Smyth and Others v Investec Bank Ltd and Another

• Jurisdiction: South Africa
• Citation: 2016 (4) SA 363 (GP)

Smyth and Others v Investec Bank Ltd and Another
2016 (4) SA 363 (GP)

2016 (4) SA p363

Citation	2016 (4) SA 363 (GP)
Case No	19269/2011
Court	Gauteng Division, Pretoria
Judge	Rabie J
Heard	September 17, 2015
Judgment	September 17, 2015
Counsel	CDA Loxton SC (with JP Vorster SC, PBJ Farlam SC and DM Davis) for the applicants.; AP Rubens SC (with J Blou SC and S Stein) for the first respondent.; G Farber SC (with N Konstantinides) for the second respondent.

Flynote : Sleutelwoorde B

Company — Oppressive conduct — Relief — Who may apply — 'Member' — Meaning of — Companies Act 61 of 1973, s 252.

Headnote : Kopnota

The applicants were the beneficial owners of shares which were registered in the C name of their nominee; the first respondent was another shareholder; and the second respondent was the company in which the shares were held. The applicants sought a declaration that second respondent's conclusion of agreements with first respondent and a third party were unfairly prejudicial acts within the meaning of s 252 of the Companies Act 61 of 1973; and an order under the section that first respondent purchase their shares. D The respondents' defence was that the applicants were not registered shareholders and therefore could not use s 252. The issue was whether 'member' in s 252 included a beneficial owner of a share.

Section 252 provides that a 'member' who complains that an act or omission, or the manner of conduct of the affairs, of a company is unfairly prejudicial, unjust or inequitable, may apply for a remedial order. The section further E provides that if it appears to the court that the act, omission or manner of conduct is indeed unfairly prejudicial, and if it considers it just, it may make an order it thinks fit.

Held, that 'member' was restricted to registered shareholders. (Paragraphs [67], [71] and [76] at 385B, 385J – 386A and 386H.)

Support for this conclusion came from s 103, which exhaustively defined F 'members'; and from foreign case law. (Paragraphs [24], [29], [38], [41], [52] and [57] – [58] at 371C, 372B – D, 375C – D, 375G – 376A, 378F – 379H and 381H – 383A.)

Application refused. (Note, though, that the applications of certain parties to intervene in the s 252 application and to join as applicants were granted.) (Paragraph [87] at 389A – 390C.) G

Cases Considered

Annotations

Case law

Southern Africa

Barnard v Carl Greaves Brokers (Pty) Ltd and Others and Two Other Cases H 2008 (3) SA 663 (C) ([2008] 2 All SA 272): referred to

D-Jay Corporation CC and Another v Investor Management Services (Pty) Ltd2000 (2) SA 755 (W): dictum at 762C applied

Hickman v Oban Infrastructure (Pty) Ltd2010 JDR 0244 (GSJ): referred to

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

MacMillan NO v Pott and Others2011 (1) SA 511 (WCC): referred to

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

Sentraal-Suid Koöperasie Bpk v Bessemer Steel Construction (Pty) Ltd (Africon Civil & Structural Engineering Services Inc and Others as Third Parties): In re Africon Engineering International (Pty) Ltd and Others v Bessemer Steel Construction (Pty) Ltd2004 (3) SA 552 (W): dictum at 556G applied J

2016 (4) SA p364

A Shapiro v South African Recording Rights Association Ltd (Galeta Intervening)2008 (4) SA 145 (W): referred to

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

Visser Sitrus (Pty) Ltd v Goede Hoop Sitrus (Pty) Ltd and Others2014 (5) SA 179 (WCC): referred to B

Vitorakis v Wolf1973 (3) SA 928 (W): referred to

Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd1986 (2) SA 555 (A): dictum at 562H – 563A applied.

Australia C

Niord (Pty) Ltd v Adelaide Petroleum NL (1990) 54 SASR 87 (SA): followed.

England

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

Eckerle v Wickeder Westfalenstahl GmbH[2013] EWHC 68: followed

Elder v Elder & Watson Ltd1952 SC 49: referred to D

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

Hecquet v McCarthy[2006] EWHC 832 (Ch): followed

Re a Company[1986] BCLC 391: referred to

Re Clearsprings (Management) Ltd[2003] EWHC 2516 (Ch): referred to.

Guernsey E

Synergy Classic Ltd v DES Commercial Holdings Ltd (Guernsey Royal Court case No 17/2011): followed.

Statutes Considered

Statutes

F The Companies Act 61 of 1973, s 252: see Juta's Statutes of South Africa 2007/8 vol 2 at 1-244.

Case Information

CDA Loxton SC (with JP Vorster SC, PBJ Farlam SC and DM Davis) for the applicants.

AP Rubens SC (with J Blou SC and S Stein) for the first respondent.

