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[1992] ZASCA 50
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Francis George Hill Family Trust v South African Reserve Bank and Others (259/90) [1992] ZASCA 50; 1992 (3) SA 91 (AD); [1992] 2 All SA 137 (A) (30 March 1992)
Case NO 259/90
IN THE SUPREME COURT OF SOUTH
AFRICA APPELLATE DIVISION
In the matter between:
THE FRANCIS GEORGE HILL FAMILY
TRUST
Appellant
and
THE SOUTH AFRICAN RESERVE
BANK
1st Respondent
PHOENIX CHEMICALS (PTY) LTD
2nd
Respondent
THE HAHN FAMILY TRUST
3rd
Respondent
CORAM:
HOEXTER, HEFER,
KUMLEBEN,. JJA et NICHOLAS, HARMS AJJA
HEARD:
21 February 1992
DELIVERED:
30 March 1992.
JUDGMENT
HOEXTER, JA
2
HOEXTER, JA
The appellant is the Francis
George Hill Family Trust ("the Hill FT"). The Hill FT is
the registered holder of half the
issued shares in the second
respondent, which is a private company known as Phoenix Chemicals
(Pty) Ltd ("Phoenix"). The
remaining half of Phoenix's
issued shares are owned by the third respondent, which is the Hahn
Family Trust ("the Hahn FT").
The first respondent is the
South African Reserve Bank ("the Reserve Bank").
By a written notice of attachment
("the notice") the Reserve Bank on 10 May 1989 attached 50%
of the moneys deposited by
Phoenix in various accounts with the Trust
Bank of Africa Ltd. On notice of motion dated 19 September 1989 the
Hill FT launched an
application in the Transvaal Provincial Division
("the court a quo"). Citing respectively the Reserve Bank,
Phoenix and
the Hahn FT as respondents in its application the Hill FT
sought the following relief: (1) leave to proceed in
3
the application "by
derivative action" on behalf of Phoenix; (2) an order reviewing
and setting aside the notice; and (3)
an order directing the Reserve
Bank (and the Hahn FT in the event that the latter should oppose the
application) to pay the costs
of the application. In fact neither
Phoenix nor the Hahn FT opposed the application; and no affidavit on
behalf of either was filed.
The application was, however, resisted by
the Reserve Bank.
Voluminous affidavits having been
filed by both the Hill FT and Reserve Bank, the opposed application
came before McCreath J. The
learned judge dismissed the application
with costs, including the costs consequent upon the employment of two
counsel. The judgment
of the court a quo has been reported: Francis
George Hill Family Trust v South African Reserve Bank and Others
1990(3) SA 704 (T).
With leave of McCreath J the Hill FT appeals to
this court against the whole of the judgment of the court a quo.
4
Sec 9
of
the Currency and Exchanges Act 9 of 1933 ("the Act")
empowers the State President to make regulations in regard to any
matter relating to currency, banking or exchanges. The regulations
may provide, inter alia, for the attachment by the Treasury of
money,
irrespective of the person in whose possession it may be, if such
money is suspected of having been involved in any act or
omission
which is suspected of constituting a contravention of the
regulations. In pursuance of this power the Exchange Control
Regulations
1961 ("the regulations") were promulgated. They
have been amended from time to time. Reg 22E provides that the
Minister
of Finance may delegate the powers conferred and assign the
duties imposed upon the Treasury by any provision in the regulations
to any person. The Minister of Finance has so delegated his said
powers and assigned its said duties to, inter alios, any Deputy
Governor of the Reserve Bank. The attachment in question was signed
by a Deputy Governor of the Reserve Bank.
5
In terms of reg 22D -
"...any person who feels
himself aggrieved by the
attachment of money "
under various paragraphs of regs
22A or 22C (which include those
paragraphs in terms whereof the
Reserve Bank attached the moneys
of Phoenix) -
"....may bring an application
in a competent court for the review of any such attachment ....and
any such court may set aside
such attachment .... on the grounds set
out in the provisions of paragraph (d)(i) or (iii) of section 9(2) of
the Act."
In terms of the trust agreement
creating the Hill FT
the donor is Mr A A Bassil
("Bassil"). The present trustees are
Mr D J F Evans ("Evans")
and Mr A Tugendhaft, the latter being an
attorney and a director of
Moss-Morris Mendelow Browde ("MMMB").
MMMB are the attorneys acting for
the Hill FT. The present
trustees of the Hahn FT are Mr P N
Bird, Mr F C Fabrie, and Mr
P W Wentzel, the last-mentioned
being a partner in the firm of
Biccari and Wentzel ("B &
W"). B & W are the attorneys acting
for the Hahn FT.
6
Phoenix has the following four
directors: Bassil and Mrs L Hill (both appointed to the board by the
Hill FT); and Mr M D Hahn and
his wife, Mrs J Hahn (both appointed to
the board by the Hahn FT).
On 13 June 1989 MMMB wrote a
letter to B & W in which
the latter were asked to confirm -
".... that your clients will
support an application to the Reserve Bank for the cancellation of
the order made in terms of the
notice, and should the Reserve Bank
fail to agree to the cancellation, an appropriate application to
court in terms of
section 22D
of the
Exchange Control Regulations to
set the order aside."
To the above letter B & W made
no formal reply. On 18 September
1989 MMMB informed B & W by
fax that:-
"....if you do not advise us
by 5:00 pm tomorrow that your client is prepared to have Phoenix
apply to court to set aside the
attachment order, our client will
proceed derivatively."
