Members of Seed of Life v Board of Directors of Seed of Life and Others (2201/2019) [2020] ZANCHC 31 (26 June 2020)

Reportable:

Yes/No

Circulate to Judges:

Yes/No

Circulate to Magistrates:

Yes/No

IN THE HIGH COURT OF SOUTH AFRICA

(NORTHERN CAPE HIGH COURT, KIMBERLEY)

CASE NO.: 2201/2019

Date heard: 20-03-2020; 15-05-2020

Date delivered: 26-06-2020

In the matter between:

Members of Seed of Life

Applicant

And

Board of Directors of Seed of Life

1st Respondent

Bafathi Trust

2nd Respondent

Juanita Cheryl September N.O

3rd Respondent

Aletta Cheryl Walker N.O

4th Respondent

Flora Nolwandle Mantashe N.O

5th Respondent

Thembeni Rita Masilo N.O

6th Respondent

Mmabotle Thinyane N.O

7th Respondent

Charlene Bontle Wildebees N.O

8th Respondent

Azola Cubekile Lowan N.O

9th Respondent

Kabira Akoob N.O

10th Respondent

Ntakadzeni Constance Netshifhefhe N.O

11th Respondent

CORAM: WILLIAMS J:

JUDGMENT

WILLIAMS J:

1. On the evening of 3 October 2019, the applicant, Members of Seed of Life, brought an urgent application before the duty judge, O’Brien AJ. After hearing the viva voce evidence of the elected spokesperson of the applicant, Ms G Mogorosi, O’Brien AJ granted the following order:

“1. That the time periods and requirements to serve as prescribe in the rules of court be abridged and this application be heard as one of urgency, as contemplated in Rule 6(12) of the Uniform Rules of Court.

2. That a Rule Nisi is hereby issued calling upon the Respondents to show cause on 22 November 2019, why the following order should not be made an order of court.

3. That the 2nd Respondent is prohibited from paying the R100 000 000.00 into the accounts of any of the Companies whose directors appear in the Seed of Life Membership.

4. That the Directors and/or leadership of Seed of Life are ordered to provide the Members of Seed of Life with the following documents:

(i) Application for the funds to 2nd respondent.

(ii) All the minutes of all the Executive meetings.

(iii) Financial reports from 2015 to date.

(iv) All other documents received from any Donors from 2015 to date.

5. The 2nd Respondent to provide all applications/documents for funds made by any Company and/or Trusts which has as its Directors any members of Seed of Life.

6. That the orders on 3, 4 and 5 shall operate with immediate effect pending the finalization of the matter.

7. A copy of this Application together with the Rule Nisi be served in the Respondent’s by the Sheriff of this Court and on the 2nd Respondent’s Attorneys.

8. Costs to be paid by the Respondents.”

2. The evidence of Ms Mogorosi, which has been transcribed and serves as the applicant’s founding papers, can be summarized as follows:

2.1 During 2014 a workshop was held locally dealing with the issue of the empowerment of women in the mining industry. Out of this workshop the idea developed to form a company for the development and empowerment of black women, not only in the mining industry, but across various industries. Initially a joining fee of R500, 00 was required, which as interest grew was raised to R3 500, 00 per person.

2.2 About 500 to 600 woman joined the initiative. A bank account was opened and later a company was registered by the name of Seed of Life Investments (Pty) Ltd (the company). The participants were split into 10 categories or units inter alia mining, construction, health, hospitality, agriculture etc.

2.3 During 2015 there was enough money in the company bank account (more than R2 million) to buy a farm in the Warrenton district.

2.4 Also during 2015 delegates from the Bafati Trust (2nd respondent) an empowerment vehicle of PPC Ltd addressed the participating women at a meeting of the company and indicated that they intended giving the women shares.

2.5 The 2nd respondent’s representatives returned during August 2016 and indicated that they were impressed with the manner in which the company conducted its business and that they would be giving the company shares during 2019.

2.6 Thereafter however, the Board of Directors, consisting of 10 women (apparently the chairperson of each of the 10 business units) became quiet. Meetings were called less frequently until August 2019, when the 2nd respondent called a AGM. (The further evidence reveals that the AGM was held during July).

2.7 At this AGM the 1st respondent informed that the company’s bank account was depleted and had been closed. The women then demanded bank

statements and financial statements of the company.

