Crisp and Others v Sharemax Investments (Pty) Ltd and Others (1939/15) [2017] ZAGPPHC 737 (22 November 2017)

IN

THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

Case number : 1939/15

REPORTABLE

OF

INTEREST TO OTHER JUDGES

REVISED

22/11/2017

In the matter between

JASON MALCOLM JAMES CRISP 1st Plaintiff

SANGEETHA

NAIDOO N.O 2nd Plaintiff

MOONSAMY

NAIDOO N.O 3rd Plaintiff

WARREN IAN CLIVE GRAHAM HALFORD 4th Plaintiff

And

SHAREMAX INVESTMENTS (PTY) LTD 1st Defendant

LIBENBERG DAVID RYK VAN DER MERWE N.O 2nd Defendant

GERHADUS ROSSOUW GOOSEN 3rd Defendant

JOHANNES WILEM BOTHA 4th Defendant

DOMINIQUE HAESE 5th Defendant

ANDRE’

DANIEL BRAND 6th Defendant

DIRK KOEKEMOER 7th Defendant

FRONTIER

ASSET MANAGEMENT

INVESTMENT (PTY) LTD 8th Defendant

CENTRO PROPERTY GROUP (PTY) LTD 9th Defendant

SHAREMAX GROWTH (PTY) LTD 10th Defendant

FINE ASSET INVESTMENT 119 (PTY) LTD 11th Defendant

ADVOCA

AUDITING INC 12th Defendant

SAREL

JOHANNES ELOFF

T/A

NEW WORLD VALUATION 13th Defendant

WALDEMAR

GUSTAV HAESE L

T/S WG HAESE and PARTNERS 14th Defendant

CAPICOL (PTY) LTD 15th Defendant

NOVA PROPERTY HOLDINGS LIMITED 16th Defendant

NOVA PROPERTY GROUP INVESTMENT 17th Defendant

THE

MINISTER OF FINANCE

NATIONAL GOVERNMENT 18th Defendant

THE

REGISTRAR OF BANKS 19th Defendant

THE SOUTH AFRICAN RESERVE BANK 20th Defendant

THE MINISTER OF TRADE & INDUSTRY

NATIONAL GOVERNMENT 21st Defendant

THE MASTER OF THE HIGH COURT 22nd Defendant

THE

FINANCIAL SERVICES BOARD 23rd Defendant

THE

REGISTRAR OF THE FINANCIAL

SERVICES BOARD 24th Defendant

MR

NEELS ALANT N.O 25th Defendant

MR

JACO SPIES N.O 26th Defendant

THE

REGISTRAR OF THE COMPANIES AND

INTELLECTUAL PROPERTY COMMISSION 27th Defendant

SHAREMAX ZAMBEZI RETAIL PARK HOLDINGS LTD 28th Defendant

SHAREMAX

ZAMBEZI RETAIL PARK INVESTMENTS

(PTY) LTD 29th Defendant

THE VILLA RETAIL PARK HOLDINGS LTD 30th Defendant

THE VILLA RETAIL PARK INVESTMENTS (PTY) LTD 31st Defendant

THE

VILLAGE HOLDINGS LTD 32nd Defendant

THE VILLAGE MALL INVESTMENTS (PTY) LTD 33rd Defendant

WITBANK HIGHVELD HOLDINGS LTD 34th Defendant

WITBANK HIGHVELD INVESTMENTS (PTY) LTD 35th Defendant

TERENTAAL CENTRE HOLDINGS LTD 36th Defendant

TERENTAAL CENTRE INVESTMENTS (PTY) LTD 37th Defendant

FLORA CENTRE HOLDINGS LTD 38th Defendant

FLORA CENTRE INVESTMENTS (PTY) LTD 39th Defendant

CARLETONVILLE CENTRE HOLDINGS LTD 40th Defendant

CARLETONVILLE CENTRE INVESTMENTS (PTY) LTD 41st Defendant

RIVONIA SQUARE SHOPPING MALL HOLDINGS LTD 42nd Defendant

ROVONIA

SQUARE SHOPPING MALL INVESTMENTS

(PTY) LTD 43rd Defendant

LIBERTY MALL HOLDINGS LTD 44th Defendant

LIBERTY MALL INVESTMENTS (PTY) LTD 45th Defendant

MONT

ROUGE RESIDENTIAL ESTATE DEVELOPMENT

FUND LIMITED 46th Defendant

PLANET WAVES 120 (PTY) LTD 47th Defendant

SHAREMAX WATERFALL ESTATE LTD 48th Defendant

BORN FREE INVESTMENTS 552 (PTY) LTD 49th Defendant

SHAREMAX BAY ESTATE DEVELOPMENT FUND LTD 50th Defendant

SHAREMAX BAY ESTATE DEVELOPMENT FUND LTD 51st Defendant

Defendant WEAVIND & WEAVIND ATTORNEYS 52nd Defendant

Summary: Application for leave to appeal. Application of the rule that orders given by the courts remain valid until set aside or rescinded. The exception to the rule apply where the court that gave the order did not have jurisdiction to make such an order or the order is obtained fraudulently. The court in the present matter had the power to sanction the schemes of arrangements in terms of section 311 of the Companies Act of 1973. The orders were not fraudulently obtained and there was full disclosure before the orders were made. The majority of the shareholders voted for the schemes of arrangements before they were sanctioned by the court.

