Trinity Asset Management (Pty) Ltd and Others v Investec Bank Ltd and Others

• Jurisdiction: South Africa

Trinity Asset Management (Pty) Ltd and Others v Investec Bank Ltd and Others
2009 (4) SA 89 (SCA)

2009 (4) SA p89

Citation	2009 (4) SA 89 (SCA)
Case No	574/07
Court	Supreme Court of Appeal
Judge	Farlam JA, Mthiyane JA, Jafta JA, Maya JA and Cachalia JA
Heard	August 26, 2008
Judgment	November 27, 2008
Counsel	CDA Loxton SC (with MW Janisch) for the appellants.; SA Cilliers SC and AP Rubens SC (with J Blou and A Rowan) for the first respondent.; AL Williamson for the second and third respondents.

Flynote : Sleutelwoorde B

Company — Shares and shareholders — Shareholders — General meeting of shareholders — Resolutions — Shareholders' right to information on propositions to be voted on — Company to accurately disclose adequate material information (in notice of invitation to attend general meeting) to enable C shareholders to come to intelligent conclusion on matters in issue — Shareholders entitled to apply to interdict holding of meeting before which materially incorrect information put by company (directors).

Company — Contracts — Approval of contract — Approval by general meeting of shareholders — Company to disclose adequate material information (in notice of invitation to attend general meeting) to enable shareholders to D come to intelligent conclusion on whether to approve proposed contract.

Company — Shares and shareholders — Shareholders — Proceedings by and against — Application by individual shareholders for declaration of invalidity of agreement concluded by company — Locus standi of shareholders — Individual shareholder entitled to interdict holding of general meeting at E which invalid agreement to be ratified — Must be adequately informed on proposition to be voted on (ratification of agreement) — Validity of agreement triable issue in application for interdict — Shareholder having locus standi to seek declarator of invalidity of agreement.

Headnote : Kopnota

A general meeting had been called at which the members of the first respondent F were asked to ratify a loan agreement concluded between the first respondent, on the one hand, and the second and third respondents, on the other. The circular convening the meeting put forward the incorrect information that the agreement was valid. With a view to preventing the holding of the meeting, the appellants, all individual shareholders in the first respondent, approached the High Court for an order declaring that the agreement was G invalid, alternatively, an order declaring that certain conditions precedent to the agreement had not been met. The parties to the agreements had, at all times, regarded the agreements as being binding on them and had implemented the agreements. After a separation of issues the High Court determined that the appellants lacked locus standi to raise the issue whether the loan agreement had lapsed due to non-fulfilment of suspensive H conditions in it and another agreement (the disposal agreement) which followed on and was dependent on the loan agreement. The High Court accordingly dismissed the application. In an appeal to the SCA,

Held, that the submission on behalf of the appellants was correct that the court a quo had mischaracterised the main question before it as being simply whether the appellants, as individual shareholders in the first respondent, I were entitled to have the agreement set aside in the face of the affected parties (the first, and second and third, respondents, respectively) having adopted the stance that the agreement was binding. It was not appropriate to approach the issue raised in the request for a declarator in the abstract without reference to the factual situation in which it arose. That was because the appellants' right to seek the declarator was triggered by the fact J

2009 (4) SA p90

A that a meeting had been called at which the members were asked to ratify the loan agreement. Before the shareholders could decide whether to attend the meeting to vote for or against the resolutions, or to give proxies to others to vote for or against on their behalf, or to do none of these things and to leave it to the majority to decide, they needed to have sufficient information to be able to come to an intelligent conclusion on the matter on which they B were asked to vote. That right arose from a term implied in the company contract. (Paragraph [22] at 95E - G.)

Held, further, that whether the loan agreement was valid or invalid was clearly a material factor which the shareholders were entitled to know before voting. Assuming, for present purposes, that the appellants' allegation was correct that the loan agreement was invalid, the paragraphs in the circular convening C the meeting which were to the effect that the agreement was valid, were incorrect. In the circumstances, the appellants would be entitled to an interdict stopping the meeting until the incorrect information was removed from the circular and replaced by information that was correct. The validity or otherwise of the loan agreement would be a triable issue in an application brought by the appellants for an interdict. (Paragraph [38] at 101B - C.)

D Held, accordingly, that the court a quo had wrongly held that the appellants had lacked locus standi to bring their application and that it had to be dismissed. (Paragraph[43] at 101J - 102B.) Appeal upheld.

The decision in Letseng Diamonds Ltd v JCI Ltd and Others; Trinity Asset Management (Pty) Ltd and Others v Investec Bank Ltd and Others 2007 (5) SA 564 (W) reversed.