On the following day, 19 September
1989, B & W wrote to MMMB a
letter in the following terms:-
"1. We refer to your
facsimile of 18 September 1989 and advise that we have, on behalf of
7
the Hahn Family trust approached
the South African Reserve Bank to obtain clarity with regard to the
attachment by them of 50% of
the funds of Phoenix.
We have been informed informally
that the attachment relates solely to the 50% interest of the Hill
Family Trust and, as such, our
client would appear to have no
interest in supporting your client in any application to have the
attachment order set aside.
We are, however, awaiting a
formal reply to our enquiry from the South African Reserve Bank and
as soon as same is received by us
we will revert to you."
Without receiving any further
communication from B & W the Hill
FT on the same date (19 September
1989) launched its application
in the court a quo.
In the application the founding
affidavit was deposed
to by Evans. Evans alleged that in
view of the Hahn FT's -
"....baseless and unlawful
refusal to permit Phoenix to bring this application...."
it was being brought derivatively
on behalf of Phoenix. Further
on Evans averred that in view of
the refusal of the Hahn FT "and
8
the directors nominated by it"
to have Phoenix take steps to set
aside the attachment, the Hill FT
-
".... had to bring this
application in order to safeguard the assets of Phoenix."
In the court a quo the Reserve
Bank contended that on the papers the Hill FT had not established
that it was legally entitled to approach
the court by way of a
derivative action. McCreath J found it unnecessary to decide this
particular issue. The learned judge assumed
in favour of the Hill FT
(see 705 E-F of the reported judgment) that if the attachment was
unjustifiable the Hill FT would be entitled
to bring the application
on behalf of Phoenix -
"....notwithstanding the
absence of any resolution by the latter which would have enabled the
application to have been brought
by that company in its own name."
In regard to the matter of his
client's locus standi
counsel for the Hill FT in his
argument before this court
departed somewhat from the stance
taken up in the founding
9
affidavit. As his main argument
counsel urged upon us that as a 50% shareholder in Phoenix the Hill
FT was a "person who feels
himself aggrieved" by the
attachment within the meaning of reg 22D. Counsel informed us that
only if this main contention should
not be upheld he would, in the
alternative, contend that the Hill FT was entitled to proceed on
behalf of Phoenix by way of a derivative
application.
It is convenient to dispose at
once of the alternative contention. For two reasons it appears to me
to be untenable. The first is
that the Hill FT has failed entirely to
establish that Phoenix's board of directors had decided, at any time
before it launched its
application in the court a quo, that Phoenix
itself would not take legal action to have the attachment of its
assets set aside. From
a reading of the founding affidavit it is
plain that the allegation made by Evans that "the directors
nominated" by the
Hahn FT had "refused" to let Phoenix
take such legal steps is no more than inference based on the
correspondence
10
between MMMB and B & W to
which reference has already been made. Such correspondence cannot, in
my view, sustain the inference
drawn by Evans. Moreoever, the bald
allegation is unsupported by any proper documentary evidence derived
from the company records
of Phoenix. So far from producing any
admissible evidence of a binding resolution passed thereanent at a
properly constituted meeting
of the board of directors of Phoenix,
the founding affidavit does not go to show that at the relevant time
the matter in issue had
even informally engaged the attention of Mr
and Mrs Hahn.
Apart from these practical
deficiencies in the founding affidavit there is further a matter of
principle which, so it seems to me,
entirely precludes recourse by
the Hill FT to a derivative action. It is trite that a company with
limited liability is an independent
legal person and separate from
its shareholders or directors. In general, therefore, when a wrong is
alleged to have been done to
a company the proper plaintiff to
n
sue the wrongdoer is the company
itself.In English law a
derivative action constitutes an
exception to that general rule.
The exception is recognised when
(1) the wrong complained of
involves conduct which is either
fraudulent or ultra vires and
(2) the wrong has been perpetrated
by directors or shareholders
who are in the majority and so
control the company. See, for
example: Burland and Others v
Earle and Others (1902) AC (JC)
83; Edwards v Halliwell
(1950) 2
All ER 1064
(CA) at 1066-7;
Prudential Assurance Co Ltd v
Newman Industries Ltd and Others
(No 2)
(1982) 1 All ER 354
(CA).
The principle underlying the
exception to the general rúle
is expounded thus by Lord Denning
MR in Wallersteiner v Moir (No 2);
Moir v Wallersteiner and
Others (No 2)
(1975) 1 All ER 849
(CA) at 857 D - F:
"If it is defrauded by a
wrongdoer, the company itself is the one person to sue for the
damage. Such is the rule in Foss v Harbottle.
The rule is easy enough
to apply when the company is defrauded by outsiders. The company
itself is the only person who can sue. Likewise,
when it is defrauded
by insiders of a minor kind, once again the company is the only
person who can sue. But suppose it is defrauded
by insiders who
12
control its affairs - by directors
who hold a majority of shares - who can then sue for damages? Those
directors are themselves the
wrongdoers. If a board meeting is held,
they will not authorise proceedings to be taken by the company
against themselves. If a general
meeting is called, they will vote
down any suggestion that the company should sue them themselves. Yet
the company is the one person
who is damnified. In one way or another
some means must be found f or the company to sue. Otherwise the law
would fail in its purpose.
Injustice would be done without redress."