2.8 During this meeting one of the women, Ntsiki Mapatsi stood up and announced that she was investigating the paying out of shares by the 2nd respondent since she had heard rumours that money was going to be paid out.

2.9 As Ms Mapatsi had started the process, she was mandated by the meeting to make further inquiries from the 2nd respondent as to who would be getting the money, since the 1st respondent had failed to inform its members/shareholders of its interaction with the 2nd respondent.

2.10 Ms Mapatsi’s investigations had revealed that each of the 10 members of the 1st respondent would be receiving R10 million from the 2nd respondent without the applicant, which consists of about 300 shareholders having any knowledge thereof or receiving any benefit

themselves.

2.11 During the course of 3 October 2019 a WhatsApp message was circulated and which, translated, reads as follows:

“Women we will keep on praying at all times. The millions will be distributed tomorrow.”

This message was sent by one of the applicant’s members by the name of Dingie and was the reason the application was brought with such haste.

3. During the hearing of the application before O’Brien AJ, Mr Mongala who appears for the applicant undertook to attend to the filing of a supplementary affidavit to give further clarity on the case of the applicant and to provide for further documents in possession of the members of the applicant as well as confirmatory affidavits to the evidence of Ms Mogorosi which was, in the main, based on hearsay. The only documents which were handed up in court were the company profile which sets out the history and background and mission and objectives of the company, the list of members of the company, and a copy of the WhatsApp message received that day.

4. Before the applicant’s supplementary affidavit was delivered, but after receiving the court order and the transcript of the proceedings of 3 October 2019, the 2nd respondent filed an answering affidavit deposed to by Mr M Khan the employee rewards manager at PPC Ltd, charged with the day to day administration of the PPC Bafati Investment Trust (2nd respondent).

5. Mr Khan explains that the 2nd respondent is a charitable broad-based black economic trust and was established with the objective of contributing to the empowerment and upliftment of black women. The beneficiaries of the 2nd respondent are determined by the Trust Deed, which establishes various eligibility requirements. That the company (Seed of Life (Pty) Ltd) had applied to be considered as beneficiaries but after consideration by the Trustees, it was determined that it did not satisfy the criteria for beneficiaries. Such determination was communicated to the 1st respondent and it was accepted by them.

6. The Trust Deed is attached to this affidavit and the relevant sub-clause of clause 11 thereof, as has crystallized in the supplementary answering affidavit filed by the 2nd respondents, is clause 11.2 which states in effect that the trustees shall select a maximum of 100 black women to benefit from the Trust and should a juristic person be identified as a beneficiary, the number of women who have ownership interest in the juristic person shall each count towards the maximum number of 100 black women. Thus, the company, with over 600 shareholders did not fulfil the requirement of a maximum of 100 black women beneficiaries.

7. The 2nd respondent’s answering affidavit proceeds to explain that it had received a letter from the applicants’ attorneys Althea Le Roux Attorneys on 9 September 2019 requesting information pertaining to the beneficiaries of the 2nd respondent and a payment purportedly to be made to certain members of the company in respect of shares allegedly allocated and furthermore requesting an undertaking that PPC Ltd not make such payment.

8. The letter from the applicant’s attorney which is attached to the 2nd respondent’s answering affidavit is of significance in that it refers to the fact that it “was later communicated that there are too many shareholders and that certain beneficiaries should be nominated for consideration in respect of the allocation of the said shares” but that “the board of directors failed to communicate and discuss the process that would be used to finalise this matter and therefore our clients were not aware of the fact that the process was finalised.” I will revert to this aspect later on herein.

9. The answering affidavit of 2nd respondent further states that the allegation that a payment of R100 million was or is going to be made to certain board members of the company is factually incorrect.

10. The applicant’s supplementary affidavit was filed on 14 November 2020 and served on all the directors of the company as well as the 2nd respondent.

11. This affidavit deposed to by Ms Mogorosi, consists of 35 pages and some 458 pages of annexures and seeks to achieve much more than what it was meant to – i.e. to clarify and provide confirmation of the allegations made by the applicant during oral evidence presented. During argument, Mr Mongala conceded that the supplementary affidavit was filed, not only to address those shortcomings in the evidence before O’ Brien AJ due to time constraints, but also to lay the basis for an amendment to the Notice of Motion.

12. As a result, the supplementary affidavit refers to matters not canvassed before O’ Brien AJ, in fact it appears to establish

and acquire information in order to bring proceedings against the 1st respondent for mismanagement of company funds and neglecting its judiciary duties towards the shareholders of the company in general.