JUDGMENT

MOLAHLEHI, J:

[1] This is an application for leave to appeal against the judgment of this court made on 4 August 2017 regarding the exception raised by the defendants which were upheld with costs.

[2] The exception was based on f the contention that the particulars of claim were scandalous, vexatious, irrelevant, lacked elements necessary to sustain a cause of action and was vague and embarrassing. The defendants contended that these grounds hindered their ability to plead or conduct their defence. The applicants have raised several grounds for leave to appeal. I do not, for the reasons that are apparent from this judgment, intent dealing with every one of them.

[3] The two key grounds of appeal upon which this matter turns on relate to:

(a) attack on the finding concerning non-joinder, and

(b) not finding that, based on the illegal and fraudulent transaction, a valid cause of action existed to have the scheme of arrangement

declared null and void.

The non-joinder point

[4] At the hearing of this application, Counsel for the plaintiffs indicated that they were no longer pursuing the challenge of the findings relating to non-joinder.

[5] On the other hand Counsel for the defendant argued that it would not be proper to refer the matter on appeal in the absence of other parties that had not been joined in the proceedings before this court because that would deny them the opportunity to be heard by the appeal court. The contention in this respect is that the non-joined parties have an interest in the outcome of the appeal.

[6] The practical difficulty with the argument of the defendants is that the appellants won't be able, in light of the judgment of this court, be able to join the other parties on appeal. In this respect, the court has pronounced that the applicant has no cause of action because of the court order legalising the schemes of arrangements has not been set aside and thus is valid and enforceable. I will revert to this latter matter later in this judgment.

[7] The other fundamental difficulty with the defendant's argument is that the appellate court in considering an appeal is confined as a general principle to the issues that served before the lower court. The issue before this court was, of course, the privity of the contract between the parties, the appellant and the non-joined parties. The leave to appeal (the lis) is however between the parties which were cited when the matter served before this court.

[8] Based on the above, I find that the respondents’ point regarding non-joinder about this application is unsustainable.

Legality of the schemes of arrangements

[9] I now turn to deal with the issue of the legality or otherwise of the schemes of arrangements. This issue is dealt with at paragraphs 59 to 65 of the judgment of this court.

[10] In concluding as it did, the court essentially found that the appellants failed to disclose a cause of action for the claim about the validity of the different property syndication schemes and the invalidity and enforceability of the court orders made in terms of s 311 of the Companies Act of 1973.

[11] The appellants argued that the different property syndications schemes were void and invalid and therefore the court orders could not be made in terms of s 311 of the Companies Act because such unlawful schemes could not become lawful through the utilisation of the scheme of arrangements. Another point made was that the schemes of arrangements did not comply with the requirements of s 311 of the Companies Act and therefore the court could not have granted the orders as it did. The orders were in other words granted on a legal basis that never existed.