Turning to the facts of the
present matter one notices
that the assertion that the Hill
FT is entitled to proceed
derivatively on behalf of Phoenix
is founded cm the assumption
that the Hahn FT and the directors
appointed by it have
groundlessly refused to authorise
legal action by Phoenix against
the Reserve Bank. However,
assuming for purposes of argument
such improper refusal on the part
of the Hahn FT or the directors
nominated by it, what is at once
apparent is that in the present
situation neither the shareholders
nor the directors of Phoenix
can be said to fit the role of the
"wrongdoer" postulated by the
exception to the Foss v Harbottle
rule. In seeking relief in
13
the court a quo
the cause of action upon which the Hill FT relied
was
the alleged illegality of the attachment of the assets of Phoenix. On
the case put up by the Hill FT the "wrongdoer"
contemplated
by the exception to the rule in Foss v Harbottle is not any insider
who may control Phoenix but the Reserve Bank. Had
the board of
directors of Phoenix in fact voted in favour of legal action to set
aside the attachment they would not, of course,
have been authorising
proceedings to be taken against themselves. It follows that the facts
of the case do not fall within the exception
in English law to the
rule in Foss v Harbottle. This finding renders it unnecessary to
consider the further point, which was not
raised in argument before
us, whether (apart from the statutory remedy provided by sec 266 of
the Companies Act 61 of 1973) the common
law exception to the rule in
Foss v Harbottle forms part of South African law.
I
proceed to examine the validity of
counsel's main argument that on the strength of its shareholding in
Phoenix the
14
Hill FT was itself "a person
who feels himself aggrieved" by the
attachment of the money in the
bank accounts of Phoenix. The
words "person ....
aggrieved", in various combinations, are not
uncommon in statutory enactments,
and they have been the subject
of many decisions. In trying to
decide what meaning is to be
assigned to these words in reg 22D
it is useful to bear in mind
the precept of Lord Hewart CJ that
-
"...there is often little
utility in seeking to
interpret particular expressions
in one statute by reference to decisions in different statutes which
have been enacted alio intuitu."
(See: Sevenoaks Urban District
Council v Twynam
(1929) 2 KB 440
at 443.) On the other hand some
solace may be drawn from the
following words of Lord Parker CJ
in Ealing Corporation v Jones
(1959) QB 384
at 390 -
"It seems to me easier to say
what will not constitute a person aggrieved than it is to say what
'person aggrieved' includes."
Mr Southwood, who argued the
appeal for the Reserve
Bank, contended that in the
context of the regulations an
15
"aggrieved person" is
someone who has a legal grievance in the
sense that his legal rights have
been invaded or infringed. In
support of his argument that on
the facts of the present case the
Hill FT was not an "aggrieved
person" counsel relied upon a
definition of these words stated
in Ex Parte Sidebotham
(1879) 14
Ch D 458
(CA), a decision
involving the provisions of the
Bankruptcy Act, 1869. A court had
refused to act upon a report
by the Comptroller that a trustee
had been guilty of neglect
resulting in loss to the estate.
It was held that neither the
bankrupt nor any creditor was
entitled to appeal from such
refusal. In the course of his
judgment James LJ remarked (at
465):-
"It is said that any person
aggrieved by an order of the Court is entitled to appeal. But the
words 'person aggrieved' do not
really mean a man who is disappointed
of a benefit which he might have received if some other order had
been made. A 'person aggrieved'
must be a man against whom a decision
has been pronounced which has wrongfully deprived him of something,
or wrongfully affected
his title to something."
16
To the
above-quoted passage, often cited in later decisions on the topic,
I
shall in what follows refer as "the
Sidebotham dictum".
At this juncture it is necessary
briefly to survey a number of decisions of our courts in which the
meaning' of the words "person
aggrieved" has received
judicial consideration. In Neuhaus v The Master of the High Court and
Another 1932 SWA 30 the applicant
was an attorney who had been
appointed by one Mayer to represent her at meetings of creditors in
an insolvent estate; to file and
prove her claim against the estate,
and to vote for her in the election of a trustee. At a meeting the
Master rejected Mayer's claim;
and in consequence the applicant lost
a vote which would have ensured his appointment as a co-trustee. The
applicant contended that
he was a "person aggrieved" by the
ruling of the Master, and he sought to review it under sec 151(3) of
the Insolvency
Ordinance 7 of 1928 (SWA). In dismissing the review
application BOK J observed
17
(at 32):-
"Now
although the expression 'every person aggrieved' in that section is
very wide
I
think
that it cannot mean that every person who feels annoyed or hurt at a
ruling of the Master is entitled to bring such ruling under
review.
For example if Bertha Mayer has a
creditor
he also might feel aggrieved because her claim
against
the insolvent estate was rejected by the Master; he may even be said
to be interested because if she were to succeed in obtaining
a
substantial dividend from the estate, his prospects of being paid by
her might be improved. But
I
doubt
whether any one would contend that such a creditor would be entitled
.... to bring the presiding officer's ruling under review
and the
reason for that,
I
think,
is that the legal right of such a creditor would not have been
affected by the ruling."
In Estate Friedman v Katzeff
1924
WLD 298
the trustee in
an insolvent estate was held, in
the particular circumstances of that case, not to be a "person
aggrieved" within the meaning
of sec 151(3) of the previous
Insolvency Act 32 of 1916. According to article 59 of the old
Transvaal Statute 13 of 1895 "every
person interested"
could apply to expunge the admission of any claim. Contrasting
"person interested" with "person
aggrieved"
Krause J remarked (at 304):-
18
"The two expressions are
different and do not have, in my opinion, the same meaning."
