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IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No: 7651/2024
In the matter between:
RENÉ JOSEF PETER Applicant
and
MIMOSA COURT SHAREBLOCK RF (PTY) LTD 1st Respondent
LANCE FANAROFF 2nd Respondent
ANDREW RUSSEL 3rd Respondent
JANET MALLEY 4th Respondent
CONNY KRAUSS 5th Respondent
Date of hearing: 22 August 2024
Date of Judgment: 5 September 2024
JUDGMENT
PANGARKER AJ
Introduction
1. Mimosa Court is a block of flats in Seapoint. The first respondent, the
company, is a shareblock company in respect of which shareholders’ shares are
allocated to units and oth er areas in Mimosa Court. The applicant is a Swiss
citizen who resides at Unit 3 […] and along with his wife, owns units or residential
flats which equates to 6% shareholding in the share block. He is a director in the
company.
2. The second to fifth respondents are also directors in the company who are
also shareholders. The second respondent is the chairperson of the Board of
directors. According to the applicant, the CIPC records still reflect the erstwhile
directors as being the company’s directors and for all intents and purposes the
second to fifth respondents are the de facto directors of the company. The
directors were appointed to the company’s board at an AGM held in August
2022.
The application in terms of section 71(5) Companies Act 71 of 2008
3. The applicant delivered this review application on 16 April 2024 and seeks
the following relief:
1. Dispensing with the provisions of the rules of the above Honourable
Court relating to the time and manner of service, and disposing of this matter as
one of urgency in accordance with the provisions of rule 6(12) of the rules of this
Honourable Court.
2. That the decision taken after the board meeting of the First
Respondent on 11 March 2024 is reviewed, declared invalid and contrary to
section 71 of the companies Act 71 of 2008, and the resolution be set aside.
3. The First Respondent and/or its office bearers are directed forthwith
to reinstate the Applicant as a director of the First Respondent.
4. The Second and Third Respondent, alternatively, the First
Respondent shall pay the costs of this application, jointly and severally, the one
paying the other to be absolved.
5. The Applicant to be granted such further and/or alternative relief as
the Honourable Court may deem fit and appropriate.
4. The applicant was removed as a director of the company in terms of
section 71 (3)(b) of the Compan ies Act 71 of 2008 (the Act) and launched this
review application in terms of section 71(5) of the Act. Section 71 states the
following:
71. Removal of directors
(1) Despite anything to the contrary in a company’s Memorandum of
Incorporation or rules , or any agreement between a company and a director, or
between any shareholders and a director, a director may be removed by an
ordinary resolution adopted at a shareholders meeting by the persons entitled to
exercise voting rights in an election of that director, subject to subsection (2).
(2) Before the shareholders of a company may consider a resolution
contemplated in subsection (1)—
(a) the director concerned must be given notice of the meeting
and the resolution, at least equivalent to that which a
shareholder is entitled to receive, irrespective of whether or
not the director is a shareholder of the company; and
(b) the director must be afforded a reasonable opportunity to
make a presentation, in person or through a representative,
to the meeting, before the resolution is put to a vote.
(3) If a company has more than two directors, and a shareholder or
director has alleged that a director of the company—
(a) has become—
(i) ineligible or disqualified in terms of section 69, other than on
the grounds contemplated in section 69(8)(a); or
(ii) incapacitated to the extent that the director is unable to
perform the functions of a director, and is unlikely to regain
that capacity within a reasonable time; or
(b) has neglected, or been derelict in the performance of, the
functions of director, the board, other than the director
concerned, must determine the matter by resolution, and
may remove a director whom it has determined to be
ineligible or disqualified, incapacitated, or negligent or
derelict, as the case may be.
(4) Before the board of a company may consider a resolution
contemplated in subsection (3), the director concerned must be given—
(a) notice of the meeting, including a copy of the proposed
resolution and a statement setting out reasons for the
resolution, with sufficient specificity to reasonably permit the
director to prepare and present a response; and
(b) a reasonable opportunity to make a presentation, in person
or through a representative, to the meeting before the
resolution is put to a vote.