[12] In seeking to persuade me that there is a reasonable prospect that another court, if the same facts were to be placed before it, would arrive at a different conclusion reference, was made to the case of The Master of the High Court v Motala,[1] which was contrasted with that of Jacobs v Baumann NO.[2]

[13] The Master was in Motala’s case charged with contempt of court. She contended that she was entitled to ignore the judgment because it was a nullity. The court below per Legodi J disagreed and found that the Master was guilty of contempt of a court order based on the principle that all orders of the court whether correctly or incorrectly granted are to be obeyed until they are properly set aside.

[14] In that case, the contempt proceedings arose from the failure by the Master to comply with the order made by Kruger AJ in terms of which judicial managers were appointed purportedly under s 429 of the Companies Act of 1973. It is clear that while s 429 of

the Companies Act gives the court the power to grant provisional judicial management orders, the power to appoint judicial managers

once such an order is made is reserved for the Master. In concluding that the finding of contempt against the Master could not be supported the Supreme Court of Appeals said:

“[11] What appeared to weigh with Legodi J was the following general proposition: all orders of court whether correctly or incorrectly

granted have to be obeyed until they are properly set aside… No doubt there are important policy considerations why that must be so. But, that raises a logically anterior question, which Legodi J described as 'the most vexing aspect of this judgment' - namely the status of the order of Kruger AJ. The Master contended that it was a nullity and could, without more, be disregarded. Legodi J took a contrary view.

[12] As long ago as 1883, Connor CJ stated in G W Willis v L B Cauvin 4 NLR 97 at 98-99:

'The general rule seems to be that a judgment, without jurisdiction in the Judge pronouncing it, is ineffectual and null.. . The maxim extra territorium jus dicenti inpune non paretur.”

[15] In S v Absalom,[3] a case quoted with approval in the above case, the court held that:

'Dit volg dus dat die Volle Hof myns insiens geen bevoegdheid gehad het om die appèl aan te hoor nie. Die gevolg, meen ek, was, soos voorspel deur Strydom R, dat die Volle Hof se uitspraak 'n nietigheid was. Sien, benewens die bronne, aangehaal deur Strydom R, Voet Commentarius ad Pandectus 49.8.1 en 3; Groenewegen De Legibus Abrogatis, Ad Cod 7.64; Lewis & Marks v Middel 1904 (TS) 291 op 303; Sliom v Wallach's Printing and Publishing Co Ltd 1925 TPD 650 op 656 en Trade Fairs and Promotions (Pty) Ltd v Thomson and Another 1984 (4) SA 177 (W) op 183D-E. Soos blyk uit hierdie bronne, het die uitspraak van 'n hof wat nie regsbevoegdheid het nie, geen regskrag nie, en kan dit eenvoudig

geïgnoreer word. Groenwegen (loc cit) sê wel dat, waar dit gaan oor die nietigheid van 'n uitspraak van die Hooggeregshof, die Princeps se hulp ingeroep moet word, maar hierdie reël geld nie meer by ons nie.'[4]

[16] Counsel for the applicants also relied on the case of S v Absalom,[5] and Vidasky v Body Corporate of Sunhill Villas,[6] in support of the argument that the orders sanctioning the schemes were a nullity and unenforceable.

[17] I have already indicated somewhere else in this judgment that the orders were not fraudulently obtained and also the court, unlike in the Motala matter, had the power to entertain the request to sanction the schemes of arrangement. The court in sanctioning the schemes did so in terms s 311 of the Companies Act of 1973. There is no dispute that the schemes of arrangements received the majority of votes by those who voted in their favour. There is also no dispute that all the relevant information was disclosed to the court before the order sanctioning the schemes was made. In other words the order was not fraudulently obtained.

[18] In my view, the authorities whom the applicants relied on are distinguishable from the present matter.

[19] In the Motala’s case, as alluded to earlier, the court had exercised the power it did not have. The power to appoint judicial managers rested with the Master and not the court.

[20] Similarly, in the Absalom matter the court found that the lower court had gone outside the jurisdiction which was regulated by the statute.