The learned judge then proceeded
(at 304-5) to approve and adopt
the Sidebotham dictum.
Waja v Orr, Orr NO and Dowjee Co
Ltd
1929 TPD 865
was a
case involving rectification of a
company register under the
former Companies Act 46 of 1926.
Dealing with the provisions of
sec 32 of that Act Feetham J said
(at 871 in fin - 2):-
"'the
person aggrieved' can,
I
think,
in the context only mean a person whose title to a share is in some
way in question, and who complains that his name is either
improperly
included in or improperly omitted from the register."
The matter of locus standi to
review the Master's
decision in terms of
sec 151
of
the
Insolvency Act 24 of 1936
fell for consideration in De Hart
NO v Klopper and Botha NNO and
Others 1969(2) SA 91(T). The
Master had given a decision under
sec 23(1)
in regard to certain
property claimed by the
19
applicants. Having quoted the
Sidebotham dictum, and after
citing Friedman's Estate v Katzeff
(supra), Trollip J ruled that
the applicants before him were
"aggrieved persons". At 100A the
learned judge reasoned thus:-
"....the effect of the
Master's decision is that the property belongs to the insolvent's
estate. Anyone, therefore, who claims
to be entitled to the property,
would suffer a legal grievance so long as that decision stands, for
he would thereby be wrongfully
deprived of his legal right to assert
his claim to the property. That would apply to the present applicants
...."
In C P Smaller (Pty) Ltd v The
Master and Others
1977(3) SA 159(T) the court had to
consider whether the applicant might be an "aggrieved person"
within the meaning of
sec 111
(2) (a) of Act 24 of 1936, King AJ (at
163E-164A) cited the Sidebotham dictum and, having referred to the
cases of Friedman's Estate
(supra) and De Hart (supra) in relation to
sec 151 of the
Insolvency Act, concluded
that no reason existed for
any different meaning to be given to the same words in sec 111 of the
20
Act.
Lastly there must be considered a
decision of the Privy Council on which counsel for the Hill FT
strongly relied for his submission
that the Hill FT had a sufficient
interest in the attached assets of Phoenix to bring it within the
category of a "person aggrieved".
The essential facts in
Attorney-General of the Gambia v N'jie (1961) 2 All ER (PC) may be
shortly stated as follows. In the Gambia
the rules of the Supreme
Court give the judge the power for reasonable cause to have the name
of a legal practitioner struck off
the roll of the Court. From any
order so made an appeal lies to the Western African Court of Appeal
("the court of appeal").
The Gambia has a single judge who
is the chief justice. The respondent, a barrister, appeared in a
civil suit heard by the chief
justice. In giving judgment the chief
justice censured the conduct of the respondent; and he sent a copy of
his judgment to the attorney-general.
The attorney-general asked for
an inquiry to be made by the chief
21
justice into the respondent's
misconduct. Since the chief justice himself had castigated the
respondent, a judge from Nigeria was
imported and specially appointed
a deputy judge of the Gambia for the purpose of the inquiry. The
deputy judge held the inguiry and
thereafter ordered that the
respondent's name be struck off the roll ("the order"). The
respondent appealed to the court
of appeal. The court of appeal set
aside the order. It held that a deputy judge had jurisdiction to
represent the chief justice only
in the exercise of judicial powers;
and that the power to strike a barrister from the roll was not a
judicial power. Against the
court of appeal's setting aside of the
order of the deputy judge the attorney-general petitioned the Priy
Council.
The Privy Council allowed the
appeal and advised that the order should be restored. It decided that
in a colony a judge exercises
judicial powers not only when he is
deciding suits between the parties, but also when he exercises
22
disciplinary powers which are
properly appurtenant to the office of a judge. It held that the power
of a judge to strike off a legal
practitioner was a judicial power
which it was competent for a deputy judge to exercise.
Before the Privy Council counsel
for the respondent unsuccessfully took a preliminary objection that
the attorney-géneral had
no locus standi to petition for
special leave to appeal because he was not in terms of the relevant
Order in Council -
"....any person aggrieved by
any judgment of the court
In support of his
objection
counsel for the
respondent relied
upon the Sidebotham dictum.
In
delivering the judgment of the
Board Lord Denning said of
the
Sidebotham dictum (at 510 -
511C):-
"If this
definition were to be regarded as exhaustive, it would mean that the
only person who could be aggrieved would be a person
who was a party
to a lis, a controversy inter partes, and had
had
a
decision given
23
against him. The Attorney-General
does not come within this definition, because, as their Lordships
have already pointed out, in these
disciplinary proceedings there is
no suit between parties, but only action taken by the judge, ex mero
motu or at the instance of
the Attorney-General or someone else,
against a delinquent practitioner.
But the definition of James LJ, is
not to be regarded as exhaustive. Lord Esher, M.R., pointed out that
in Re Reed, Bowen & Co.,
Ex p Official Receiver ((141)
(1887) 19 QBD at p 178). The words
"person aggrieved' are of wide import and should not be
subjected to a restrictive interpretation.
They do not include, of
course, a mere busybody who is interfering in things which do not
concern him; but they do include a person
who has a genuine grievance
because an order has been made which prejudicially affects his
interests. Has the appellant a sufficient
interest for this purpose?