(5) If, in terms of subsect ion (3), the board of a company has
determined that a director is ineligible or disqualified ,
incapacitated, or has been negligent or derelict, as the case
may be, the director concerned, or a person who appointed
that director as contemplated in section 6 6(4)(a)(i), if
applicable, may apply within 20 business days to a court to
review the determination of the board.
(My emphasis)
5. The applicant thus seeks a review of the Board's decision as well as
reinstatement as director of the company and furthe r relief. It is evident from the
affidavits filed in the application that the Board of Directors held a meeting on the
Zoom platform at 16h00 on 11 March 2024 whereby it was resolved to remove
the applicant as a director of the company.
Chronology of main events
6. The applicant had received a notice of the meeting of the Board of
directors in terms of section 71(2)(a) of the Act accompanied by the Board’s
resolution in terms of section 71(3) 1. The Notice was accompanied by a
statement addressed to the applicant and I summarise the detail of the Notice
and statement as follows:
1 RJP1, RJP2
6.1 at the company’s AGM in September 2023, it was discussed and
agreed that the applicant would procure quotations for renovations
intended for the reception area of Mimosa Court;
6.2 these quotations were to be presented to the Board members for
consideration;
6.3 on 9 January 2024, the applicant indeed emailed three quotations
from three contractors, namely Mazz Interior and Projects, The
Design Empire (LCRK Designs) and Joinery Marble Worx for the
Board’s consideration, and indicated his preference for the
quotation of Joinery Marble Worx on the basis that the latter had
done work at Mimosa Court previously and was reliable 2;
6.4 it then came to light that Mr Higgins of Joinery Marble Worx had
procured a quotation from The Design Empire (as opposed to the
applicant procuring it himself) and that Mazz Interior and Projects
was a company based in Thailand;
6.5 subsequently, on 30 January 2024, the second respondent
emailed the Board members including the applicant wherein he
requested an explanation as to why the quotations presented and
provided by the applicant were obtained by Mr Higgins, and why
Joinery Marble Worx was suggested as the preferred contractor3;
6.6 following on from various correspondence exchanged between the
Board and the applicant, the view was held that the explanation
provided by the latter regarding the quotation iss ue, was
2 RJP6
3 AA13, AA14
inadequately explained and/or unsatisfactory;
6.7 the section 71(4)(a) statement subsequently alleged that in view of
the implausible explanation provided, it appeared to the Board that
the applicant had provided “contrived comparative quotes in a n
effort to entice the Board to select your preferred contractor to carry
out the renovations to the foyer”4;
6.8 the directors alleged that the applicant was derelict in the
performance of his duties in that his conduct was unethical and
dishonest, and it was thus proposed that he could not continue as a
director of the company and was to be removed.
7. From the nu merous emails between the directors, it becomes apparent
that the applicant was queried at the end of January as to the reason why the
size of the stone top needed for the reception area in Mimosa Court had
increased but the price on the quotations had no t also increased 5, to which the
applicant replied that the increase in the size of the stone top did not affect the
price6. The applicant admitted in an email dated 31 January that he had a
preferred contractor when it came to quotes 7. The second respondent
subsequently on 2 February gave him an opportunity to rectify the view which he
(the second respondent) held tha t contrived comparative quotes amounted to
unethical, dishonest and fraudulent behaviour8.
8. On 7 February, the applicant informed the Board members of his denial of
the allegations that the quotes were manipulated or influenced, and furt hermore,
denied that he had committed any unethical or dishonest conduct. It is important
to indicate at this stage that the email correspondence indicates that it was the
4 RJPI, p51
5 AA13
6 AA16
7 AA16
8 AA18, AA19
fifth respondent who discovered via her investigation t hat one contractor was
based in Thailand and she agreed with the second and third respondents that it
was unethical to manipulate or set up quotes, and emphasised that the rules of
the company’s Memorandum of Incorporation were to be complied with9.
