REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
CASE NO : 2022 -058058
DATE : 24 FEBRUARY 2025
In the matter between:
ENSEMBLE HOTEL HOLDINGS (PTY) LIMITED First Applicant
ZIAD JAMAL ALI EL-BARAG Second Applicant
and
SWANVEST 328 (PTY) LIMITED First Respondent
LEGACY MANAGEMENT HOLDINGS (PTY) LIMITED Second Respondent
ALLAN PATRICK BREARLEY Third Respondent
ALBERTUS HENDRICUS DORRESTEIN Fourth Respondent
NEIL GEORGE YATES Fifth Respondent
LEGACY HOSPITALITY MANAGEMENT (PTY) LIMITED Sixth Respondent
LEGACY HOTELS AND RESORTS (PTY) LIMITED Seventh Respondent
MOHAMED MAHMOUD ALZAROUQ SHAWSH Eighth Respondent
Neutral Citation : Ensemble Hotel Holdings and Another v Swanvest 328 and
Others (2022/058058) [2025] ZAGPJHC --- (24 February
2025)
(1) NOT REPORTABLE
(2) NOT OF INTEREST TO OTHER JUDGES I I L__ __
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Coram: Adams J
Heard on : 21 February 2025 – ‘virtually’ as a videoconference on Microsoft
Teams .
Delivered: 24 February 2025 – This judgment was handed down electronically
by circulation to the parties' representatives by email, by being
uploaded to CaseLines and by release to SAFLII. The date and time
for hand -down is deemed to be 1 0:30 on 24 February 2025.
Summary: Application for leave to appeal and application to cross -appeal –
s 17(1)(a)(i) of the Superior Courts Act 10 of 2013 – an applicant now faces a
higher and a more stringent threshold –
Another compelling reason for leave to appeal to be granted (s 17(1)(a)(ii)) – the
decision sought to be appealed against involves an important question of law –
also, why leave to appeal and leave to cross -appeal granted to the Supreme
Court –
Leave to appeal and leave to cross -appeal granted to the Supreme Court of
Appeal .
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ORDER
(1) The respondents are granted leave to appeal to the Supreme Court of
Appeal.
(2) The cost of this application for leave to appeal shall be costs in the appeal.
(3) The applicants are granted leave to cross -appeal to the Supreme Court of
Appeal against paragraphs (5) and (6) of the order of this Court dated
19 December 2024.
(4) The costs of this application for leave to cross -appeal shall be costs in the
cross -appeal.
JUDGMENT [APPLICATION S FOR LEAVE TO APPEAL]
Adams J:
[1]. I shall refer to the parties as referred to in the original opposed application
by the first and the second applicant s for an order directing that the business of
the seventh respondent (‘ Legacy Hotels ’) be sold at a private auction at which
only the first applicant (‘ Ensemble ’), the first respondent (‘Swanvest 328 ”) and
the second respondent (‘LMH ’) would bid. The applicants also apply for ancillary
relief relating to the production of a list of company documents of Legacy Hotels,
as well as for declarator y and interdictory orders in relation to transactions
concluded by the said company, which, according to the applicants, are invalid
and should be voided. The first, the second and the seventh respondents in the
main application preferred a counterapplication, seeking an order directing
Ensemble to sell to Legacy Hotels, which is to repurchase the shares held by the
former in the latter, against payment of a net after tax consideration to be
determined by an expert professional va luer.
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[2]. On 19 December 2024 I handed down a written judgment and an order in
terms of which most of the relief sought by the applicants in the main application
was granted , excepting only that I ordered the sale to be of the shareholding in
the Legacy Hotels as against the business of the said company . I also granted
the applicants the ancillary relief relating inter alia to the production of documents
and the declaration of invalidity of certain transactions concluded by the
respondents. Importantly, I issued an order that t he issued share capital of
Legacy Hotels is to be sold to the highest bidder at a private auction, at which
only Ensemble, Swanvest 328 and LMH would be allowed to bid. The first,
second and seventh respondents’ counterapplication was dismissed with costs .
[3]. The first to seventh respondents (including the first to third counter
applicants ) (‘the respondents ’) appl y for leave to appeal to the Supreme Court of
Appeal of South Africa against the whole of the aforementioned judgment and
order , including the order for costs . The respondents contend that I erred in
granting the aforesaid order and that I should instead have dismissed the
applicants’ application with costs and that the counter application ought to have
been granted also with costs.