G Farber SC (with N Konstantinides) for the second respondent. G

An application for relief in terms of s 252 of the Companies Act 61 of 1973.

Order

1.

The application of the 7 main applicants is refused and they are H removed as applicants from the main application, which shall proceed without them.

2.

The 7 main applicants are ordered jointly and severally to pay the costs of the first respondent relating to the main application of the 7 main applicants, including the locus standi objection.

3.

I The intervention applications of the following 27 beneficial owners are dismissed: Malachite International Ltd; CR Zehnder; Computrak (Pty) Ltd; Eljay Investments Inc; NHW Gubb; PR Gubb; Hentiq 1843 (Pty) Ltd; DJ Palmer; Raven Crest Property Holdings (Pty) Ltd; GJ Chappel; HL Menne; RP Mundel; ML Steadman; AE Thompson; N Zehnder; SR Buckle; GD Cahn (Pops Investments); J EC Chandler; MF Chandler; MS Ghani; Gary Cahn

2016 (4) SA p365

Family Trust; D Gillfilan; Mafumisa Investment Club; S Maharaj; A Smyth Family Trust; AM van der Strieckt; and IC Zambeti.

4.

The 27 remaining beneficial owners mentioned in the previous paragraph are ordered to pay the first respondent's costs relating to their intervention applications.

5.

It is noted that the 6 intervention applications of SSP Investment Trust, B MS Ahomed, IC Bell, IW Botha, K Lai and N Wendt ('the freelance applicants') have been withdrawn. If these applications have in fact not been withdrawn, the application to postpone these applications is dismissed and the intervention applications of the aforesaid freelance applicants are dismissed. C

6.

The 6 intervention applicants (the freelance applicants) are ordered to pay the first respondent's costs relating to their intervention applications which, if withdrawn, would be until the time of the withdrawal thereof.

7.

The 7 intervention applications of WJS Baily, L Duthie, MM Guise, D T Hamilton, Japonica Trust, MJ Robertson and The Garcia Revocable Family Trust in respect of which the applicants obtained registration in their own names ('the own-name applicants') are granted.

8.

The 7 own-name applicants are ordered to pay the first respondent's costs in respect of their applications until 2 May 2014. E

9.

The 3 intervention applications by the three nominees, SBN, Shap-Aron and BNS, are granted as follows:

9.1

SBN is granted leave to intervene in respect of the shares held on behalf of E Gubb, J Gubb, Milkwood Investments Ltd, Malachite International Ltd and CR Zehnder; F

9.2

Shap-Aron is granted leave to intervene in respect of the shares held on behalf of DJ Smyth, PC Smyth, Anglorand Securities Ltd, Eljay Investments Inc, Hentiq 1843 (Pty) Ltd, DJ Palmer, Raven Crest Property Holdings (Pty) Ltd, G GJ Chappel, HL Menne, RP Mundel, ML Steadman, AE Thompson, N Zehnder, SR Buckle, GD Cahn (Pops Investments), EC Chandler, MF Chandler, MS Gani, Gary Cahn Family Trust, D Gillfilan, Mafumisa Investment Club, S Maharaj, Smyth Family Trust, AM van der Strieckt and IC Zambeti; H

9.3

BNS is granted leave to intervene in respect of the shares held on behalf of JGW Gubb, Jag Investments (Pty) Ltd, Computrak (Pty) Ltd, NHW Gubb and PR Gubb.

10.

The first respondent and the second respondent are ordered to pay the costs of the 3 nominee intervention applications jointly and I severally.

11.

Any issue raised in the intervention applications but not decided by this court shall be adjudicated, if necessary, by the court hearing the main application and costs in that regard are reserved.

12.

All orders for costs shall include the costs of three counsel. J

2016 (4) SA p366

Judgment

Rabie J: A

[1] In the main application Mr DJ Smyth and six other applicants (the main applicants) applied for inter alia the following relief against the first and second respondents:

'1.

Declaring that the conclusion of:

1.1

B the agreement styled the Revised Settlement Agreement and concluded by the second respondent with JCI Ltd (JCI) on 20 January 2010 and which was ratified by a simple majority of the second respondent's holders on 20 May 2010; and

1.2

the agreement styled the ''Litigation Settlement Agreement'' C and concluded by the second respondent with inter alia the first respondent on 22 January 2010, the conclusion and ratification of which was a condition precedent to the Revised Settlement Agreement;

constitutes or involves an act or omission which is unfairly prejudicial, unjust or inequitable as contemplated in D Section 252(1) as read with Section 252(3) of the Companies Act 61 of 1973 (the Companies Act).

2.

In the light of paragraph 1 above, ordering the first respondent to purchase the applicants' shares in the second respondent in the sum of R288,56 per share (or any other sum which the above Honourable Court [may] in its discretion determine) plus the E ruling Randgold price at the time of such purchase.'

[2] The respondents objected to the locus standi of each...