9. As for the fourth respondent’s stance at the time, her email dated 6
February indicates that there was no manipulation of quotes, and that the other
Board members were to consider opening a dialogue with th e applicant in order
to reach an understanding of the circumstances surrounding the applicant’s
acceptance of quotes procured by Mr Higgins10
10. The second respondent proceeded to email the Notice of Meeting of the
Board of directors, the propos ed Directors’ resolution and the section 71(4) (a)
statement providing reasons for the resolution on 22 February 2024. On 28
February, the applicant indicated per email to the Board members that he was
unavailable for the 11 March meeting as he would be ab road, and requested that
the meeting be postponed until mid -May to give him an opportunity to consult
with his legal team on this very serious matter 11, the allegations of which he
clearly denied.
11. The second respondent’s response was to afford the applicant a few days
more but not a postponement of the meeting to May12. It was made clear in the
email of 1 March that the Board had held several meetings via Zoom and that the
applicant could consult with his legal rep resentatives in this manner too, and
thus, that the meeting date of 11 March was retained.
12. The fourth respondent made clear that she would not participate in the
meeting which according to her, w as “designed” by the second respondent, and
9 S2 to second respondent’s supplementary affidavit
10 AA22
11 AA25
12 AA26
she advocated for a more collaborative and conciliatory approach amongst the
Board members. On this score, she deposed to an affidavit wherein she indicates
that she does not side with the applicant nor with the second respondent, but in
respect of the latter, makes it clear that the third respondent supports the second
respondent. She raises certain concerns about the inaccuracies in the opposing
affidavit and states that she is being pressurised to resign as elected shareholder
and director as she does not support t he second respondent’s actions against
the applicant.
13. The second respondent has deposed to a confirmatory affidavit to the firs t
respondent’s affidavit. The fifth respondent, also a director and shareholder, has
not deposed to an affidavit in this application.
Submissions regarding the 20 business days’ period in section 71(5) of the
Act
14. The first to third respondents raise in the opposing affidavit that the
application is brought out of time in that section 71(5) requires that an application
for review must be brought within 20 business days after the Board has
determined that the director was, inter alia, negligent or derelict. The second
respondent states that the decision was taken by the Board on 11 March and the
application was brought on 16 April, outside the 20 business day period, which
would have lapsed on 11 April.
15. The second respondent’s averment is that despite warnings to the
applicant’s legal representative regarding compliance with the time limit as
aforesaid, the applicant failed to comply and as the Act does not allow a Court to
grant condonation for non-compliance with the time period, for that reason alone,
the application falls to be dismissed.
16. The applicant’s reply to the averment that the application is o ut of time is
that the application was indeed launched within 20 business days of it coming to
his notice that the Board had apparently resolved to remove him as a director.
His version is further that he was at sea on 11 March 2024 and only “became
aware of the purported decision several days after the Board meeting” 13. The
applicant states further that he never received the resolution apparently passed
on 11 March 2024. He questions whether a vote was actually taken at th e March
meeting to remove him as a director and that nobody saw fit to inform him of the
Board’s decision.
17. In support of his view and the argument that he never received the
resolution timeously, the applicant r elies on correspondence that his legal
representative requested the resolution and transcript of deliberations in the
meeting. This request was directed to the second respondent and the property
agent.14 The further email correspondence relied upon in the replying affidavit
indicates that Mr Meltz had already been provided with the actual recording of
the entire meeting but that a link sent allowing for a download of the meeting did
not contain the deliberations. The applicant thus states that by 19 March a copy
of the record ing of the meeting was still not available and he thus denies non-
compliance with the time period referred to in section 71(5) of the Act.
18. Counsel for the applicant argued that the 20 business days commence to
run from the time that the applicant obtains formal knowledge of the Board’s
decision and this would only occur once he received the resolution and
deliberations or record of the meeting. Until the formal notification occurs, so the
argument goes, the 20 day period referred to in section 71(5) is not triggered.
