Its Time Group (Proprietary) Limited v Tyulu and others
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Pullinger AJ |
| Judgment Date | 19 September 2023 |
| Citation | 2023 JDR 3607 (GJ) |
| Hearing Date | 05 September 2023 |
| Docket Number | 2023/085264 |
| Court | Gauteng Local Division, Johannesburg |
Pullinger AJ:
This is one of the unusual cases where the costs of an urgent application are ventilated before the Urgent Court. I decided to hear this matter because I had read the papers and the issues are clear and straightforward. It is unnecessary to trouble another judge in due course. This would be waste of judicial resources and unnecessarily increase the costs.
Before me were two intertwined questions, defined by Mr Antonie SC, who appeared with Ms Ndlovu for the applicant as follows:
First, should this application have been brought as one of urgency?
Second, should the respondent pay the costs of the urgent application considering that the substantive relief had been conceded?
The material facts are as follows:
Mr Khanya Solani (“Mr Solani”) is the sole shareholder and director of the applicant.
He is the non-executive chairman of the second respondent and, formerly an employee of the second respondent, an issue which has bearing on the outcome of this matter.
2023 JDR 3607 p3
Pullinger AJ
The applicant is the beneficial owner of 70% of the issued shares in the second respondent. It has advanced a shareholder loan of some R8 million to the second respondent.
The first respondent was the sole director of the second respondent, prior to the relief sought in this application being conceded by him (an issue to which I refer more fully below). He is also the owner of 30% of the issued shares in the second respondent.
There is a written agreement between the applicant, the first respondent and the second respondent styled “Nominee Agreement” which affords, in particular, the applicant the right to appoint directors to the board of the second respondent (“the Nominee Agreement”).
On 31 July 2023, Mr Solani met with the first respondent to advise that the applicant would be taking over the day-to-day running of the second respondent’s business. The context in which this conversation took place is comprehensively traversed in the applicant’s founding affidavit, but is not material to the issue before me.
On 1 August 2023, Mr Solani transmitted an email to the first respondent proposing a turnaround plan for the second respondent’s business. The email records:
“. . .
2023 JDR 3607 p4
Pullinger AJ
Attached is the process that I am going to be managing as part of the business turnaround efforts.
Your role and that of Sechaba we will discuss when we are in the office, like I stated to you last night I rather consult and engage with you rather than dictate what you should do.”
Some ten days later, and on 11 August 2023, the first respondent replied to Mr Solani. The material parts of the email record:
“I am not in agreement with your proposal and how you have conducted things. As the managing director of Vula Oil I have decided to take the following steps in an attempt to save the business due to its financial woes.
Terminate your role as the Chief Financial Officer with immediate effect, unfortunately this is due to a lack of transparency in your role which is crucial and I do not agree with the plan you submitted to turn the business around. Please bare [sic] in mind as the sole director I have taken all the risk being surety for the company’s debts and I am left exposed, therefore, I will handle the finances of the Company to ensure stability and mitigate my personal exposure to debt. You have stated that you cannot be a director due to conflict of interest and I remain the only director of the Company who is obligated to uphold the directors [sic] fiduciary duty to the Company.
. . .
In an effort to save the business I have decided to commence with the process of putting the Company under business rescue with an aim to facilitate rehabilitation due to it being financially distressed.”
2023 JDR 3607 p5
Pullinger AJ
On 19 August 2023, the first respondent held two separate meetings, the first one with the bulk tanker drivers, and the second one with the energy advisors at the second respondent’s Randfontein depot.
During these meetings, the first respondent advised the attendees that he would be restructuring the second respondent’s business, and that there would be inevitable retrenchments effective as at 25 August 2023.
The applicant states, in regard to the aforegoing, that:
“[t]his naturally caused anxiety and unrest within the business of [the second respondent] and unnecessarily exposes [the second respondent] to legal reprisal as a consequence of [the first respondent’s] failure to follow due process applicable to retrenchments. In my view, there was no basis to threaten staff retrenchments.”
On 21 August 2023, the applicant called upon the first respondent to appoint a further director, one Mr Sibeko, to the second respondent’s board.
By virtue of the materiality of this letter to the issue before me, I reproduce the content of the letter. It provides:
I refer you to the Nominee Agreement entered into with Its Time Group (Pty) Ltd (“ITG”), duly signed by you on 1 August 2021 (“the Nominee Agreement”).
The Nominee Agreement prescribes, inter alia:
2023 JDR 3607 p6
Pullinger AJ
2.1
“Its Time shall be the owner of 70% (seventy) of the issued shares in [Vula]” clause 4.2.2);
2.2
“Magcinaviwe shall, on behalf of Its Time hold the Its Time shares in a nominee capacity. The Its Time shares shall be held by Magcinaviwe on behalf of Its (clause 4.2.3).
2.3
In the event that Its Time is required to appoint a director or directors to represent the Its Time shares, Its Time shall on the written notice to Magcinaviwe undertake to forward the details and secure the appointment of any person nominated by Its Time to the board of directors of [Vula]” (clause 5.1).
ITG is most concerned, having regard to various factors, including your recent conduct, that you are no longer acting in the interests of ITG nor in accordance with your duties to ITG. ITG now requires that a director be appointed to represent its interests on the board, whilst also acting in the best interests of Vula as a company.
ITG has identified Mr Setshaba Sibeko (Identity number 8110015830085) (“Mr Sibeko”) as a suitable candidate to be appointed as a director of Vula. Mr Sibeko has agreed to and has accepted the proposed appointment.
ITG hereby gives its notice (as per clause 5.1 of the Nominee Agreement) for you to take the necessary steps to formalize the appointment of Mr Sibeko as a director of Vula within 3 (three) business days of receipt of this notice.
I attach for your ease, the necessary documentation required by CIPC, duly signed by Mr Sibeko and Mr Solani (where applicable). Should Vula and/or CIPC require any further documentation from Mr Sibeko or ITG to give effect to the above, please let us know prior to the above-mentioned deadline. Should you fail to do so, the attached will be considered to be sufficient and ITG will await your timeous compliance with this notice.
Please note that your recent emails to Mr Solani have been forwarded to our attorneys for their comment and advice. You can expect to receive a substantive response to your mails from our attorneys in due course.
In the interim ITG’s and Mr Solani’s rights remain reserved.”
2023 JDR 3607 p7
Pullinger AJ
On 23 August 2023, the first respondent replied to the aforesaid letter stating:
“I acknowledge receipt of your correspondence.
I shall revert regarding the directors appointment next week, latest 30 August 2023.”
In response to the aforegoing, the applicant’s attorneys wrote to the first respondent. Again, and given the materiality of this letter, it is reproduced in full. It records:
We represent Its Time Group (Pty) Limited (“our client”).
We refer to our client’s letter to you dated 21 August 2023 in which our client exercised its rights under clause 5 of the Nominee Agreement and gave you notice to take the necessary steps to formalize the appointment of Mr Setshaba Sibeko (“Mr Sibeko”) as a director of Vula Oil (Pty) Limited within three business days.
You have refused to comply with our client’s instruction. Instead, in an email addressed to our client on 23 August 2023, you advised that you would only revert on this issue by latest 30 August 2023.
Our client is of the view that your refusal to appoint Mr Sibeko constitutes a dispute or disagreement (“the dispute”) as contemplated in clauses 8.1 and 8.2 of...
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