New Diamond Corporation (Pty) Ltd and Another v Zone One Diamonds (Pty) Ltd (formerly Skeat Mining (Pty) Ltd and Others

• Jurisdiction: South Africa
• Court: Northern Cape Division
• Judge: Olivier J
• Judgment Date: 04 March 2005
• Citation: 2005 JDR 0528 (NC)
• Hearing Date: 25 February 2005
• Docket Number: 167/2005

Olivier J:

[1]

The applicants, New Diamond Corporation (Pty) Ltd ("first applicant) and Schmidtsdrift Mining Enterprises (Pty) Ltd ("second applicant"), approached this Court on an urgent basis on 18 February 2005 for, inter alia, an interdict restraining the respondents, Zone One Diamonds (Pty) Ltd (formerly Skeat Mining (Pty) Ltd and hereinafter referred to as the "first respondent"), Peter Edwin Skeat ("second respondent") and Benoryn Investment Holdings (Pty) Ltd ("third respondent"), from alienating, encumbering or removing certain machinery and equipment from a mining area in the vicinity of Smidtsdrift, Northern Cape, pending

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an action to be instituted to compel rehabilitation of land, alternatively for an order declaring the respondents liable for damages in the amount of the expenses pertaining to such rehabilitation. On 18 February 2005 the application was postponed to 25 February 2005 for hearing, with the costs of 18 February 2005 being reserved for decision at the hearing of the matter, and by agreement between the parties it was ordered that the respondents would not until then remove or dispose of certain items of the equipment.

[2]

After hearing arguments in the matter by counsel for the respondents, advocate Van Niekerk SC (assisted by advocate Limberis) and the attorney for the applicants, Mr Ziman, judgment was reserved and by agreement between the parties it was ordered that the limited interdict which had been granted in respect of certain of the items of equipment would be extended until judgment was delivered.

[3]

The factual background to this matter, very briefly, is that the two applicants had entered into a written contract ("the mining contract") with the first respondent during June 2004, in terms of which it was agreed that the first respondent would perform mining activities on behalf of the first applicant in diamondiferous gravel situated in the relevant area near Schmidtsdrift. On 4 February 2005 the applicants were notified, on behalf of the first respondent, that, insofar as the mining contract had not in any event already come to an end on certain grounds, it was being cancelled.

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[4]

Thereafter a stream of rather long-drawn-out correspondence by the attorneys for the parties followed in which, inter alia, demand was made on behalf of the applicants that the first respondent rehabilitate the area and that the equipment which the first respondent had used for its mining activities not be removed from the area to ensure that a judgment for damages would not be rendered futile by the absence of assets against which to execute such judgment. Not surprisingly the correspondence led to no solution and culminated in this application. The applicants have joined the second and third respondents in the application and it is contended that they will, in the envisaged action, on the basis of either section 424 of the Companies Act or the common law be held to be liable jointly and severally with the first respondent for its liabilities vis-a-vis the applicants.

[5]

At the hearing of the application mr Ziman handed up a draft order and indicated that, in the event of a finding in favour of the applicants, the relief set out in the draft order would be sought. The draft order differs from the notice of motion in that the equipment it is aimed at is now limited to only such equipment as would be necessary to complete the rehabilitation, whereas the relief set out in the notice of motion would have meant that all the mining equipment which the first respondent had used would have been subjected to the interdict sought by the applicants.

[6]

Certain objections in limine were raised on behalf of the respondents. In view of the conclusion to which I have come regarding the merits of the matter I do not intend dealing with

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those objections in any detail. It was inter alia argued that, because "service" on the respondents took place outside the area of jurisdiction of this Court, the dies induciae as prescribed in section 27 of the Supreme Court Act, no 59 of 1959, applied and that, in view of cases like Shield Insurance Co Ltd v Van Wyk 1976 (1) SA 770 (NC) and Staatsdiensliga van Suid-Afrika & Andere v Minister van Waterwese 1990 (2) SA 440 (NC), the applicants' failure to set the matter down for a date after such dies induciae had expired, could not be condoned. In my view this argument is untenable. No more need in the present circumstances be said in this regard than that the fact that service on the respondents did take place, and in actual fact enabled them to enter an appearance on 18 February 2005 and to oppose the application, means that the object of section 27 of the Supreme Court Act had been achieved (see Consani Engineering (Pty) Ltd v Anton Steinecker Machinenfabrik GmbH 1991 (1) SA 823 (T)).