The applicant’s counsel motivated this submission on the basis that if the
applicant is unaware of the outcome or determination of the meeting , then he
would not know whether to take the decision on review or not.
13 Replying affidavit, par 4, p345
14 AA2
19. Accordingly, it was thus submitted that with reference to section 71(5) and
the time period re ferred therein, the Court should adopt a purposive approach to
statutory interpretat ion as a failure to do so would result in an absurdity and
prejudice the applicant’s rights to utilise the section 71(5) review mechanism.
20. The counter argument presented by the first to third respondents is that
section 71(5) does not allow a Court t o grant condonation for non -compliance
with the 20 business day period. Counsel referred to an unreported decision of
Langeni and Another v South African Women in Mining Association and
Others15 and submitted that this is the only authority which he could find on th is
issue and as it is a decision of a single Judge, it is not binding on this Court . To
clarify, the first to third respondents submit that Senyatsi J’s view in Langeni16
that the 20 day period may be condoned by a Court faced with a section 71(5)
review application, was not based on any binding authority.
21. The further argument by the se respondents is that the applicant wishes
the Court to interpret the word s “determine” and “determination” in section 71(5)
as meaning formal knowledge of the Board’s decision but that this interpretation
is incorrect as there is nothing in the Act which s tates that upon receipt of a
resolution of the Board’s decision, the time period in the section is then triggered.
The argument is that while the applicant does not ask for condonation for the late
review application, the Act in any event does not allow for the granting of
condonation, and that the applicant has nonetheless admitted knowledge of the
decision shortly after the 11 March meeting. The Court is thus requested to
dismiss the application on the basis of its lateness.
Discussion
22. Having regard to the differing views on the question of compliance with the
15 [2023] ZAGPJHC 1309
16 Langeni supra, paragraphs 27 and 28 of the judgment
20 business day time period , the discussion commences with a consideration of
the wording of section 71(5), which clearly states that once a Board of a
company determined, in terms of section 71(3), that the director is ineligible or
disqualified or, inter alia, negligent or derelict , the director concerned may apply
within 20 business days to a Court to review the determination17. It is apparent
from the arguments submitted that t here is no dispute that t he word “determine”
(and similarly “determination”) means to come to a decision18. The decision
would relate, inter alia, to the director’s ineligibility, negligence, and/or dereliction
of his/her fiduciary duties as referred to in section 71(3)(a).
23. Secondly, the director against whom such decision is made is vested with
a discretion to approach a Court to review the determination made by the Board .
Insofar as the reference to a pplying “within 20 business days to a court to review
the determination of the board”, in terms of section 5(3) read with section 1 of the
Act, business days would by definition exclude weekends and public holidays.
Thus, if the respondents’ argument is found to be correct, then in terms of section
71(5) read with section 5(3), the 20 business days to apply to Court to review the
Board’s decision would have lapsed on 11 April. The application was delivered
on 16 April 2024.
24. Thirdly, and quite tellingly, section 71(5) does not speak of condonation for
a late review nor can I find any reference to condonation in the wording of the
Companies Act. Put differently, the language of the sub -section does not vest a
Court hearing a review with a discretion to mero motu grant condonation.
However, in Langeni, on the question as to whether the applicants were entitled
to have the matter reviewed outside the 20 business day period, the Court held
as follows:
17 The section also refers to the person who appointed the director as contemplated in section
66(4)(a)
18 See, for example, https://www.merriam-webster.com “determine” – “to fix conclusively or
authoritatively; to settle or decide by judicial sentence; to settle or decide by choice of alternatives
or possibilities; resolve”
“[27] The respondent contended that the application for review should
not be entertained because it was launched after the 20 -day period as
prescribed by section 71 of the Companies Act. They contend that the
application for review of the determination could not have been launched
prior to 2 December 2022 which was the actual date of removal and not 15
November 2022 as contended by the applica nt. The latter date, so the
argument continues, was a date of resolution to commence the steps to
remove them and that the removal took place after an urgent court
application was launched by the applicants.