[4]. In a nutshell the respondents’ case in this application for leave to appeal
is that I erred in the manner I directed the relationship between the three
shareholders in Legacy Hotels to be severed. I erred, so the respondents
contend, in holding that my dissolution order would provide fair value for the
shares to be purchased by private auction between the shareholders of Legacy
Hotels .
[5]. The respondents also contend that I erred in my conclusion that the
applicants had made out a case for relief under section 163 of the Companies
Act, yet I found that the respondents had not made out a case for such relief . I
erred in law, so the submission continues, in not following legal precedent, such
as the principles stated in Bayly and Others v Knowles1, in which it was held that
1 Bayly and Others v Knowles 2010 (4) SA (SCA) .
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in the case of a breakdown of shareholder relationship, the usual approach is that
the majority shareholder willing to be the purchaser and actively concerned with
the management of the company , is entitled to buy the shares of the minority at
a fair price .
[6]. The respondents furthermore contend that I erred in granting the order for
the sale of the shares at a private auction, when that it not what the applicants
asked for by the time the matter was heard by me. T he only relief that the Court
was called upon to consider as regards the applicants' application, was a claim
for a private auction at which the opposing shareholder groupings would at a
private auction bid for the business of Legacy Hotels. A sale of business by
private auction would, in any event, so the respondents argue, be inappropriate,
unfair and inequitable, for a number of reasons .
[7]. As regards the further relief claimed by the applicants and granted by the
court, the applicants submit that I erred in finding that the second applicant
(El-Barag ) was entitled to all documents requested and by not concluding that
there was a real dispute of fact as to whether El -Barag had been denied access
to documents required to comply with his fiduciary duties to Legacy Hotels, which
had to be decided on the respondents' version. The factual dispute relating to this
aspect of the matter, so the respondents contend, should have been decided in
their favour on the basis of the Plascon Evans rule. The same argument is raised
in relation t o the declaration of invalidity of certain transactions concluded by
Legacy Hotels.
[8]. The applicants, on the other hand, are aggrieved by the fact that I had not
granted the order for the sale of the business of Legacy Hotels, as prayed for by
them in the amended notice of motion. They therefore make application for leave
to cross -appeal to the Supreme Court of Appeal against paragraphs (5) and (6)
of my order . In sum, the ground of the cross -appeal is that t he Court erred in
ordering a sale by private auction of the share capital of Legacy Hotels , as
opposed to the assets and business as a going concern of the said company, as
the shares of the first applicant (Ensemble Hotel Holdings) in Legacy Hotels were,
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and still are, assets owned or controlled, directly or indirectly, by ‘sanctioned
entities’, as on 17 March 2011 those shares became sanctioned assets and
subject to an asset freeze in terms of UNSC resolution 1973 read with UNSC
resolution 1970 . This means, so the contention is concluded, that a sale of the
first applicant's shares was, and is prohibited by the provisions of section 26B(2)
of the Financial Intelligence Centre Act, 2001.
[9]. Nothing new has been raised by the parties in their respective application
for leave to appeal and the application for leave to cross -appeal. In my original
judgment of 19 December 2024, I have dealt with most, if not all of the issues
raised by the respon dents and the applicants in their applications for leave to
appeal and it is not necessary for me to repeat those in full. Suffice to restate
what I say in my said judgment which is that I am of the view that the sale of the
shares at a private auction bet ween the shareholders is the fairest mechanism to
achieve equitable relief.
[10]. The traditional test in deciding whether leave to appeal should be granted
was whether there is a reasonable prospect that another court may come to a
different conclusion to that reached by me in my judgment. This approach has
now been codified in s 17(1) (a)(i) of the Superior Courts Act 10 of 2013, which
came into operation on the 23rd of August 2013, and which provides that leave to
appeal may only be given where the judges concerned are of the opinion that ‘the
appeal would have a reasonable prospect of success’.
[11]. In Ramakatsa and Others v African National Congress and Another2, the
SCA held that the test of reasonable prospects of success postulates a
dispassionate decision, based on the facts and the law that a court of appeal
‘could’ reasonably arrive at a conclusion different to that of the trial court. These
prospects of su ccess must not be remote, but there must exist a reasonable
chance of succeeding. An applicant who applies for leave to appeal must show
2 Ramakatsa and Others v African National Congress and Another (724/2019) [2021] ZASCA 31 (31 March
2021);
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that there is a sound and rational basis for the conclusion that there are prospects
of success.
