Smyth and Others v Investec Bank Ltd and Another

• Jurisdiction: South Africa
• Citation: 2018 (1) SA 494 (SCA)

Smyth and Others v Investec Bank Ltd and Another
2018 (1) SA 494 (SCA)

2018 (1) SA p494

Citation	2018 (1) SA 494 (SCA)
Case No	674/2016; [2017] ZASCA 147
Court	Supreme Court of Appeal
Judge	Navsa JA, Lewis JA, Petse JA, Mathopo JA and Schippers AJA
Heard	October 26, 2017
Judgment	October 26, 2017
Counsel	PBJ Farlam SC (with DM Davis) for the appellants.; AP Rubens SC (with J Blou SC, S Stein SC and N Farooqui) for the first respondent.; G Farber SC (with N Konstantinides SC) for the second respondent.

Flynote : Sleutelwoorde

Company — Oppressive conduct — Relief — Who may apply — Whether beneficial owner of shares, whose shares registered in name of nominee, may C apply — Relief available only to 'member' of company — 'Member' confined to persons entered in company's register of members — Beneficial owner of shares not included in register — Accordingly not entitled to apply for relief from oppressive conduct — Further, not eligible to join as co-applicants with relevant nominees — Companies Act 61 of 1973, ss 252 and 103.

Headnote : Kopnota

In D the High Court the first to seventh appellants — beneficial owners of shares in the company Randgold (second respondent), which shares were registered in the names of their nominees — brought an application under s 252 of the Companies Act 61 of 1973. Their complaint was that Randgold, in entering into certain agreements with Investec (first respondent) and another party, E had committed acts 'unfairly prejudicial' to them within the meaning of s 252. They sought various declaratory relief, as well as an order that Investec purchase their shares. Alongside the above 'main application' were applications brought by various other beneficial shareholders (8th – 34th appellants) and nominee shareholders (35th – 41st appellants), in which they sought leave to intervene in the main application, similarly seeking relief F under s 252.

The court granted the applications to intervene of the various nominee shareholders. The court, however, dismissed the main application and intervention applications by the various beneficial shareholders on the basis of lack of legal standing: the remedy under s 252 was only available to 'members of a company' (section quoted in [15]) of judgment); beneficial shareholders, G the court held, and contrary to the assertions of the appellants, did not fall into such a category, in the light of the clear meaning of 'member' as provided in s 103 (section quoted in [16] of judgment). The court rejected the alternative argument raised by the appellants that the beneficial owners, if found not to be members of Randgold, were nevertheless entitled to intervene in the main application as co-applicants with their respective H nominees on the ground that they had a direct and substantial interest in the subject-matter of the main application. The appellants were granted leave to appeal to the Supreme Court of Appeal, where the above two points formed the focus of the proceedings.

Held, that, implicit in the definition of 'member' located in s 103 of the Act was that, for a person to become a member, it was necessary that the name of I such a person had to be entered in the register of members of the company concerned (see [19]). And in South African law, in respect of shares held by a nominee on behalf of a beneficial shareholder, only the nominee was eligible to have his or her name entered in the register of members, and who would only become a member once his or her name was so entered (see [23]). Accordingly, a beneficial shareholder, not being a member of a J company, could not avail him- or herself of the s 252 remedy.

2018 (1) SA p495

Held, further, that the purposive interpretation of s 252 of the Act favoured by the A appellants — that, given that it was the beneficial owner who sustained the prejudice sought to be redressed by s 252, he or she should be considered a 'member' for the purposes of that section, despite the meaning provided in s 103 (see [30] – [31]) — could not be accepted. This interpretation would do violence to the language of the provision, by placing upon it a meaning of which it was not reasonably capable. (See [45] – [46].) B

Held, as to the alternative argument, that the rules and common-law principles relating to joinder of interested parties could not avail the appellants in circumstances where they sought to be joined as co-applicants with their nominees and invoke a statutory remedy that specifically catered for someone who was a member of the company in terms of the Act. To allow them to do so would fly in the face of the clear provisions of s 252 of the Act, C which unambiguously confined the remedy only to members of a company, which the appellants were not. (See [54].) Accordingly, appeal dismissed with costs (see [58]).

Cases cited

Southern Africa D

Barnard v Carl Greaves Brokers (Pty) Ltd and Others and Two Other Cases2008 (3) SA 663 (C) ([2008] 2 All SA 272; [2007] ZAWCHC 2): dictum in para [41] distinguished

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others2004 (4) SA 490 (CC) (2004 (7) BCLR 687; [2004] ZACC 15): dictum in para [89] applied E

Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk2014 (2) SA 494 (SCA) ([2013] ZASCA 176): dicta in paras [10] – [12] applied

Bowring NO v Vrededorp Properties CC and Another2007 (5) SA 391 (SCA) ([2007] ZASCA 80): compared F

Burger v Rand Water Board and Another2007 (1) SA 30 (SCA) ([2006] ZASCA 150): referred to

Dadabhay v Dadabhay and Another1981 (3) SA 1039 (A): referred to

Dadoo Ltd and Others v Krugersdorp Municipal Council1920 AD 530: dictum at 543 applied

Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining & Development Co Ltd and Others G 2014 (5) SA 138 (CC) (2014 (3) BCLR 265; [2013] ZACC 48): dicta in paras [84] – [86] applied

Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd2007 (6) SA 199 (CC) (2007 (10) BCLR 1027; [2007] ZACC 12): dictum in para [51] applied

Donaldson Investments (Pty) Ltd and Others v Anglo-Transvaal Collieries Ltd: H SA Mutual Life Assurance Society and Another Intervening1979 (3) SA 713 (W): dictum at 719H applied

Donaldson Investments (Pty) Ltd and Others v Anglo-Transvaal Collieries Ltd and Others1980 (4) SA 204 (T): dictum at 209B – F applied

Doornkop Sugar Estates Ltd v Maxwell and Others 1926 WLD 127: dictum at 134 applied I

Ex parte Avondzon Trust (Edms) Bpk1968 (1) SA 340 (T): compared

Hanekom v Builders Market Klerksdorp (Pty) Ltd and Others2007 (3) SA 95 (SCA) ([2006] ZASCA 2): distinguished

Henri Viljoen (Pty) Ltd v Awerbuch Brothers1953 (2) SA 151 (O): referred to

Jacobs en 'n Ander v Waks en Andere1992 (1) SA 521 (A) ([1991] ZASCA 152): dictum at 534A – E applied J

2018 (1) SA p496

Kalil A v Decotex (Pty) Ltd and Another1988 (1) SA 943 (A) ([1987] ZASCA 156): dictum at 970H – J distinguished

KPMG Chartered Accountants (SA) v Securefin Ltd and Another2009 (4) SA 399 (SCA) ([2009] 2 All SA 523; [2009] ZASCA 7): dictum in para [39] applied

Lourenco and Others v Ferela (Pty) Ltd and Others (No 1)1998 (3) SA 281 (T): B compared

Minister of Safety and Security v Sekhoto and Another2011 (5) SA 367 (SCA) (2011 (1) SACR 315; [2011] 2 All SA 157): dictum in para [22] compared

Motsepe v Commissioner for Inland Revenue1997 (2) SA 898 (CC) ([1997] ZACC 3): dictum in para [32] compared

Natal C Joint Municipal Pension Fund v Endumeni Municipality2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): dictum in para [18] applied

North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd2013 (5) SA 1 (SCA) ([2013] ZASCA 76): dictum in para [24] applied

Novartis D SA (Pty) Ltd and Another v Maphil Trading (Pty) Ltd2016 (1) SA 518 (SCA) ([2015] ZASCA 111): dicta in paras [24] – [31] applied

Oakland Nominees (Pty) Ltd v Gelria Mining & Investment Co (Pty) Ltd1976 (1) SA 441 (A): dictum at 453A – B applied

S v Zuma and Others1995 (2) SA 642 (CC) (1995 (1) SACR 568; 1995 (4) BCLR 401; [1995] ZACC 1): dicta in paras [13] – [14] applied

Sammel E and Others v President Brand Gold Mining Co Ltd1969 (3) SA 629 (A): dicta at 666C – D and 666D – E applied

Sandton Civic Precinct (Pty) Ltd v City of Johannesburg and Another2009 (1) SA 317 (SCA) ([2008] ZASCA 104): dictum in para [19] applied

SATAWU and Another v Garvas and Others2013 (1) SA 83 (CC) (2012 (8) BCLR 840; [2012] ZACC 13): dictum in para [37] applied

Sentrakoop F Handelaars Bpk v Lourens and Another1991 (3) SA 540 (W): referred to

Smyth and Others v Investec Bank Ltd and Another2016 (4) SA 363 (GP): confirmed on appeal

South African Airways (Pty) Ltd v Aviation Union of South Africa and Others2011 (3) SA 148 (SCA) ([2011] 2 BLLR 112): dicta in paras [25] – [30] G applied

South African Police Service v Public Servants Association2007 (3) SA 521 (CC) ([2007] 5 BLLR 383; [2006] ZACC 18): dictum in para [20] applied

Standard Bank Investment Corporation Ltd v Competition Commission and Others H 2000 (2) SA 797 (SCA) ([2000] 2 All SA 245; [2000] ZASCA 20): dictum in para [16] applied

Standard Bank of South Africa Ltd and Another v Ocean Commodities Inc and Others1983 (1) SA 276 (A): dictum at 289A applied.

Australia

In I re Fernlake (Pty) Ltd 1994 (13) ACSR 600: dictum at 605 considered.

England

Atlasview Ltd v Brightview Ltd[2004] EWHC 1056 (Ch): considered

Farstad Supply A/S v Enviroco Ltd[2011] UKSC 16: dicta in paras [37] – [39] considered

Hecquet J v McCarthy[2006] EWHC 832 (Ch): considered.

2018 (1) SA p497

New Zealand A

RPB Solutions Ltd v Avoca Holdings Ltd [2010] 2 NZLR 857 (HC): considered.

Case Information

PBJ Farlam SC (with DM Davis) for the appellants.

AP Rubens SC (with J Blou SC, S Stein SC and N Farooqui) for the first...