[28] The defence as raised by the respondents i s of a technical nature
and in exercise of the court’s discretion, it will not be in the interest of
justice not to entertain the merits of the application simply because the
filing of the application was out of time. In any event, the litigation that has
been pursued by the applicants had started way before the removal.”
(my emphasis)
25. I gather from the above finding that the decision in Langeni to condone
the lateness of the review application was based on the interests of justice and
that the removal of the applicants as directors occurred after the applicants had
brought an urgent application. In my view, the facts in Langeni are
distinguishable from the facts in this matter, but m ore so, the judgment does not
discuss the wording of the Act, specifically section 71(5), in relation to the
commencement of the running of the time period to launch the review
application.
26. In view of these findings, I therefore agree with the respondents’ counsel’s
submissions regarding the binding nature of Langeni on this Court as it is noted
that no authority is relied upon in that judgment to sustain a finding that section
71(5) allows for the granting of condonation in circumstances where an
application is brought out of time. In the result, I thus respectfully decline to follow
the findings at paragraphs 27 and 28 of Langeni regarding the lateness of a
section 71(5) review and the granting of condonation for such lateness.
27. Turning then to the submission that a purposive approach to interpretation
of a statute must be adopted, I agree with the applicant’s submission on this
aspect but the argument requires further consideration. In Bato Star Fishing
(Pty) Ltd v Minister of Environmental Affairs and Tourism and Others 19,
Ncqobo J stated that:
[91] “The technique of paying attention to context in statutory
construction is required by the Constitu tion, in particular, section
39(2). As pointed out above, that provision introduces a mandatory
requirement to construe every piece of legislation in a manner that
promotes the spirit, purport and objects of the Bill of Rights.”
In Investigating Directorate: Serious Economic Offences and
Others v Hyundai Motor Distributors ( Pty) Ltd and Others: In re
Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and
Others,20 this Court explained the meaning of the interpretive role of
section 39(2) in our constitutional democracy as follows:
This means that all statues must be interpreted through the
prism of the Bill of Rights. All law -making authority must be
exercised in a ccordance with the Constitution. The
Constitution is located in a history which involves a transition
from a society based on division, injustice and exclusion
form the democratic process to one which respects the
dignity of all citizens, and includes all in the process of
governance. As such, the process of interpreting the
19 2004(4) SA 490 (CC) par 91
18 2001 (1) SA 545 (CC) par 21 – footnote retained
Constitution must recognise the context in which we find
ourselves and the Constitution’s goal of a society based on
democratic values, social justice and fundamental human
rights. Th is spirit of transition and transformation
characterises the constitutional enterprise as a whole.”
(my emphasis)
28. Thus, the approach to adopt to statutory interpretation is that regard must
be had to the spirit and object of the Bill of Rights . In Bertie van Zyl (Pty) Ltd
and Another v Minister of Safety and Security and Others 21, a later decision
of the Constitutional Court, Mokgoro J stated that a purposive approach must
remain faithful to the actual wording of the legislation , and with reference to Bato
Star22 and Jaga v Donges NO and Another 23, the learned Judge emphasised
that a purposive approach would entail a consideration of the purpose and
scope of the particular legislation and its background24.