13. The confirmatory affidavits relating the hearsay evidence of Ms Ntisiki Mapatsi and Ms Dingi Pule, which was heavily relied upon before O’Brien AJ and who was assured that it would be attached to the supplementary affidavit, do not form part of the supplementary affidavit although extensive reference is made again to their input in the bringing of the application. Various other hearsay allegations are not confirmed by affidavit even though reference to such affidavits are made in the supplementary affidavit.

14. Another issue arising from the supplementary affidavit and which is of great concern is the fact that the correspondence between the applicant’s attorney and the 2nd respondent is mentioned for the first time in the supplementary affidavit. The correspondence had been exchanged weeks before the urgent application was brought and was of utmost relevance to O’Brien AJ since it reveals not only that the 2nd Respondent had declined the company’s application for financial backing but that the applicant had been aware of the fact. Ms Mogorosi, in the supplementary affidavit in fact admits that the applicant members were informed at a meeting held on 16 August 2019 (should apparently be 3 July 2019) that the 2nd respondent had rejected the application by the company and that individual applications would have to be made.

15. The impression gained from the withholding of this information is that, had the 2nd respondent not drawn attention to it in its first answering affidavit, it would probably not have been divulged by the applicant. Ms Mogorosi in fact in her evidence before O’Brien AJ stated that the 2nd respondent was probably not aware of the fact that the money that it was about to pay over to certain members of the 1st respondent was not going to be shared by all members equally.

16. I move on for the time being. After having been alerted by the 2nd respondent in its answering affidavit that the trustees of the Bafati Trust have to be cited in their official capacities, the applicant filed an application for the joinder of trustees Ms C September, Ms A Walker and Ms F Mantashe in their official capacities as 3rd, 4th, and 5th respondents on 11 December 2019. On 14 January 2020, the applicant filed a notice of amendment to include as 6th to 11th respondents Ms T Masilo, Ms M Thingane, Ms C Wildebees, Ms A Lowan, Ms K Akoob and Ms N Netshifhefhe in their official capacities as trustees of the 2nd respondent.

17. It transpires from the affidavits of the applicant and 2nd respondent in the joinder application that the applicant’s attorney had obtained the names of the 3rd to 5th respondent’s from the Trust Deed attached to the 2nd respondents answering affidavit. After the joinder application of 11 December 2019 had been served on 2nd to 5th respondents, the attorney for the particular respondents, Ms Victoria Herholdt of Bowman Gilfillan Inc. addressed a letter to the

applicant’s attorney on 19 December 2019 informing that the 3rd to 5th respondents no longer served as trustees of the 2nd respondent. The names of the current trustees (6th to 11th respondents) were supplied.

18. Ms Herholdt also requested a notice of withdrawal of the joinder application by 14:00 the following day, 20 December 2019, failing

which the relevant respondents intend to file a Notice of Opposition to the joinder application on an attorney and client scale.

She also mentioned that should the applicant wish to file a new joinder application in respect of the current trustees, that such application be delivered without delay and be enrolled for hearing on the unopposed motion court roll.

19. This letter from Ms Herholdt resulted in a flurry of correspondence after the applicant’s attorney’s office re-opened for business on 6 January 2020. Ms Le Roux accused Bowmans of misleading and misdirecting the applicant as to its trustees and indicated that an affidavit (presumably the 2nd respondent’s answering affidavit) “far outweighs a letter, even a letter by attorneys”, consequently declining Ms Herholdt’s offer and insisting that 2nd respondent be responsible for the costs of the joinder application.

20. I do not intend to deal in any greater detail with the correspondence between the attorneys, save to state that when the application served before me on 20 March 2020, Mr Van Niekerk informed that the 3rd to 11th respondents do not oppose the joinder application, and that only the issue of the costs of the joinder application remains to be argued. As a result, the 3rd to 11th respondents were joined in the application.

21. I now turn to a different issue. After filing its supplementary affidavit, the applicant delivered a notice of intention to amend its Notice of Motion. (The order made by O’Brien AJ referred to in paragraph 1 herein was made in accordance with a draft order handed up by Mr Mogala. It restates the relief sought in the Notice of Motion).