Their Lordships think that he has. The Attorney-General in a colony
represents the Crown as the guardian
of the public interest. It is
his duty to bring before the judge any misconduct of a barrister or
solicitor which is of sufficient
gravity to warrant disciplinary
action. True it is that, if the judge acquits the practitioner of
misconduct, no appeal is open to
the Attorney-General. He has done
his duty and is not aggrieved. But if the judge finds the
practitioner guilty of professional misconduct
and a Court of Appeal
reverses the decision on a ground which goes to the jurisdiction of
the judge or is otherwise a point in which
the public interest is
concerned, the Attorney-General is a 'person aggrieved' by the
decision and can properly petition Her Majesty
for
24
special leave to appeal."
I
would
respectfully agree with the view expressed by Lord Denning in the
N'jie case (supra) that the definition given in the Sidebotham
dictum
is not an exhaustive one. An example
taken
from the facts of the instant appeal illustrates the point.
The
notice of attachment served upon Phoenix did not, without more,
create any lis between the Reserve Bank and Phoenix. It is,
nevertheless,
correct to say (and in argument it was common cause)
that Phoenix itself was an "aggrieved person" within the
meaning of
reg 22D. With deference to Lord Denning it seems to me
that his f
ú
rther
statement that "person aggrieved" would include "a
person who has a genuine grievance because an order has been
made
which prejudicially affects his interests" may be rather too
widely stated. However that may be, it seems to me that in
any case
the interest of the attorney-general in the N'jie case is properly to
be described as a "legal grievance".
I
say so because an arresting feature of the
facts in the N'jie
25
case
is the element of the public interest injected into the case
by
the significant role of the attorney-general in the colony.
As
the custodian of the public interest the attorney-general is invested
with a duty to maintain the professional integrity of
legal
practitioners who practise in the courts of the colony.
On
any view of the facts in the N'jie case, so it seems to me
with
respect, the decision of the court of appeal in upsetting
the
order made by the deputy judge resulted in legal prejudice to
the
attorney-general in the execution of his duties in the due
preservation of the public interest. The
observations of
Lord Denning in the N'jie
case, so
I
venture
respectfully to
suggest, must be read with
an eye to the rather unusual facts in
the
case.
Mr Doctor,
who argued the appeal on behalf of the Hill FT, accepted that a
"person aggrieved" within the meaning of reg
22D was not
merely a person disgruntled at or dissatisfied with the attachment.
He submitted, however, that in general those
26
words would embrace anybody able
to assert a "substantial interest" in the assets attached;
and he urged upon us that as
a 50% shareholder in Phoenix the Hill FT
could fairly be said to have a substantial interest in the fortunes
of Phoenix and the fate
of its assets.
The word "interest"
comprehends a very broad concept. See the remarks of Nicholas AJA in
Nieuwoudt v The Master and Others
NNO 1988(4) SA 513(A) at 528 F-J.
In one sense a shareholder may no doubt be said to have an "interest"
in the property
of the company. The shareholder may derive pecuniary
benefit from an increase of such property, and he may suffer
pecuniary loss
from its destruction. It seems to me, however, that
such interest as the Hill FT may have a shareholder in Phoenix is
insufficient
in law to make the Hill FT a "person aggrieved"
by the attachment.
Leaving aside the significance of
statutory context in particular cases, the tenor of decided cases in
South Africa
27
points,
I
think, to the general conclusion that the
words "person aggrieved" signify someone whose legal rights
have been infringed
a person harbouring a
legal grievance. The current of
judicial
interpretation would appear to run in the same direction in the
decisions of English courts - see the remarks of Donovan
J
in
Ealing Corporation v Jones (supra) at 392. Viewed against the
background of the regulations as a whole that is the proper meaning
which in my judgment should be assigned to the words in reg 22D in
the present case.
I
have
indicated my view that what was said by the Privy Council in its
judgment in the N'jie case (supra) is not irreconcilable with
the
South African decisions which reguire a legal grievance before the
objector can qualify as a "person aggrieved". However,
if
in this respect
I
am
mistaken, and if upon a true appraisal of the N'jie case its tendency
should run counter to the definition propounded by the
South
African courts, then, with respect,
I
would
not be disposed
to be guided by it in
determining the issue in the present
28
appeal.
The critical question in the
present case is whether the attachment by the Reserve Bank of the
assets of Phoenix represents an invasion
of the legal rights of the
Hill FT. That question must be answered in the negative. The notion
of a company as a distinct legal personality
is no mere technicality
-
"It is a matter of substance;
property vested in the company is not, and cannot be, regarded as
vested in all or any of its members."
(per Innes CJ in Dadoo, Ltd and
Others v Krugersdorp Municipal
Council
1920 AD 530
at 550-1) See
further: Salomon v
Salomon and Company
1897 AC 22
(HL); Macaura v Northern
Assurance Company Limited and
Others
1925 AC 619
(HL). The
antithesis between mere pecuniary
interest on the one hand and actual legal right on the other is
crisply stated in the minority judgment
(in this connection
unaffected by the ratio decidendi of the majority judgment) in
Stellenbosch Farmers' Winery v
29
Distillers Corporation Ltd and
Another 1962(1) SA 458(A) at 472A-
"The fact that the
shareholder is entitled to an aliquot share in the distribution of
the surplus assets when the company is
wound up proves that he is
financially interested in the success or failure of the company but
not that he has any right or title
to any assets of the company."