29. Thus, in embarking upon a purposive approach to interpre ting section
71(5), the exercise involves a consideration firstly of the purposes of the 2008
Companies Act, which are to be found in section 7, to wit:
7. Purposes of Act
The purposes of this Act are to—
(a) promote compliance with the Bill of Rights as provided for in the
Constitution, in the application of company law;
21 [2009] ZACC para 19-23
22 Supra
23 1950 (4) SA 653 (A) 662G-H
24 See Bertie van Zyl Pty Ltd supra, at para 20-21 and the authorities referred to therein
(b) promote the development of the South African economy by—
(i) encouraging entrepreneurship and enterprise efficiency;
(ii) creating flexibility and simplicity in the formation and
maintenance of companies; and
(iii) encouraging transparency and high standards of corporate
governance as appropriate, given the signif icant role of
enterprises within the social and economic life of the nation;
(c) promote innovation and investment in the South African markets;
(d) reaffirm the concept of the company as a means of achieving
economic and social benefits;
(e) continue t o provide for the creation and use of companies, in a
manner that enhances the economic welfare of South Africa as a
partner within the global economy;
(f) promote the development of compani es within all sectors of the
economy, and encourage active participation in economic
organisation, management and productivity;
(g) create optimum conditions for the aggregation of capital for productive
purposes, and for the investment of that capital in enterprises and the
spreading of economic risk;
(h) provide for the formation, operation and accountability of non -profit
companies in a manner designed to promote, support and enhance
the capacity of such companies to perform their functions;
(i) balance the rights and obligations of shareholders and directors within
companies;
(j) encourage the efficient and responsible management of companies;
(k) provide for the efficient rescue and recovery of financially distressed
companies, in a manner that bal ances the rights and interests of all
relevant stakeholders; and
(l) provide a predictable and effective environment for the efficient
regulation of companies.
30. It is evident from the above highlighted section 7(a) that the enactment of
the new Companies Act sought to promote compliance with the Bill of Rights in
the field of company law, and in so doing, the legislature sought to include
company law in the constitutional framework. S ection 7(b)(iii), (i) and (j) , which I
also highlight above, speak to the promotion of high standards of corporate
governance, balancing the rights and obligations of shareholders and directors
and encouraging efficient and responsible management of companies.
31. Furthermore, and within the context of what needs to be determined in this
matter from a statutory interpretation perspective , it is apparent from the Act’s
Preamble read with Part F, that the Act seeks to define the relationships between
companies and its respective shareholders and directors. To elaborate: Part F of
the Act, which includes section 71, deals inter alia, with governance of
companies25, shareholders and Board meetings, representation of shareholders
at meetings, the procedure for the removal of directors from within a company,
and the remedy available to a director who has been removed in terms of section
71(3). From the above, it is apparent that the 2008 Act is very detailed, and its
25 Sections 57 to 78 fall under Part F of the Act
scope and purpose as set out in section 7, encompasses a variety of aspects
relative to the field of company law and the economy.
32. Following on from the consideration of the purposes and objects of the Act
and specifically section 71, I return to the interpretation issue raised in relation to
section 71(5). The applicant wishes the Court to interpret the section so as to
effectively read in the words that the director concerned “may apply within 20
business days after receiving the board’s Resolution as provided for in section
71(3), to a court to review the determination of the board” 26 or words along those
lines.
33. The applicant thus invites the Court to interpret the section in such a way
that the time period starts running once the director who was removed receives
the resolution and the record of deliberations of the Board’s meet ing, and not
from the date of the Board’s decision or determination. The latter interpretation
would lead to absurd results, says the applicant. I must emphasise that having
found that the section and Act are silent on condonation, it is so that a director
who then applies for review outside the 20 business day period, would have no
further recourse in terms of the Act to set aside the Board’s decision.
34. In my view, a purposive approach to the interpretation of section 71(5)
bears in mind the purpose and aims of the 2008 Act and the inter -relationship
between the company and its shareholders and directors , including the need for
a high standard of corporat e governance . Yet, such approach as advocated in
Bertie van Zyl (Pty) Ltd, must remain faithful to the language of the statute , and
in this regard the sub -section states that the director “may apply within 20
business days to a court to review the determination of the board”27.
35. The language of the sub -section, in my view, makes it quite clear that the
26 My summary of the applicant’s request regarding the interpretation issue
27 Section 71(5)
significant moment or event which triggers the commencement of the time period
is the determination or decision of the Board of the company as referred to in
section 71(3) to remove the director . Section 71(5) does not refer to nor does it
mention that the ti me period starts running from the moment when the particular
director receives the resolution and/or the record of the deliberations of the
section 71 meeting, whereby he/she was removed from office.