22. The intended amendment sought to:

22.1 Replace paragraph 3 of the Notice of Motion with the following:

“That the 2nd respondent and its trustees are prohibited from paying the R100, 0000, 00 and or any monies into the accounts of any of the Companies

whose Directors/shareholders names appear on the Seed of Life Investments Pty Ltd membership and/or shareholders names;

22.2 To add to paragraph 4 thereof 16 further items of documents to be provided by the 1st respondent;

22.3 To add to paragraph 5 thereof the following:

“5.1 That the 2nd respondent confirms if it has received any application for funds from any of the companies for which any member of Seed of Life Investments (Pty) is a member thereof.”

5.2 The 2nd respondent to provide the names of all the companies that shares the same list of shareholders of Seed of Life Investments (Pty) Ltd, who made applications for founding from it since 2015.

5.3 The 2nd respondent to provide the monetary value of the shares that it intended to pay in the year 2019 and the process it employed to

identify beneficiaries therein and why it rejected Seed of Life Investments (Pty) Ltd’s applications.”

23. The 1st respondent filed an objection to the intended amendments on 17 January 2020 on grounds inter alia that an interim court order had already been granted and stands until the Court has heard the complete matter; that 1st respondent has already dealt in its answering affidavit with the request for documents listed in the proposed amendment; that the applicant in any event has a right in terms of s 26(1) of the Companies Act 71 of 2008, (the Companies Act), to inspect and copy the information contained in the records of the company by direct request made to the company but has failed to make such a request; and that the notice to amend is mala fida and an abuse of the process of court.

24. In terms of Rule 28(4), where an objection to a proposed amendment is delivered “the party wishing to amend may, within 10 days lodge an application for leave to amend.” The applicant failed to lodge an application for leave to amend within the period envisaged in Rule 28(4) and only on 6 March 2020 filed a notice of set down for the application to be heard on 20 March 2020.

25. On 20 March 2020, which was also the date the main application was set down for hearing, counsel for the 1st respondent, Ms Tyuthuza raised a further objection to the proposed amendment in that the applicant had failed to seek condonation for the late lodging of the application for leave to amend which has resulted in the notice to amend having lapsed. The objection was supported by Mr Van Niekerk.

26. As a result Mr Mongala applied for condonation for the non-compliance with Rule 28(4) from the bar, explaining that he was of the view that the court seized with the main application would be in a better position to determine the application for amendment and that there could be no prejudice to the respondents in any event.

27. After hearing argument I dismissed both the application for condonation and leave to amend for reasons that:

27.1 The proposed amendment to paragraph 3 of the Notice of Motion is unclear and broadens the scope of the relief sought to such an extent that it would prejudicially affect the rights and interest of persons not cited as parties to the application;

27.2 The further documents proposed to be included under paragraph 4 had either already been made available by the 1st respondent or could be accessed through the mechanisms created by the Companies Act;

27.4 No good cause for condonation for non-compliance with the Rules have been shown.

28. I indicated that the costs of the application for leave to amend would be dealt with in this judgment.

29. Various points in limine were raised in the 1st respondent’s answering affidavit of which only two were proceeded with i.e., locus standi and non-joinder of the company, Seed of Life Investments (Pty) Ltd.

30. The locus standi argument is twofold in that it goes to the identity of the applicant and the authority of Ms Mogorosi to bring the application on behalf of the applicant.

31. The argument relating to the identity of the applicant is that if there is only one applicant, then it is clear that the entity

“Members of Seed of Life”, is not a legal persona and therefore lacks the required locus standi to bring the application. If there are more than one applicant as would appear from the oral evidence and affidavit of Ms Mogorosi, then they have not been sufficiently identified in order to give effect to any order against them.

32. For a party to have the requisite locus standi to institute proceedings he or she must have an interest entitling him or her to bring the application. As a shareholder in the company there can be no doubt that Ms Mogorosi would have the necessary locus standi to bring the application. She is however not the applicant in this matter. There would in my view also not be a problem with Ms Mogorosi representing a group of shareholders who have an interest in the application for practical reasons, to prevent

a multiplicity of individual applications. In fact the Companies Act extends the right to make an application in s 157(1)(c) thereof to a person “acting as a member of, or in the interest of, a group or class of affected persons, or an association acting in the interest of its members” in matters as described in s156. There can therefore be no reason why in this instance locus standi would be absent. The only requirement would be that Ms Mogorosi has the authority to bring these proceedings on behalf of the interested shareholders.