In support of his argument that
the Hill FT ranked as "person
aggrieved", Mr Doctor tended
to emphasise the magnitude of his
client's shareholding in Phoenix.
It need hardly be said,
however, that if no single
shareholder has any right to any item
of property owned by the company,
the precise extent of the Hill
FT's shareholding in Phoenix is
irrelevant to the inquiry. The
legal position remains the same
whether the Hill FT owns 50% or
1% of the shares in Phoenix. Mr
Doctor also called attention to
the invidious position in which
the Hill FT found itself as a
result of the failure of Phoenix
itself to challenge the
attachment by appropriate legal
action. This extraneous factor
in the case
cannot,
I
consider,
reinforce the claims of the Hill
FT to be a "person
aggrieved". The crucial stage at which the
30
Hill FT had to achieve that status
was the very time at which the notice of attachment was served upon
Phoenix on 10 May 1989. If
the Hill FT did not then rank as a "person
aggrieved" later events could not alter the legal position.
For purposes of
the present appeal it is unnecessary to
attempt
any sort of comprehensive definition of what, within the meaning of
reg 22D, may be said to constitute a "person aggrieved".
Suffice it to say that on the facts set forth in
the
founding affidavit
I
am
able firmly to conclude that the Hill
FT
did not in law qualify as such. The conclusion that the Hill FT
lacked locus standi is sufficient to dispose of the whole
appeal
and renders superfluous any further inquiry into the legal
propriety
or otherwise of the notice of attachment.
31
The appeal is dismissed with
costs, such costs to include the costs consequent upon the employment
of two counsel.
G G HOEXTER, JA
NICHOLAS AJA ) HARMS AJA ) Concur
259/90
/mb
IN THE SUPREME COURT OF SOUTH
AFRICA APPELLATE DIVISION
In the matter between:
THE FRANCIS GEORGE HILL FAMILY
TRUST
.... APPELLANT
and
THE SOUTH AFRICAN RESERVE BANK
1ST RESPONDENT
PHOENIX CHEMICALS (PTY) LTD
2ND RESPONDENT
THE HAHN FAMILY TRUST
3RD
RESPONDENT
CORAM
:
HOEXTER, HEFER, KUMLEBEN JJA,
NICHOLAS et HARMS AJJA
HEARD
:
21 FEBRUARY 1992
DELIVERED
: 30 MARCH 1992
JUDGMENT
KUMLEBEN JA
/....
1.
As appears from
the judgment of my Brother
Hoexter, which
I
have had the privilege of reading, the
locus standi
of the appellant was challenged on two grounds. On this guestion,
I
agree that for the reasons stated in that
judgment the appellant was not entitled to proceed on behalf of
Phoenix by way of derivative
authority. However,
I
respectfully differ
from
the conclusion that the appellant is not "a person
who
feels aggrieved" by the attachment.
The wide powers conferred on the
Treasury in terms of reg 22A to,
inter alia
, attach money and
goods are authorised by s 9(2)(b) of the Act. It reads as follows:
"(b) Any regulation
contemplated in paragraph (a) may provide for-
(i) the blocking, attachment and
obtaining of interdicts for a period referred to in paragraph (g) by
the Treasury and the forfeiture
and disposal by the Treasury of any
money or goods referred to or defined in the regulations or
2/...
2.
determined in terms of the
regulations or any money or goods into which such money or goods have
been transformed by any person, and-
(aa) which are suspected by the
Treasury on reasonable grounds to be involved in an offence or
suspected offence against any regulation
referred to in this section,
or in respect of which such offence has been committed or so
suspected to have been committed;
(bb) which are in the possession
of the offender, suspected offender or any other person or have been
obtained by any such person
or are due to any such person and which
would not have been in such possession or so obtained or due if such
offence or suspected
offence had not been committed; or
(cc) by which the offender,
suspected offender
or
any other person has been
benefited
or
enriched as a result of such of f
ence
or
suspected offence:
......................."
The words "any
person who feels aggrieved" (to which
I
shall refer as the "phrase")
appears - with the
addition of the word "himself"
- in reg 22D. This
phrase, by which
locus standi
is conferred, has its
origin in the peremptory wording
of s 9(2)(d)(i) of the
Act, which reads as follows:
"(d) Any regulation
contemplated in paragraph (a)
3/...
3.
shall provide-
(i) that any person who feels
aggrieved by any decision made or action taken by any person in the
exercise of his powers under a regulation
referred to in paragraph
(b) which has the effect of blocking, attaching or interdicting any
money or goods, may lodge an application
in a competent court for the
revision of such decision or action or for any other relief, and the
court shall not set aside such
decision or action or grant such other
relief unless it is satisfied-
(aa) that the person who made such
decision or took such action did not act in accordance with the
relevant provisions of the regulation;
or
(bb) that such person did not have
reasonable grounds to make such decision or to take such action; or
(cc) that such groúnds for
the making of such decision or the taking of such action no longer
exist;"
Thus, though we are directly
concerned with
the regulations, in construing the
meaning of the
phrase it is the intention of the
Legislature which is
to be ascertained.
4/...
4.
Whenever it is intended in an
enactment that certain persons should be entitled to claim - broadly
stated - the reversal of a decision,
the words commonly used to
confer such a right are, on the one hand, "an aggrieved person"
or "any person who feels
himself aggrieved" by the decision
concerned or, on the other hand, any person "interested in"
or "having an
interest in" such decision. The two pairs of
phrases are correlative and the meaning of the former can only be
determined by
a consideration of the latter. Whether one is to be
regarded as an aggrieved person in any particular case must depend
upon the nature
of the interest intended to serve as the
qualification. Thus the enquiry must - and before us in argument did
-focus on the kind
of interest envisaged by s 9(2)(d) and reg 22D.