36. My understanding of the respondents’ argument is that the section does
not speak of knowledge of the Board’s determination (which triggers the 20 day
period) but as the submissions continued, it seemed that the respondents
acknowledged that were the Court to follow the applicant’s interpretation that the
running of the time perio d is triggered by the director’s knowledge of the Board’s
determination, then it should be interpreted as actual knowledge and not formal
knowledge. In other words, not knowledge obtained via receipt of the resolution
taken after the Board’s meeting and/or receipt of the record of deliberations at
the meeting.
37. In the course of my research to answer the interpretation question, I have
found no other authority on this topic aside from Langeni and counsel have not
provided any further authority on the q uestion of the interpretation of the
commencement of the 20 day period in section 71(5). Henochsberg on the
Companies Act 71 of 2008 28 has unfortunately also proved to be of little
assistance. However, a discussion and analysis titled “A Critical analysis of the
judicial review procedures under section 71 of the Companies Act 71 of
2008” by Professor Rehana Cassim, Senior Lecturer in the Department of
Mercantile Law at UNISA 29, has proved to be helpful in that it has assisted to
clarify my view.
38. In the abovementioned academic work, Professor Cassim analyses
28 Service issue 20, September 2019
29 2018 SA Merc LJ 302 at p312-313
section 71 in detail and in respect of the 20 business day requirement in section
71(5), she states the following:
“The period of 20 business days places a cap on the time allowed a
director to contend that he ha s been improperly removed from office by
the board of directors.”30
“Section 71(5) does not, however, specify when the period of 20 business
days commences. Presumably, the period of 20 business days would
commence from the date that the board o f directors takes the decision to
remove the director from office. It is submitted that section 71(5) should
specify when the period of 20 business days commences.”31
(my emphasis)
39. In light of the Professor’s reading of the sub -section I can safely say that I
believe that she also understands that the time period commences from the date
on which the Board makes the decision to remove the director from office. My
view is that any uncertainty is remedied by having regard to section 5 (3) read
with section 1 of the Act, which would require that the dies is to be calculated
from the day after the Board’s determination was made. In a scenario where the
director contends that he had no knowledge of the determination by the Board to
remove him, for whatever reason, then in my view, it could be argued that he had
no knowledge that he could approach a Court for review, and hence, was not
aware or did not appreciate that he had 20 business days to do so.
40. How is this peculiar or exceptional scenario resolved within the context of
section 71(5) and when does the time period start running? I must emphasise
that the purposive approach to statutory interpretation would require that where a
30 At p312
31 At 313
director was simply unaware of the determi nation made to remove him, his
section 34 constitutional right of access to a Court, should not be infringed nor
curtailed32. I am of the view tha t in a n exceptional scenario such as this, the
argument in favour of actual knowledge of the Board’s determination should
prevail, because to do otherwise would or could lead to an absurdity and an
infringement of the director’s constitutional right of access to Court and remedy
under the Act.
41. In respect of the director who has no knowledge of the determination , as
in the above scenario, such knowledge of the decision should and must, in my
view, be limited to actual knowledge and not receipt of the r esolution and/or
receipt of the transcript of the section 71 meeting. By this I mean that the 20 day
period is then triggered from the date on which the director obtained actual
knowledge, in whichever manner including informally, of the Board’s
determination33. This peculiar or exceptional situation would depend on the facts
of the case . The “actual knowledge interpretation” , in my view, would only apply
where the facts indicate that the director in question did not know or was not
aware of the Board’s determination.
42. In the normal course, to interpret section 71(5) in the manner which the
applicant advances, in other words, that the time period starts to run only once
the director receives the resolution and/or the transcription of the Board’s
deliberations at the meeting, would lead to an absurdity and potential abuse of
the section 71(5) procedure. It would also do nothing to encourage the efficient
and responsible management of companies. In my view, this interpretation was
never what the legislature intended in section 71(5) and it would not be faithful to
the wording of the sub -section. Put simply, section 71(5) must be understood
to mean that t he 20 business day time period is triggered by the Board’s
32 An example would be where the director is incapacitated due to being hospitalised (for
example, in a coma) at the time of the Board meeting and not aware of the decision taken to
remove him, and only becomes aware at some later date
33 The calculation of the dies is in terms of section 5(3) read with section 1 of the Act
determination and commences to run from the consecutive business
day/date after the day on which the Board’s determination is made, having
regard to section 5(3) read with section 1.
