might
be made. Rule
1 in turn refers not only to an offer but also to “
an
approach with a view to an offer being made
”.
The Code further contemplates that
the next step might be an announcement of a firm intention to make
an offer which is also not
an offer, and that announcement might,
but need not, result in an offer.
It was further argued that it follows
that Rule 13, for instance, which prohibits an offeror or persons
acting in concert with
it from proposing special deals, does not in
its reference to an offeror mean only a person who has made an offer
in the ordinary
legal sense, since “
offer
”
includes an offer in respect of an affected transaction, however it
is effected, and casts duties on the offeror and the
board even when
an offer is merely one in contemplation. The same principles apply
to Rule 16, 19 and 20. In particular, it
was argued, that at all
material times leading up to, during and after the board meeting of
10 August 2007, Tsogo was a prospective
offeror in respect of whom
an offer was reasonably in contemplation and even imminent. The
only reason why it had not made a
formal offer at R34.50 was that
the majority shareholders declined to support it. This does not
mean that it should not have
been made known to minority
shareholders, to the SRP itself and to the Court.
The panel was entitled and obliged to
regard Tsogo’s approach as an offer in that sense, and one
which was seriously made
to the extent of obtaining agreements in
principle from banks to provide R12.1 billion to fund the offer.
It must be borne in mind too, that it
is the panel who is charged with the power and responsibility to
interpret the Code (see
the Code Section A introduction).
Finally in all the circumstances it
cannot be said that there was no evidence upon which a reasonable
person in the position of
the panel could not find the breaches of
the rules as set out in the reasons for making the ruling for which
it did.
An analysis of the SRP’s
reasons in the light of GRR’s case:
[43] The SRP’s acceptance that
the proposal made to the three shareholders constitutes an offer as
defined by the Code, fails
to take into account that as a
precondition for such offer was Tsogo’s requirement that no
offer could be placed before the
board until irrevocable undertakings
from the three shareholders supporting such offer had been received.
The SRP’s failure
to separate the Tsogo proposals made to the
majority shareholders and its refusal to make an offer to the GRR
board constituted
a misdirection on its part.
[44] Tsogo’s attitude carries
the inevitable consequence that if no such undertaking were given, as
in fact occurred, and
as was made clear by GRR in its unchallenged
submissions, no offer would be put on the table or could be imminent.
[45] In essence therefore, at the
insistence of Tsogo, there was no offer or even suggestion of an
offer by it until there had been
acceptance of the precondition
referred to. If the board of GRR had given notice of the Tsogo
approach to the majority shareholders
to the minority shareholders,
this would be misleading them, as unless and until the precondition
had been met there was no prospect
of an offer from Tsogo. The SRP
did not take cognisance of the relevant considerations to this effect
which were put before it
by GRR and failed to find as an undisputed
fact that the possibility of Tsogo making an offer was at all times
dependant on the
precondition it put forward being met. If this did
not occur there was no chance of any offer being made.
[46] It is somewhat ironic that the
party who had insisted that no offer would be put before the board
without its precondition
being met, is now the complainant that
minority shareholders were not informed of its conditional approach.
The attitude of Tsogo
was that it was not prepared to deal with the
board or Merrill Lynch because it did not wish to have its offer
publicised unless
it knew that such offer would be successful. As is
shown in paragraph 29 Tsogo was specifically invited to make an
offer. It
declined this invitation. Its complaint is therefore
unjustified as a result of its previous attitude.
[47] Had the SRP appreciated the
argument of GRR, it would have found that there was no offer by Tsogo
as defined in the Code and
there was therefore no merit in its
complaint. In my view it misconceived GRR’s contention by
classifying it in the manner
in which it did.
[48] The key to understanding the
status of the Tsogo approach lies in the letter it sent to the board
of GRR dated 10 August 2007
which is quoted at par 30 above. It made
it plain that it was in discussions with shareholders which if
successful “
may result
in an offer being presented to the board
”.
The obvious implication is that if the discussions were unsuccessful
no such offer would be forthcoming. In my view this
cannot be
construed as an offer as envisaged in the Code and rules of the SRP.
By ignoring this letter, save for a passing reference,
the SRP also
ignored the argument of GRR and in so doing misconstrued the Tsogo
“
offer
”
when in fact it was a “
non
offer
” to use the
words of GRR’s counsel at the hearing before it and repeated in
argument before this court.
Is the SRP ruling reviewable?:
[49] On behalf of GRR it was submitted
that there were four grounds on which the application for a review
should be granted. It
seems to me that it is not necessary to deal
with two of the grounds relied upon, namely bias and a failure of
procedural process,
the first two grounds relied upon by the GRR are
dispositive of the present application.
The first ground:
[50] It is GRR’s case that the
SRP erred in accepting as a fact that on 9 August 2007 Tsogo had made
an offer to GRR and that
such offer had been rejected by the board.
It was submitted on behalf of GRR that this finding:
did not have regard to the facts;
miscategorised the facts that were in
dispute as undisputed facts;
insofar as it might have identified
the existence of any such fundamental dispute at issue ignored all
of GRR contentions in regard
thereto;
did not identify or recognise such a
disputed issue and thereupon declined to address them.
The second ground:
[51] The SRP listed as common cause
facts, matters which were essentially in dispute.
[52] Ignored other material matters of
fact which were indeed common cause and uncontested by Tsogo.
[53] Generally ignored anything GRR
had said in response to the complaint.