The phrase standing alone has
little or no definitive content and is generally acknowledged to be
5/...
5.
one of wide import. (See
Attorney-General of the Gambia v N'jie
(1961(2) All ER (PC)
504 at 511 A). The same can be said of the word "interest".
(Cf.
Nieuwoudt v The Master and Others NNO
1988(4) SA 513 (A)
at 528 F - G.) The meaning of the phrase can, on the one hand, be
limited to "someone whose legal rights
have been infringed - a
person harbouring a legal grievance" ("the restricted
meaning"), which is the one given to
the phrase in the judgment
of Hoexter JA. On the other hand, it can refer to a person having a
financial or proprietary interest
("the wider meaning"),
that is, one falling short of a legal right. If the latter
construction is placed upon the phrase,
it is necessary to determine
on the facts of any particular case, whether such interest is
sufficiently direct and substantial to
confer
locus standi
on
the person concerned.
6/...
6. Examples of cases in which the
phrase has been
given a restricted meaning (mostly
in reference to
insolvency and bankruptcy
proceedings) are given in the
majority judgment. Others in which
a wider meaning has
been adopted, with reference to
the phrase and its
correlative,
are as readily to hand. In
Nieuwoudt v
The Master
and Others NNO
(supra) 522 C -
I
Van Heerden
JA said:
"Ek kom nou by die vertolking
van frases soos "n belang' of 'n persoon wat 'n belang het'. Dit
is duidelik dat hulle h baie
wye betekenis kan hê en slegs
uitgelê kan word met inagneming van die verband waarin hulle
voorkom. Vgl
Gartside and Another v Inland Revenue Commissioners
[1968] 3 All ER 661
(Ch) op 665, en
Bearmans Ltd and Another v
Metropolitan Police District Receiver
[1961] 1 All ER 384
(CA op
391. In die
Woordeboek van die Afrikaanse Taal
word 'belang'
omskryf as onder andere 'voordeel', 'gewin', 'wat iemand raak omdat
sy voordeel daarmee gemoeid is', 'iets wat aandagtige
deelneming,
nuuskierigheid, ens opwek'. HAT se omskrywing sluit in 'wat iemand
raak'. Die
Oxford Enqlish Dictionary
betrek onder 'interest'
onder andere
'the relation of being objectively
concerned in
7/...
7.
something, by having a right or
title to, a
claim upon, or a share in';
'the relation of being concerned
or affected in
respect of advantage or
detriment',
en
the feeling of one who is
concerned or has a
personal concern in any thing'.
Die woord
'belang' het dus 'n genoegsame wye betekenis om ook 'begaandheid' in
te sluit. Wanneer die woord egter in 'n statut
ê
re
bepaling voorkom, word normaalweg daaraan die enger
betekenis
geheg van 'n reg met betrekking tot, of 'n
geldwaardige
belang
in, dit waarop die woord slaan.
Vgl
Pretoria Bill Posting Co v Hess
1911 TPD 360
op 363, waarna met klaarblyklike
goedkeuring
verwys is in
National Trading Co Ltd v
Commissioner for Inland Revenue
1943 AD 496
op 504."
(I
emphasize.)
(I
shall
return to this decision later in this judgment.) And in the decision
cited in the quoted passage,
National
Trading Co., Ltd. v Commissioner for Inland Revenue
,
1943 AD 496
the question was whether the appellant company was a
public company within the meaning of s 33(2)(b) of the Income Tax
Act, no 31
of 1941, that is, a company in which the Commissioner is
8/...
8.
satisfied the general public is
substantially interested. Centlivres JA at 504 said:
"If members of the general
public have a proprietary and pecuniary interest in a company, they
are in my opinion 'interested
in the company' within the meaning of
sec. 33 (2)(b). See
Smith v. Hancock
(1894, 2 Ch.D. at p. 386)
and
Pretoria Bill Posting Company v. Hess
1911, T.P.D. at
p.363). In the present case the preference shareholders are
'interested' both in the capital of the Company and the
profits which
the Company makes. It is not necessary in this case to decide whether
a mere pecuniary interest, such as that of debenture
holders, is a
sufficient interest within the meaning of the section."
The wider meaning of the phrase is
thus described in
Ritz Hotel Ltd v Charles of the Ritz Ltd and
Another
, 1988(3) SA 290 (A) 308 A - B:
"The effect of the decided
cases is summarised in Kerly's
Law of Trade Marks and Trade Names
11th ed in s 11-07 as follows. The persons who are aggrieved are all
persons who are in some way or other substantially interested
in
having the mark removed from the register; including all persons who
would be
substantially damaged if the mark remained
, and all
trade rivals over whom an
9/...
9.
advantage was
gained by a rival trader who was getting the benefit of a registered
trade mark to which he was not entitled."
(I
again emphasize.)
The reference to these decisions
is in no way intended to serve as a guide to its meaning as used in s
9(2)(d) and reg 22D. They merely
illustrate that the phrase, and its
integral component ("interest"), can as readily be given a
wide meaning. It is therefore
unprofitable to attempt to discern any
general trend in its interpretation by a survey of decisions in other
enactments which favour
one meaning above the other. The all
important concern, as stressed by Hoexter JA, is the context in which
the phrase is used: its
meaning is to be determined ex
visceribus
actus
. In the nature of things, the more general or ambiguous a
word or phrase is, the more important this consideration becomes.