33. After apparently having been made aware of possible problems relating to the issues of locus standi and authority, Ms Mogorosi, after merely stating in her evidence before O’Brien AJ that the applicant “is the women of Seed of Life who I am representing right now.”, as chairperson of an interim Task Team which was formed to “further the interests of the disgruntled and unhappy members of Seed of Life”, on 6 October 2019 attended an urgent meeting organised by the Task Team, which according to Ms Mogorosi was attended by more than 350 women shareholders and where the following resolution was passed:

“1. No member shall oppose the final granting of the application;

2. Every member shall benefit equally from the shares/monies that come from the BAFATI TRUST UNDER PPC (PRETORIA PORTLAND CEMENT).”

An attendance register by the shareholders who attended that meeting was signed by approximately 300 shareholders.

34. Whilst I am reluctant in matters of this nature to elevate form above substance, I have expressed to applicant’s counsel my concern with the resolution and authority alleged by Ms Mogorosi, which does not authorize her to institute and pursue the application on behalf of those shareholders present at the meeting. Despite these concerns raised and a break of about 8 weeks before arguments were finalised on 15 May 2020, an improved resolution has not been obtained and provided.

The application in my view can be dismissed on this point alone.

35. The point of non-joinder of the company has been contested by Mr Mongala for the applicant on the basis that the company is not a necessary party since the applicant seeks no relief against the company. In any event, so the argument goes, the Board of Directors which is cited as a party is the organ through which a company conducts its business and as such its citation is sufficient

for the protection of any interest the company may have in the subject matter of the application.

36. What Mr Mongala’s argument loses from sight is the fact that a company is a juristic person separate from its members and directors. The company in this case does not merely have an interest in the subject matter of the application but is directly affected by the relief sought in that the documentation sought is the property of the company and as such the company is a necessary party in these proceedings. On this point also, the application can be dismissed.

37. For the benefit of the applicant and since I have heard argument on the merits I propose to deal briefly with a few further issues which cripple this application.

38. When an application is brought ex parte with no notice to the respondents as in casu, there is a duty of full disclosure on the applicant. In Schlesinger v Schlesinger 1979 (4) SA 342 (WLD) Le Roux J, after listing the authorities, distilled the following at 349 A-B:

“(1) in ex parte applications all material facts must be disclosed which might influence a court in coming to a decision;

(2) the non-disclosure or suppression of facts need not be wilful or mala fide to incur the penalty of rescission; and

(3) the court apprised of the true facts, has a discretion to set aside the former order or to preserve it.”

Schlesinger’s case was cited with approval in Hassan and Another v Berrange NO 2012 (6) SA 329 (SCA) at 335 G.

39. Good faith is of the utmost importance, since the court hearing the ex parte application, often urgent, does not have the benefit of the opposite party’s version and has to rely solely on the version put forth by the applicant to make orders often prejudicial to the respondent. In urgent matters also hearsay is at times

allowed on the understanding that verification or confirmation thereof will be provided in due course.

40. I have alluded earlier herein to the fact that no confirmation has been forthcoming relating to the information allegedly received from Ms Mapatsi and Ms Pule which not only led to the extreme urgency with which this application has been brought but also formed the “factual” basis on which the relief sought against the 2nd respondent was founded.

41. The respondents have denied any imminent payments to the 1st respondent as alleged, which could not be gainsaid by the applicant.

42. I have herein-before also alluded to the correspondence between the applicant’s attorney and the 2nd respondent, which predated the application and was not disclosed to O’Brien AJ. Had it been disclosed, O’Brien AJ would have been aware of the fact that the 2nd respondent is a charitable and discretionary Trust, that the trustees had considered and evaluated the company’s application to participate in the Trust and that it was determined that the company did not satisfy the Trust’s criteria for beneficiaries. Had O’Brien AJ been aware of the fact that the application was based on pure rumour and that there was no agreement between 2nd respondent and the company and/or its shareholders – to allocate shares or make payment for its benefit, I have no doubt that the application would have been dismissed. At this stage I pause to mention that what has been put to O’Brien as a “commitment” by the Trust to benefit the company, was watered down in the replying affidavit to the “creation of an expectation” that the Trust would make payment to the company. As such also the applicant has shown no right to demand that the 2nd respondent provide it with any documents.

43. The relief relating to the company documents must suffer the same fate. The applicant does not deny that it has not requested

these documents from the 1st respondent before approaching the court for an order that the documents be made available. In any event the applicant had an alternative remedy to gain access to the documents through the provisions of the Companies Act.