Ben-Tovim v Ben-Tovim and Others

• Jurisdiction: South Africa
• Judge: H J Erasmus AJ
• Judgment Date: 29 March 2001
• Citation: 2001 (3) SA 1074 (C)
• Counsel: P B Hodes SC (with him E Fagan) for the applicant. D R Mitchell SC (with him S C Goddard) for the first respondent. No appearance for the second and third respondents. S F Burger SC (with him G Selikowitz) for the fourth respondent.
• Hearing Date: 15 March 2001
• Docket Number: 1627/2001

H J Erasmus AJ:

The applicant seeks an order declaring a resolution J

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adopted at a meeting of shareholders of the second respondent held on 8 February 2001 'to be invalid A and of no force and effect'. The application was brought on 2 March 2001 as a matter of urgency. In the notice of motion the respondents were given till 6 March 2001 to give notice of intention to defend and till 9 March 2001 to file answering affidavits. First respondent complied with the dates so given, filing notice of his intention to defend on 6 March 2001 and his B answering affidavits on 9 March 2001. The fourth respondent gave notice of its intention to oppose on 9 March 2001. At the hearing a short affidavit was filed on behalf of the fourth respondent.

The application is opposed by the first respondent. The second respondent does not oppose for reasons which are set out later in this judgment. The third respondent abides the decision of the C Court. The fourth respondent has entered the fray and opposes the application. Both the first and fourth respondents submitted that the matter was not urgent and that a departure from the ordinary time limits was not warranted. I shall return to the matter of urgency in the course of the judgment. D

The parties

The applicant is Sara Ben-Tovim ('Sara').

The first respondent is Gershon Ben-Tovim ('Gershon').

The second respondent is YAM Diamond Recovery (Pty) Ltd (YAM), a E company incorporated in the Republic of Namibia, but conducting business and having its principal administrative offices within the jurisdiction of this Court at 44 Leeukloof Drive, Tamboerskloof, Cape Town.

The third respondent is Seapoon Investments (Pty) Ltd (Seapoon), a company incorporated in the Republic of South Africa and having its F registered office in Cape Town.

The fourth respondent is Namibian Diamond Recovery (Pty) Ltd (NDR), a company incorporated in the Republic of Namibia and having its registered office in Windhoek, Namibia.

There are several other dramatis personae who do not feature as parties to the application. These are Namdeb Diamond G Corporation (Pty) Ltd (Namdeb), incorporated in the Republic of Namibia; GAL Marine (Pty) Ltd (GAL), incorporated in the Republic of South Africa; Quarterdeck Prospecting and Mining (Pty) Ltd (Quarterdeck); and De Beers Holdings (Pty) Ltd (De Beers). H

Shareholding and directorships

Sara and Gershon are the sole shareholders of YAM, each holding 50% of the shares in the company. They are also the only two directors of YAM. I

By way of resolutions taken by YAM and its board on 1 March 1994 and 4 July 1994, 100 cumulative preference shares were allotted to Seapoon. The preference shares conferred on Seapoon the right to receive out of the profits of YAM available for distribution, in priority to any other shares in issue in YAM, a cumulative preferential cash dividend equal to the audited after-tax profits of YAM. In terms of the J

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articles of association of YAM, the holders of the cumulative preference shares are not entitled to vote at any meeting of the A company unless the preference dividends, or any part of them, whether declared or not, remain in arrears and unpaid after 30 days from the due date for payment.

Sara and Gershon also own 25% each of the issued ordinary shares in Quarterdeck. De Beers holds the other 50% of the shares. B Sara and Gershon are, and have at all times been, directors of Quarterdeck. Gershon and Quarterdeck maintain that De Beers has sold its shares in Quarterdeck to Gershon by way of a sale which Sara is contesting.

Seapoon is a wholly-owned subsidiary of Quarterdeck. The directors of Seapoon are William 'Huck' Endersby (Endersby) and John McLuskie, C both of who are directors of De Beers and represent its interests.

Gershon, through Othinge Mining (Pty) Ltd and On-Shelf Investments Ninety-Nine (Pty) Ltd, owns 30% of the issued shares of NDR. Gershon is also a director of NDR. D

Sara and Gershon

Sara and Gershon are married to each other according to the laws of Israel. Gershon has instituted divorce proceedings in both this Court and in Israel. The divorce proceedings are being defended by Sara. E

It appears from the papers placed before this Court that Sara and Gershon have in recent years been involved in a series of extremely acrimonious disputes with each other, largely concerning the involvement of Sara in the affairs of companies in which they are shareholders and/or directors. Other companies, linked contractually to those companies, have also been drawn into the disputes. There has been F litigation between them in this Court and there are cases pending in the High Court in Windhoek, Namibia. In Ben-Tovim v Ben-Tovim and Others 2000 (3) SA 325 (C) at 328B Van Heerden J had occasion to remark:

'The level of acrimony between the parties and the frequency of the disputes between them appear to have been greatly exacerbated by G the separation of the parties and the ongoing divorce proceedings.'