It is true that, as pointed out in
the majority
10/...
10. judgment with reliance upon
the
Stellenbosch Farmers Winery
case, that a shareholder has
"no actual legal right" to any of the assets of the
company. However, it is as plain that
a shareholder is, or may be,
substantially prejudiced by the attachment of such assets. The
regulation, one notes, provides that
"any money or goods",
or for that matter all money or goods can be attached. ("Goods"
by definition in the regulations
includes immovables.) Such a step on
the part of the Treasury, or its delegated authority, could
immediately and vitally - perhaps
irreversibly -affect the running of
the company and the value of a member's shareholding. The potential
of such harm is inherent
in the authority conferred. The interests of
a shareholder may thus be "substantially damaged" should
the attachment remain.
He has a direct financial interest - "'n
geldwaardige belang" - in having it set aside. Until this takes
place he would
11/...
11.
have every reason to feel
aggrieved - in the legal sense of the word.
The following
considerations, as
I
see
them, support this conclusion. Since this is a dissenting judgment,
I
shall state them briefly.
Section
9(2)(d)(i), which
I
have
already quoted, sets out in paragraphs (aa), (bb) and (cc) the
grounds on which application may be made to court, with reference
to
the facts of the present case, to set aside the
attachment
.
But a person whose
legal
rights
have been infringed by such an attachment, or by
any
of the other acts authorised in s 9 (2) (d) and reg 22D, would in any
event be entitled under the common law, by way of review
or other
appropriate action, to apply to court on those grounds without their
express incorporation in the Act and regulations. This
is to my mind
a strong indication that the restricted meaning was not intended.
12/...
12.
I
have
already commented on the harsh potential
conseguences
of attachment and the other acts authorised. The grant of such powers
without notice or an order of court is by any standards
a drastic
measure. If this is fully taken into account, it is reasonable to
infer that the Legislature intended that
this
right should be offset, or the consequences of its
exercise
ameliorated, by conferring on a wide, rather than a restricted, range
of persons a remedy by which the
status
quo ante
may be restored.
Giving the
phrase its wider meaning might in certain circumstances give rise to
conflicting interests and decisions on the part of
persons qualifying
as "aggrieved persons". This could be a factor supporting
or justifying a restricted interpretation.
But it would seem that no
such problem could ever arise if the phrase as used in the section
and regulations is to be given the wider
meaning.
I
13/...
13. can
conceive of no circumstances in which the release from attachment of
the money or goods of a company at the ihstance of a
shareholder
would not enure to the benefit of all concerned (apart from the
Treasury). Cf.
Mc Lelland v Hulett and
Others
1992(1) SA 456 (D & CLD) 467
G - H. In this regard it is to be borne in mind that an attachment
for even a relatively short period
of time before it is set aside
could prove gravely prejudicial.
I
can
see no reason why a shareholder should not have the right to take
prompt
action when it could or would
involve delay to obtain a
resolution of the
company, resolve a deadlock, or to act in terms of s 266 of the
Companies Act, No 61 of 1973.
It may be accepted that in the
sense that the expressions are for present purposes to be construed,
"any aggrieved person"
and "any person who feels
aggrieved" bear the same meaning (the latter phrase
14/...
14.
also has nothing to do with
emotion). Nevertheless the fact that the Legislature chose this
phrase to express its intention is - to
an admittedly limited extent
- a further indication that the wider meaning was intended.
Finally, if the correct
interpretation is open to doubt, the rule
semper
in
dubiis
benigniora praeferenda
ought to operate. In fact it appears to me
equitable and reasonable that it ought to apply in the instant case
unless there are compelling
reasons for deciding that the appêllant
ought not to be regarded as "a person who feels aggrieved".
To revert to the
Niewoudt
case, in brief the facts were that the insolvent sought to object to
a liquidation and distribution account of a company in liquidation
on
the grounds that he had an interest in the liquidation of the
company. The shares he held in the company on insolvency vested
in
his trustee. It was thus common ground that no legal right of the
insolvent
15/...
15.
had been infringed by the decision
of the liquidator to exclude the claim of the trustee from his
account and that his trustee was
a "person having an interest in
the company being wound up" in terms of s 401(1) of the
Companies Act. The latter was clearly
entitled to lodge an objection
to the account, his interest in the company in liquidation being a
legal and direct one. Nevertheless
in the minority judgment it was
held that the insolvent had the necessary
locus standi
to
object by virtue of his "geldwaardige belang". The majority
judgment held that the
residuary
financial interest of the
insolvent - and nothing more could be relied upon -was insufficient
to bring him within the provisions
of s 407(1). The
indicia
which lead me to the opposite conclusion in this case (one concerned
with a wholly different enactment) were absent in the
Niewoudt
case.
At the hearing of the appeal it
was decided, with the consent of counsel, that the question of
locus
16/...
16.
standi
should first be argued as a separate issue with the merits standing
over to be debated at a later stage, if necessary. On the view
I
take of this preliminary issue,
I
hold that the appellant has
locus
standi
, and
I
would adjourn the matter for argument on
the merits.
M E KUMLEBEN
JUDGE OF
APPEAL
HEFER JA - Concurs