[54] These two grounds can be dealt
with together under the general heading that the SRP failed to
appreciate or have regard to
GRR’s case before it and as a
result wrongly came to the conclusion that it did. As I have already
made plain, I agree that
the SRP was incorrect in coming to the
conclusion which it did. However the matter does not end there, the
next question is whether
the order made by the SRP is reviewable
rather than merely appealable.
Is the order of the SRP
reviewable?:
[
55] It
was not in dispute between the parties that the decision of the SRP
is one which is subject to the provisions of the Promotion
of
Administrative Justice Act, No. 3 of 2000 (PAJA). It was further not
in dispute that section 6 (2) of PAJA is a code of administrative
review which is applicable in the present case. The relevant section
reads :
“
6
(2) A
court or a tribunal has the power to judicially review an
administrative action if-
the administrator who took it-
was not authorised to do so by
the empowering provision;
acted under a delegation of power
which was not authorised by the empowering provision;
was biased or reasonably
suspected of bias;
a mandatory and material procedure
or condition prescribed by an empowering provision was not complied
with;
the action was procedurally
unfair;
the action was materially
influenced by an error of law;
the action was taken-
for a reason not authorised by
the empowering provision;
for an ulterior purpose or
motive;
because irrelevant considerations
were taken into account or relevant considerations were not
considered;
because of the unauthorised or
unwarranted dictates of another person or body;
in bad faith; or
arbitrary or capriciously;
the action itself-
contravenes a law or is not
authorised by the empowering provisions; or
is not rationally connected to-
the purpose for which it was
taken;
the purpose of the empowering
provision;
the information before the
administrator; or
the reasons given for it by the
administrator;
the action concerned consists of a
failure to take a decision;
the exercise of power or the
performance of the function authorised by the empowering provision,
in pursuance of which the administrative
action was purportedly
taken, is so unreasonable that no reasonable person could have so
exercised the power or performed the
function, or;
the action is otherwise
unconstitutional or unlawful”.
[56] On behalf of GRR it was correctly
submitted that each of the paragraphs and sub-paragraphs of section
6(2) of PAJA constitutes
a discrete ground of review. Where
administrative action falls within any of the categories described in
these paragraphs and
sub-paragraphs it falls to be reviewed and set
aside in terms of the plain meaning of section 6(2). What is
relevant in the present
case are the following sub-sections of
section 6(2) :
Where the decision maker bases its
decision on mistaken facts or irrelevant considerations, the
decision falls to be reviewed
and set aside in terms of section
6(2)(e)(iii). See
Minister
of Health No v New Clicks SA (Pty) Ltd
2006 (2) SA 311
(CC)
at para 389 – 404 and 505 – 572 and
Chairpersons’
Association v Minister of Arts and Culture and Others
2007 (5) SA
236
(SCA)
at para 47.
Where the decision is not rationally
related to the information that served before the decision-maker or
the reasons provided
for it by the decision-maker, that decision
falls to be reviewed and set aside in terms of 6(2)(f)(ii)(cc) or
(dd) respectively.
See
Barto
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
Tourism
[2004] ZACC 15
;
2004 (4) SA 490
(CC)
at para 24 – 25 and 48 and
Jicama
17 (Pty) Ltd v West Coast District Municipality
2006 (1) SA 116
(C)
at para 3 and 8-13;
Total
Computers (Pty) Ltd v Muncipal Manager Potchefstroom Local
Municipality and Others
[2007] ZAGPHC 239
;
2008 (4) SA 346
(T)
at para 22 and 55.
As has already been stated the SRP
in its findings failed to take cognisance of the fact that :
whatever offer had been made was
made only to the three shareholders and not to GRR;
the offer would only come into
existence if and when the three majority shareholders furnished
their irrevocable undertaking
to support it. Until that occurred
no offer of any nature was made or would be made by Tsogo;
it was at Tsogo’s specific
instance that no offer was to be put forward to the board, and the
fact that there were discussions
at the board meeting of 10 August
regarding the proposals made by Tsogo and their rejection by those
representing the major
shareholders could not be construed as an
offer.
[57] The fact that the SRP did not
deal with any of these contentions leads to the necessary conclusion
that its decision was based
on mistaken facts or irrelevant
considerations and was not one which any rational body would have
arrived at had they paid cognisance
to the submissions of GRR.
[58] In the circumstances the
application for review succeeds and the order of the SRP must be set
aside.
[59] As regards costs counsel for both
sides addressed me and it was common cause that unless it can be
found that the conduct of
the SRP was in any way
mala
fide
or its finding was as
a result of perverse or malicious conduct costs should not be awarded
against a body such as the SRP. I
am in full agreement with those
sentiments. I am unable to find any malicious or perverse conduct on
the part of SRP.
[60] The following order is made:
The decision of the Securities
Regulation Panel of 1 February 2008 is reviewed and set aside.
The order made by the Panel is set
aside and it is substituted with the following order:
“The
complaint is dismissed”.
3. There is no order as to costs.
_________________________
P BLIEDEN
JUDGE OF THE HIGH COURT
COUNSEL FOR THE APPLICANT: Adv.
Kuper (SC)
Adv. Blou
Adv. Chaskelson
INSTRUCTED BY: Deneys Reitz
Inc.
COUNSEL FOR THE RESPONDENT Adv.
Solomwitz (SC)
Adv. Machaba
INSTRUCTED BY: Kenaka Hlatshwayo
Radebe Attorneys