Mbethe v United Manganese of Kalahari (Pty) Limited (503/2016) [2017] ZASCA 67; 2017 (6) SA 409 (SCA) (30 May 2017)

Mbethe v United Manganese of Kalahari (Pty) Limited (503/2016) [2017] ZASCA 67; 2017 (6) SA 409 (SCA) (30 May 2017)

The Supreme Court of Appeal held that the appellant failed to discharge the onus of proving, on a balance of probabilities, that he acted in good faith in seeking leave to institute a derivative action on behalf of the company. The evidence did not support his assertion that reinstating the Zastrospace contract was in the company's or the local community's interests, nor did it show reasonable grounds for his belief. The court found that the appellant's demands were driven by a collateral or ulterior purpose related to the Zastrospace contract, rather than genuine concern for corporate governance or the company's welfare. Furthermore, the court determined that alternative remedies were...

Citation
[2017] ZASCA 67
Parties
Appellant: Lazarus Mbethe; Respondent: United Manganese of Kalahari (Pty) Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
30 May 2017
Case Number
503/2016
Procedural Posture
Leave to Appeal / Appeal From Gauteng Local Division, High Court, Johannesburg
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Navsa, Theron, Swain, Gorven, Mbatha
Legal Topics
Derivative Action, Good Faith Requirement, Companies Act 2008, Corporate Governance, Onus of Proof, Alternative Relief
Commercial and Corporate Civil Procedure Derivative Action Good Faith Requirement Companies Act 2008 Corporate Governance Onus of Proof Alternative Relief

Case Brief

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Parties

Lazarus Mbethe

Appellant

United Manganese of Kalahari (Pty) Limited

Respondent

Procedural Posture

Leave to Appeal / Appeal From Gauteng Local Division, High Court, Johannesburg

Legal Issues

  1. 1 Whether the appellant acted in good faith in seeking leave to institute a derivative action on behalf of the company.
  2. 2 Whether the proposed proceedings involved the trial of a serious question of material consequence to the company.
  3. 3 Whether it was in the best interests of the company that the appellant be granted leave to commence the proceedings.

Ratio Decidendi

The Supreme Court of Appeal held that the appellant failed to discharge the onus of proving, on a balance of probabilities, that he acted in good faith in seeking leave to institute a derivative action on behalf of the company. The evidence did not support his assertion that reinstating the Zastrospace contract was in the company's or the local community's interests, nor did it show reasonable grounds for his belief. The court found that the appellant's demands were driven by a collateral or ulterior purpose related to the Zastrospace contract, rather than genuine concern for corporate governance or the company's welfare. Furthermore, the court determined that alternative remedies were...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs, such costs to include the costs of two counsel.