43. In addition, the A ct does not define “resolution” but it is safe to say that a
resolution of a company is proof or evidence of the determinati on or decision of
the Board of the company. There is a further problem with the argument of the
applicant as to the commencement of the time period: having regard to Pityana v
Absa Group Limited and Others 34, I share the view that there seems to be no
reason to seek the record of the deliberations in order to launch a review as the
reasons for the removal were or would have been known to the director prior to
the meeting in terms of the section 71(4) procedure.
44. Furthermore, nothing in my mind would prevent a director such as the
applicant from launching a section 71 review in the absence of a record or
transcription of the deliberations of 11 March, as he would already have known
the reasons for the removal from the section 71(4) statement and could always
supplement his review application on receipt of the record in terms of rule 6. 35 I
thus hold the view that the receipt of the record of the deliberations of the 11
March meeting, was not first needed before the 20 day period was triggered.
45. At the risk of repetition, the applicant’s stance is that he did not have
knowledge of the determination and that there was a requirement that he be
formally informed of the decision before the time period runs. Applying the
purposive approach to interpretation in relation to the facts of this matter, the
applicant states in his replying affidavit that he only became aware of the
decision “several days after the Board meeting” 36 and later at paragraph 208 of
the same affidavit, he s tates that h e became aware informally “more or less two
34 [2023] JOL 61223 (GP) para 61-87
35 It goes without saying that the applicant is entitled to utilise rule 53 to seek the r ecord of the
meeting for purposes of the section 71(50 review
36 Par 4, p345
days after the Board meeting” 37. Thus, while the earlier paragraph is unclear, the
later paragraph indicates his version is that he obtained informal knowledge of
the Board’s decision two days after such decision.
46. However, t he letter written by Mr Meltz dated 12 March 2024, indicating
that in terms of section 71(5), the applicant is obliged to take the Board’s decision
on review within 20 business days, confirms my view that Mr Meltz was aware if
not on the day of the meeting, then certainly the next day (12 March), of the
Board’s determination. It is also common cause that the applicant was
represented by his attorney and counse l at the meeting but that they left the
meeting prior to the Board’s deliberations 38. For all intents and purposes then, it
must be the most probable explanation that his legal representative informed him
of the Board’s determination.
Conclusion
47. The applicant is afforded the benefit of the doubt and in view of the above
findings, I thus conclude that in all probability he obtained knowledge of the
Board’s determination on 12 March 2024, which was the day after the meeting. In
the ordinary determination of section 71(5), as referred to earlier in the judgment,
the 20 business day period is triggered on the Board’s determination (11 March
2024) and the calculation of the period thus commenced on 12 March 2024.
Thus, having regard to section 5(3) , the last day to have delivered the review
application was 11 April 2024.
48. In light of this finding, it is clear that the application was delivered late and
thus outside the prescribed 20 business day period, and as the section and the
Act do not afford the Court a discretion to condone the non -compliance, the
argument by counsel for the first to third respondents that the application falls to
37 P422
38 Record, p55 (p274)
be dismissed is thus sustained. Accordingly, I make no findings on the lateness
of the fourth respondent’s affidavit nor on the merits or demerits of the review
application. Insofar as costs are concerned, there is no reason why the costs
should not follow the result in the ordinary course.
Order
49. In the result, the following order is granted:
The application is dismissed with costs on scale B.
_______________________
M PANGARKER
ACTING JUDGE OF THE HIGH COURT
For applicant: Adv A Maher
Instructed by: Meltz & Associates
Mr J Meltz
For first to third respondents: Adv D van Reenen
Instructed by: Nirenstein Attorneys Inc.
G Nirenstein
For fourth respondents: No appearance (affidavit filed)
For fifth respondent: No appearance