[21] In the Vidasky’s matter, the court found that the arbitrator lacked jurisdiction because the other party to the hearing was not properly notified of the set down of the hearing.

[22] In brief it cannot be said that the decision in Motala, is in conflict with that in Jacob’s matter. As alluded to earlier in the Motala case the SCA found that the order was a nullity because the court purported to exercise the power it did not have.

[23] It is thus my view that the contention by the appellants that there are conflicting decisions of the SCA is unsustainable. In addition to the above my view is supported by the recent decision of the SCA in Moraitis Investments (Pty) Ltd v Montic Dairy (Pty) Ltd.[7] In that case the appellant had amongst other things relying on the provisions of ss 75, 112 and 115 of the Companies Act of 2008, contended that the agreement which had been made the order of the court was unenforceable and for that reasons the court order fell to be set aside.[8]

[24] In dealing with the issue of the enforceability of a court order until set aside the SCA held that:

“ [10] In my view that was not the correct starting point for the enquiry, because it ignored the existence of the order making the agreement an order of court. Whilst terse the order was clear. It read:

‘The Agreement of Settlement signed and dated 05 September 2013 is made an order of court.’

For so long as that order stood it could not be disregarded. The fact that it was a consent order is neither here nor there. Such an order has exactly the same standing and qualities as any other court order.. . The Constitutional Court has repeatedly said that court orders may not be ignored. To do so is inconsistent with s 165(5) of the Constitution, which provides that an order issued by a court binds all people to whom it applies.”

[25] Although the court in the Montic Dairy, was dealing with the rescission of a default judgment the decision does illustrate the exception to the general rule that orders of courts are to be obeyed and stand until set aside.

[26] In light of the above, I am not persuaded that another court presented with the same facts as those that served before this court would come to a different conclusion to the one reached by this court. I further find that there are no compelling reasons as envisaged in s 17 (1) (a) (ii) of the Superior Courts Act of 2013 to grant leave to appeal.

Order

[27] In the premises, the applicant’s application for leave to appeal is dismissed with costs.

_____

E MOLAHLEHI

JUDGE OF THE HIGH COURT

GAUTENG LOCAL DIVISION,

JOHANNESBURG

Appearances:

For the Appellant: Adv. JJ Brett SC

Instructed By: AJ Van Rensburg Incorporated

For the Defendant: Adv. A Allison

Instructed By: Hirschowitz Flionis Attorneys

Head on: 24 October 2017

Delivered on: 22 November 2017

[1] 2012 (3) SA 325 (SCA).

[2] 2009 (5) SA 432 (SCA).

[3] 1989 (3) SA 154 (A) at 164.

[4] See the translation from http://www.etranslator.ro/translate-afrikaans-to-english. "It follows that the Full Court in my opinion had no power not

to hear the appeal. The result, I think, was, as predicted by Strydom R, the Full Court ruled a vanity was.See, in addition to the sources quoted by Strydom R Foot Commentarius ad Pandectus 49.8.1 and 3; Groenewegen The Legibus abrogatis, Ad Cod 7.64; Lewis & Marks v Agent 1904 (TS) 291 to 303; Sliom v Wallach's Printing and Publishing Co Ltd 1925 TPD 650 to 656 and Trade Fairs and Promotions (Pty) Ltd v Thomson and Another 1984 (4) SA 177 (W) at 183D-E. As evidenced by these sources, the judgment of a court which has no jurisdiction, no legal effect, and can be simply ignored. . .” (My underlyning)

[5] 1989 (3) SA 154 (A).

[6] 2005 (5) SA 200 (SCA).

[7] (799/2016) [2017] ZASCA 54 (18 May 2017).

[8] The court of first instance upheld the application to set aside the agreement which had been made the order of court by agreement

between the parties on the bases that it was void and unenforceable because the trustee had no actual authority to conclude the settlement agreement on behalf of the family trust. On appeal the majority per Matojane J and Hawes AJ, upheld the appeal on the ground that the settlement agreement constituted a compromise of the pending litigation. The minority judgment per Moshidi J found that the settlement agreement remained void ab initio and un-enforceable largely based on the principle that trustees must act jointly unless the Trust Deed provides otherwise.