Mr Mitchell has rightly stressed that emotionally charged peripheral and irrelevant matter must be separated from the facts that Sara has to establish in order to entitle her to the relief she seeks in this matter under the principles of company law. H

Factual background

YAM is in the business of prospecting for and mining diamonds off the Namibian coast. For this purpose, it charters up to four specialised I offshore vessels which are adapted for the recovery of diamonds. YAM employs approximately 100 people, ranging from geologists and engineers to ship's officers and ordinary seamen. Its annual turnover is in the region of N $40 million which comes to it from an agreement it has with Namdeb. J

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Namdeb is jointly controlled by the Namibian government and De Beers. A An agreement entered into between YAM and Namdeb in April 1995 provides, inter alia, as follows:

1.

Namdeb appointed YAM to carry out diamond prospecting and mining operations on its behalf within the area seaward of the low-water mark within that portion of grant area now identified as M4/4/108, bounded in the north by Bogenfels Arch and in the south by the then B international border at the Orange River mouth, Namdeb being the holder of the applicable rights in respect of the said area.

2.

The agreement commenced on 1 January 1994 and continued until 31 December 1999. C

3.

YAM had the first right to renew the agreement for a successive period of five years on the same terms and conditions as before, as varied or amplified by the written agreement of the parties, provided that such right was exercised not less than three months or more than four months before the date of termination.

4.

Namdeb would pay YAM for production from all suitable vessels D which had been agreed to by Namdeb and are utilised by YAM in the conduct of the prospecting or mining activity, as follows:

4.1

60% of the realised value (net proceeds) of all diamonds produced from screened gravel which had not been concentrated by dense media separation or any continuous processing treatment; E

4.2

80% of the realised value of all diamonds produced by the shore-based treatment;

4.3

80% of the realised value of all diamonds delivered to Namdeb from jigging or other concentration methods, including X-ray, as F determined by Namdeb according to prudent sea diamond mining practice;

4.4

in the event that the production from YAM's vessels exceeded 80 000 carats in any one year, then all payments for deliveries of diamonds over and above 80 000 carats would be at a rate of 70% of the realised value. G

A dispute has arisen in regard to the extension of the agreement for a further five years and Sara has instituted proceedings in the High Court of Namibia, Windhoek, in which she seeks an interdict restraining Namdeb from concluding with any party an agreement which would be in conflict with the provisions of the agreement between YAM and Namdeb, H as well as an order directing YAM and Namdeb to continue fulfilling their respective obligations in terms of the agreement. These proceedings are at present pending.

At a meeting of the board of directors of YAM held in Cape Town on 13 November 2000 a letter was tabled containing an offer from NDR to YAM to purchase its current diamond mining licence No M4/4/108, I being the licence relevant to the agreement with Namdeb, for a purchase consideration of N $5 million. The offer reads as follows:

'Offer to purchase licence

Further to our ongoing discussions and the outcome of our most recent meeting with Namdeb, we, Namibia Diamond Recovery (Pty) Ltd, hereby would like to J

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make a formal offer to purchase from YAM Diamond Recovery (Pty) Ltd its current diamond mining licence No M4/4/108 on the A following terms and conditions:

1.

Acceptance

This offer shall become a final and binding sale upon acceptance hereof by YAM Diamond Recovery (Pty) Ltd on or before November 18, 2000. Acceptance of this offer by YAM Diamond Recovery (Pty) Ltd shall be effected by all parties signing a detailed sales agreement and by B date and time mutually agreed upon.

2.

Purchase price

The purchase price is the sum of N $5 000 000 payable by Namibia Diamond Recovery (Pty) Ltd to YAM Diamond Recovery (Pty) Ltd as follows: C

•

20% into a trust account upon signing of the sales agreement.

•

30% into a trust account upon full and effective transfer of the licence.

•

50% as full and final payment within 30 working days after the effective transfer of the license.

3.

Cost of transfer

Namibia Diamond Recovery (Pty) Ltd shall pay all transfer costs incurred directly in respect of the registration of the D licence.

4.

Namibia Diamond Recovery (Pty) Ltd will guarantee employment...