Cases Considered

Annotations E

Reported cases

Southern Africa

Anirudh v Samdei and Others 1975 (2) SA 706 (N): referred to

Aquatur (Pty) Ltd v Sacks and Others 1989 (1) SA 56 (A): referred to F

Barclays National Bank Ltd v Thompson 1989 (1) SA 547 (A): referred to

Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd 2005 (6) SA 205 (SCA) ([2006] 1 All SA 103): referred to

Director of Education, Transvaal v McCagie and Others 1918 AD 616: referred to

Durban City Council v Association of Building Societies 1942 AD 27: referred to G

Ex parte Ginsberg 1936 TPD 155: referred to

Ex parte Nell 1963 (1) SA 754 (A): referred to

Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others 1996 (1) SA 984 (CC) (1996 (1) BCLR 1): referred to

Graaff-Reinet Municipality v Van Ryneveld's Pass Irrigation Board 1950 (2) SA 420 (A): H referred to

Henri Viljoen (Pty) Ltd v Awerbuch Brothers 1953 (2) SA 151 (O): referred to

Letseng Diamonds Ltd v JCI Ltd and Others, Trinity Asset Management (Pty) Ltd and Others v Investec Bank Ltd and Others 2007 (5) SA 564 (W): referred to

Nguza and Others v Minister of Defence 1996 (3) SA 483 (TkS): applied

Safari Reservations (Pty) Ltd and Another v Zululand Safaris (Pty) Ltd 1966 (4) SA 165 (D): referred to I

Standard Bank of SA Ltd v Trust Bank of Africa Ltd 1968 (1) SA 102 (T): referred to

United Watch & Diamond Co (Pty) Ltd and Others v Disa Hotels Ltd and Another 1972 (4) SA 409 (C): referred to

Van Zyl NO v Bolton 1994 (4) SA 648 (C): referred to J

2009 (4) SA p91

Voget and Others v Kleynhans 2003 (2) SA 148 (C): referred to A

Wood and Others v Ondangwa Tribal Authority and Another 1975 (2) SA 294 (A): referred to.

Foreign

Australia

Bulfin v Bebarfald's Ltd (1932) 38 SR (NSW) 423: dictum at 440 - 441 applied B

Shears v Chisholm [1994] 2 VR 535: referred to.

Fraser v NRMA Holdings Ltd (1995) 127 ALR 543: dictum at 554 applied.

Canada

Garvie v Axmith [1962] OR 65 (31 DLR (2d) 65): applied

Goldex Mines Ltd v Revill [1974] 54 DLR (3d) 672: referred to.

England C

Matabeleland Co Ltd v British South Africa Co (1893) 10 TLR 77 (Ch and CA): applied

Re Dorman Long and Co Ltd; Re South Durham Steel and Iron Co Ltd 1934 Ch 635 (Ch D): dictum at 657 applied

Tiessen v Henderson [1889] 1 Ch 861 (Ch D): dicta at 866 - 867 and 870 - 871 applied. D

Case Information

Appeal from a decision in the Witwatersrand Local Division (Blieden J). The facts appear from the judgment of Farlam JA. E

CDA Loxton SC (with MW Janisch) for the appellants.

SA Cilliers SC and AP Rubens SC (with J Blou and A Rowan) for the first respondent.

AL Williamson for the second and third respondents. F

Cur adv vult.

Postea (November 27).

Judgment

Farlam JA: G

[1] This is an appeal from a judgment of Blieden J, sitting in the Johannesburg High Court, in which he dismissed with costs the appellants' application for certain relief. The relief sought included: (a) an order declaring that a loan agreement concluded, on the one hand, between Investec Bank Ltd, the first respondent, and, on the other, JCI Ltd, the second respondent, and Lexshell 658 Investments (Pty) Ltd (whose name H was changed to JCI Investment Finance (Pty) Ltd and which is a wholly owned subsidiary of the second respondent), the third respondent, was void for vagueness and/or impossibility of performance; (b) alternatively to (a), an order declaring that conditions precedent to the agreement had not been met; (c) an order interdicting the first respondent 'from in any I way implementing or benefiting from' the loan agreement; and (d) an order ordering the first respondent to restore the second and third respondents into the position that they would have been in had the loan agreement not been concluded; alternatively such order as to the restitution of the parties inter se as the court may deem fit. In what follows, I shall call the first respondent 'Investec' and the second respondent 'JCI'. I

2009 (4) SA p92

Farlam JA

A [2] The appellants' application was heard by the court a quo together with another application brought by Letseng Diamonds Ltd (which I shall call in what follows 'Letseng') in which that company also sought certain relief against the same three respondents, arising from the same loan agreement...