Tiger-Eye Investments (Pty) Ltd and Another v Riverview Diamond Fields (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Diemont J, Theron J and Corbett J
• Judgment Date: 25 June 1970
• Citation: 1971 (1) SA 351 (C)
• Hearing Date: 02 March 1970
• Court: Cape Provincial Division

Diemont, J.:

Gerrassimos Vangelatos is the sole shareholder and the only director of a private company, Riverview Diamond Fields (Pty.) Ltd. (hereinafter referred to as "Riverview"), which was the applicant in the Court a quo and is the respondent on appeal.

Vangelatos is an engineer and a prospector. During the years E 1963, 1964 and 1965, he prospected for diamonds and base minerals on the farm Rietfontein on the Orange River in the district of Gordonia. Three claims were registered with the Department of Mines on 1st June, 1965, and on 9th May, 1966, Vangelatos applied to the Secretary of Mines for prospecting F rights and a mining lease in terms of sec. 21 of Act 12 of 1960. He stated in his application:

"... I worked on the relevant farms for the period early 1963 to 1965. However, to my dismay, I have now been informed by the Mining Commissioner of Barkley West that, despite the fact that I have pegged, paid for and registered in my name the areas on the farm Rietfontein, this territory has now been proclaimed a prohibited area in respect of prospecting and mining.

During the period 1963 to 1965 I spent vast sums of money and G devoted a great deal of my time travelling and investigating the properties in question, and the sworn affidavit and statement made by the Commander of Police prove that I was the first person to visit the district for the purpose of relevant investigation.

In view of the aforegoing, I therefore submit this my claim for preferance in regard to all prospecting rights, and the granting of a mining lease over the total area covered by the farms mentioned above."

At about the same time Vangelatos, having been informed that H this was necessary, wrote to the Department of Coloured Affairs asking for the consent of the Minister to the exercise of the rights sought. On 27th July, 1966 the Secretary for Coloured Affairs replied advising Vangelatos that until the farm Rietfontein had been incorporated in the Mier Coloured Area, neither the Department of Mines nor the Department of Coloured Affairs would consider any applications - of which there were several - to enter the area or the allocation of prospecting leases.

Diemont J

The Secretary for Coloured Affairs stated further:

"For your information I may add that in previous instances prospecting leases for precious stones were allocated to the Coloured Development Corporation Ltd., who had to contract with certain companies or consortiums to undertake prospecting and later mining operations on its behalf."

A Thereafter on 4th August, 1966 Vangelatos made application to the Department of Coloured Affairs on behalf of Riverview for a permit to prospect for precious stones. No reply was received until 19th December of that year when the Department of Mines wrote to Vangelatos in the following terms:

B [The learned Judge set out the contents of the letter and proceeded.]

The next stage in the proceedings was the formation of the operating company. The third respondent, the Coloured Development Corporation Ltd. (hereinafter referred to as "the C.D.C."), advised Vangelatos that a company known as Amaf (Amaf Prospekteerders (Eiendoms) Bpk.) had been nominated by the C Minister of Mines to accept the leadership in the formation of the operating company and, 24th January, 1967 Amaf gave written notice of a meeting of all the applicants to be held on 27th February. 1967.

Before the meeting took place Vangelatos was approached by one Gert Petrus van Zyl who offered to provide financial assistance. A written agreement (annexure "K") was entered into D between van Zyl, Riverview and Vangelatos during the third week of February. In the preamble to this agreement it is recorded that the "applicant" (Vangelatos) had applied unsuccessfully for prospecting rights and that he had now been invited by the C.D.C. to obtain a shareholding in an operating company which would prospect in the Mier Coloured Area.

E It was further recorded that Vangelatos would require financial assistance. The parties accordingly agreed that Vangelatos would in due course apply for a shareholding in the operating company, and that he would indicate in his application that he was prepared to invest R250,000 in the venture. Van Zyl bound himself to furnish the necessary finance F in return for which he was to receive two-thirds of the share capital in Riverview. It was further agreed that should van Zyl fail to furnish the moneys required on demand the agreement would be subject to cancellation.

The meeting of White applicants for prospecting rights of which Amaf had given written notice, as stated above, was duly held G on 27th February, 1967. All 13 of the applicants recognised as such up to that date were in attendance or represented. Van Zyl was there in person, representing various parties. So was Vangelatos, representing Riverview. A Mr. Greyling, the general manager of the C.D.C., was also present, by invitation. Elected chairman of the meeting, he proceeded to give an exposition of H the scheme devised by the Minister of Mines in order to do justice between the competing claimants for prospecting rights in the area in question (as unfolded in para. 2 of the letter dated 19th December, 1966, which I have quoted above) and to explain the terms upon which the company to be formed by the C.D.C. would allow the operating company to conduct the prospecting operations on its behalf. He indicated that the White applicants should agree amongst themselves as to the apportionment between them of the shareholding in the operating company, but added that in the event of their failing to reach agreement

Diemont J

on this point the Minister of Mines would take the necessary decision. Having decided that each of the applicants present - whether an individual, a company or a partnership - would be entitled to one vote, the meeting proceeded to pass resolutions in regard to a number of matters requiring to be A settled prior to the incorporation of the operating company. The most contentious of these matters was how the issued share capital of the company about to be formed should be divided between the 13 applicants. In this connection it was proposed that three major companies represented there as applicants - Amaf, Dorsland Diamante and Vasteland Mynbou - should B receive 60 per cent of the capital in the operating company and that the balance of 40 per cent of the capital should be divided among the remaining ten applicants. After protracted debate this proposal was rejected and it was agreed to equal division and to the matter being discussed with...