[12]. The ratio in Ramakatsa simply followed S v Smith 2012 (1) SACR 567
(SCA), [2011] ZASCA 15, in which Plasket AJA (Cloete JA and Maya JA
concurring), held as follows at para 7:
‘What the test of reasonable prospects of success postulates is a dispassionate decision,
based on the facts and the law that the Court of Appeal could reasonably arrive at a
conclusion different to that of the trial court. In order to succeed, therefore, the appellant
must convince this Court on proper grounds that he has prospects of success on appeal
and that those prospects are not remote, but have a realistic chance of succeeding. More
is required to be established than that there is a mere possibility of success. That the
case is arguable on appeal or that the case cannot be categorised as hopeless. There
must, in other words, be a sound, rational basis for the conclusion that there are
prospects of success on appeal.’
[13]. In Mont Chevaux Trust v Tina Goosen3, the Land Claims Court held (in an
obiter dictum ) that the wording of this subsection raised the bar of the test that
now has to be applied to the merits of the proposed appeal before leave should
be granted. I agree with that view, which has also now been endorsed by the
SCA in an unreported judgment i n Notshokovu v S4. In that matter the SCA
remarked that an appellant now faces a higher and a more stringent threshold, in
terms of the Superior Court s Act 10 of 2013 compared to that under the provisions
of the repealed Supreme Court Act 59 of 1959. The applicable legal principle as
enunciated in Mont Chevaux has also now been endorsed by the Full Court of
the Gauteng Division of the High Court in Pretoria in Acting National Director of
Public Prosecutions and Others v Democratic Alliance In Re: Democratic Alliance
v Acting National Director of Public Prosecutions and Others5.
3 Mont Chevaux Trust v Tina Goosen, LCC 14R/2014 (unreported).
4 Notshokovu v S, case no: 157/2015 [2016] ZASCA 112 (7 September 2016).
5 Acting National Director of Public Prosecutions and Others v Democratic Alliance In Re: Democratic
Alliance v Acting National Director of Public Prosecutions and Others (19577/09) [2016] ZAGPPHC 489
(24 June 2016).
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[14]. I am persuaded that all the issues raised firstly by the respondents in their
application for leave to appeal , as well as those raised by the applicants in their
application for leave to cross -appeal, are issues in respect of which another court
is likely to reach conclusions different to those reached by me. I therefore
conclude that there are reasonable prospects of another court making factual
findings and coming to legal conclusions at variance with my factual findings and
legal conclusions. The appeal, therefore, in my view, does have a reasonable
prospect of success.
[15]. Moreover, I am of the view that there is another compelling reason why
the appeal should be heard , as envisaged by s 17(1)(a)(ii) of the Superior Court s
Act, and that relates to the fact that the issues implicated in this matter are novel
insofar as they relate to the dissolution of the relationship between shareholders.
Put another way, the decision sought to be appealed against involves an
important question of law .
[16]. Leave to appeal should therefore be granted. And in that regard, I believe
that, in view of the complexity of the legal issues raised, leave to appeal should
be granted to the Supreme Court of Appeal.
Order
[17]. In the circumstances, the following order is made:
(1) The respondents are granted leave to appeal to the Supreme Court of
Appeal .
(2) The cost of this application for leave to appeal shall be costs in the appeal.
(3) The applicants are granted leave to cross -appeal to the Supreme Court of
Appeal against paragraphs (5) and (6) of the order of this Court dated
19 December 2024.
(4) The costs of this application for leave to cross -appeal shall be costs in the
cross -appeal.
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_____________ ____________________
L R ADAMS
Judge of the High Court
Gauteng Division, Johannesburg
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HEARD ON: 21 February 2025
JUDGMENT DATE: 24 February 2025
FOR THE FIRST AND THE
SECOND APPLICANTS : J Peters SC, together with D Hodge
INSTRUCTED BY: David Shapiro & Associates,
Fellside, Johannesburg
FOR THE FIRST TO THE
SEVENTH RESPONDENTS : A Subel SC, together with H Pretorius
INSTRUCTED BY: Simpson Incorporated ,
Killarney, Johannesburg
FOR THE EIGHTH RESPONDENT: No appearance
INSTRUCTED BY: No appearance