[7]

The point was also taken that, insofar as the matter might have been urgent by 18 February 2005, such urgency had been the result of the applicants' inaction (see Schweizer Reneke Vleis Mkpy (Edms) Bpk v Die Minister van Landbou en Andere 1971 (1) PH 711 (T)) and that the application should on this ground alone be dismissed. Although it is so that the applicants had on 4 February 2005 been made aware of the fact that the first respondent was in the process of removing the equipment, it is also a fact that the applicants' attorney had ever since then been attempting, by means of correspondence, to obtain an undertaking that such removal would be ceased. It was also their contention

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that it had only been in the course of such correspondence that they had become aware of the first respondent's version that the equipment did not belong to it, but to the third respondent. Under these circumstances I do not think that it would be justified or fair to hold that any existing urgency had been caused by the applicants themselves (see Nelson Mandela Metropolitan Municipality and Others v Greyvenouw CC and Others 2004 (2) SA 81 (SE) at 93H-94E).

[8]

The deponent for the applicants, mr Qabaka, alledged that he was, inter alia, a director of the second applicant and he annexed to his founding affadavit a document purporting to be a certified copy of a resolution taken at a meeting of the board of directors of the second applicant, to the effect that the institution of the application was authorised and that mr Qabaka was authorised to sign all the necessary documents. These allegations were challenged by the respondents, who annexed a document obtained at the offices of the Registrar of Companies and according to which mr Qabaka was not a director of the second applicant.

[9]

In his replying affidavit mr Qabaka chose not to deal with this aspect specifically and contented himself with a vague denial of "any of the facts or allegations contained in the Answering Affidavit (which) are inconsistent with the contents of the Founding Affidavit". This could never be viewed as a sufficient answer to the respondents' challenge in this regard. Mr Ziman argued that the date of the document is 7 April 2003 and that it does not exclude the possibility that mr Qabaka might have become a director after that date. He furthermore argued, if I understood him correctly,

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that in any event the records of the Registrar of Companies merely reflect what it has been notified of as at that stage.

[10]

In my view there is absolutely no merit in this argument. Quite apart from the fact that mr Qabaka has not in reply made use of the opportunity to explain that he had become a director of the second applicant after April 2003 and that the Registrar of Companies had simply not yet been notified accordingly, mr Ziman has not even himself gone so far as to suggest that this is in fact what had happened. He merely raised it as a possibility and in my view his argument in this regard amounted to no more than speculation.

[11]

It was argued on behalf of the respondents that the second applicant has a direct and substantial interest in the application and that, because there is no proof of it having authorised mr Qabaka to depose to an affidavit on its behalf, it should be regarded as not being a party and that the application should therefore be dismissed on the basis of non-joinder.

[12]

Mr Ziman argued that, insofar as mr Qabaka might not have been authorised by the second applicant, the latter has in any event for all practical purposes been joined as a party. I am not quite sure that I follow this argument properly. Certainly the second applicant has not been joined in accordance with the usual procedure and there is, in the absence of mr Qabaka's initial allegation of being a director of the second applicant, absolutely no indication of the second applicant even being aware of the application. In fact, mr

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Qabaka's strange silence about the records of the Registrar of Companies raises a strong suspicion that the board of directors of the second applicant did not, as purported by the resolution, authorise the application at all (see Mall (Cape) (Pty) Ltd v Merino Ko-operasie Bpk 1957 (2) SA 347 (C) at 351D-E and Royal Worcester Corset Co. v Bester's Stores 1927 CPD 143).

[13]

The question which then arises is whether the second applicant has a direct and substantial interest in the application, sufficiently to have made its joinder compulsory (see Silverstar Development Ltd v Gauteng Gambling Board and Others 2004 (2) SA 289 (T) at 315G and Rosebank Mall (Pty) Ltd v Cradock Heights (Pty) Ltd [2003] 4 All SA 471 (W) at 480d-e). It must be kept in mind that it is the first applicant, and not the second applicant, who had entered into the notarial mineral lease agreement with the Republic of South Africa and which is, in terms of that agreement, liable vis-à-vis the Government to see to it that the relevant area is...