Mogale Alloys (Pty) Ltd v Nuco Chrome (Bophuthatswana) (Pty) Ltd and Others (345/08) [2008] ZANWHC 6 (10 March 2008)

IN THE HIGH COURT OF SOUTH AFRICA

BOPHUTHATSWANA PROVINCIAL DIVISION

CA NO.: 345/08

In the matter between:

MOGALE ALLOYS (PTY) LTD APPLICANT

AND

NUCO CHROME (BOPHUTHATSWANA) (PTY) LTD 1ST RESPONDENT

EDWARD CLAUDE BUTLER 2ND RESPONDENT

GERRIT MARTHINUS VAN ZYL 3RD RESPONDENT

UTHINGO MINING RESOURCES (PTY) LTD 4TH RESPONDENT

MARTIN ROSENBERG : POTENTIAL INTERVENING PARTY

APPLICATION

MMABATHO

GURA J.

DATE OF HEARING : 10 MARCH 2008

DATE OF JUDGMENT:

FOR THE 1st APPLICANT : ADV. R. SOLOMON (SC)

FOR THE POTENTIAL INTERVENING PARTY: ADV. P. LEVENBERG (SC)

FOR 1ST to 3RD RESPONDENT: ADV. P. PAUW (SC) with him ADV. C. HARTFORD (SC)

JUDGMENT

Introduction

[1] This is an application by Mr Rosenberg to intervene, as a Second Applicant, in the main application for a restraining order, launched by Mogale Alloys (Mogale) against the Respondents.

[2] Having heard all the parties and carefully considered all the issues, I gave an order with costs in favour of Rosenberg and reserved reasons for judgment. These then are the reasons for judgment.

[3] The main application between Mogale and the Respondents is, as I said above, for an order restraining the First Respondent (Nuco) from carrying out mining activities in and disposing of material from the mining property, and restraining the Second Respondent (Butler) from disposing of the 33% shareholding in Nuco allegedly forming the subject matter of the sale agreement between Mogale and the Respondents. An order is also sought directing Nuco to allow Mogale free and unlimited access to the mining property.

[4] Part of the shares that Mogale claims ownership over, are apparently a portion of the same shares that Rosenberg claims to be the owner of. As would be clearer below, Rosenberg wants to protect his shares from being transferred to another person but more importantly, he wants the Respondents to be interdicted from managing the assets of Nuco in such a way as to dissipate them to his disadvantage. Details of the agreement allegedly entered into by Rosenberg and Butler in respect of the share holding in Nuco follow below.

[5] Rosenberg alleges that in 1989 it was agreed between Butler and him that the shares in Nuco would be held as follows:- 40% and 60% by Rosenberg and Buttler respectively. The shares in Nuco were to be divided into two categories, A and B shares. Rosenberg was to be the beneficial owner of B class shares. Mr Keeton (Keeton) would hold 39 shares in Nuco as a nominee of Rosenberg. A further B class shares would be registered in the name of Mr Maree (Maree) who would also hold such shares as a nominee of Rosenberg.

[6] The material terms of the above agreement were the following:-

6.1 A Declaration of Trust in terms whereof Keeton acknowledged that he held the 39

shares as nominee.

6.2 A shareholders’ agreement between Buttler, Keeton and Nuco pursuant to which

the parties agreed that Keeton would hold 40 shares and Buttler 60 shares.

6.3 A blank transfer form (signed by Keeton) which would allow the holder thereof

Rosenberg to register a transfer of shares into his name or that of his nominee.

6.4 A blank director resignation form to enable Rosenberg to effect the resignation of

Keeton from his intended position of director, if he (Rosenberg) so desired.

[7] In this declaration of trust form, the beneficial shareholder was not disclosed but Rosenberg was entitled and authorised to complete the form at his discretion, at any time, by inserting his own name or that of his nominee. The original copies of all these documents were kept by Rosenberg.

[8] On 2 September 1991, an amendment was effected to the 1989 agreement. Its effect was to increase Rosenberg’s shareholding in Nuco to 50 shares and to reduce that of Buttler to 50 shares. The rest of the terms of the 1989 agreement remained unchanged. It was an express term of the 1991 agreement that either Buttler or Keeton would instruct the auditors of Nuco, to effect the transfer of the shares to their respective owners within thirty days.

[9] On 17 January 2008, Rosenberg asked for Nuco’s shareholders’ register. After some unexplained delay, he received it. To his amazement, the register reflected the current share holders of Nuco as:-

(i) Buttler : 78 shares

(ii) Third Respondent: 12 shares

(iii) The Premier of the North West Province (in its capacity as a trustee of the Royal

Bafokeng Nation):10 shares

[10] The register further reflected that Maree did hold one share at some stage but that he ceased to be a shareholder. Above that, the Fourth Respondent was reflected as having been a shareholder of 28 shares and thereafter as having disposed of its shares on 4 September 2007.

[11] Rosenberg then realised (after perusing the register) that Butler never designated Keeton in the register as a nominal shareholder. The transfer of shares to Fourth Respondent and to Third Respondent were unauthorised by Rosenberg who enjoyed a right of pre-emption. Up to 4 February 2008, Rosenberg was unaware that the Royal Bafokeng Nation owned 10 shares in Nuco. What follows is the version of First to Third Respondents. Fourth Respondent did not oppose the application.

[12] The First to the Third Respondents opposed the application for joinder. Buttler died on 20 February 2008. At the time of his death, he had already been served with the founding affidavit of Mogale. His wife and Dr Olivier were joined as the Second Respondent, in their capacity as the executors of the estate of Buttler. None of the Respondents denied any allegation by Rosenberg relating to the shareholding in Nuco. All that Third Respondent stated was that he and Mr Theo Annandale were the present directors of Nuco. Buttler’s widow stated that she was the bookkeeper of Nuco since November 1989. She admits, however, that during her time of service at Nuco she became aware about the agreements upon which Rosenberg relies.

The Issues

[13] Mr Peter Pauw made the following submissions:-

13.1 In order to evaluate Rosenberg’s position, the Court should have regard to the rights which Mogale purports to have. If Mogale has no rights, Rosenberg’s application should fail, because nothing comes from nothing. Mogale has failed to comply with Sections 5(4) (b) and 11 (1) of the Mineral and Petroleum Resources Development Act, No. 28 of 2002 (the 2002 Act).

13.2 Equally, Rosenberg has failed to comply with Section 5 (4) (b) and 11 (1) of the 2002 Act;

13.3 Rosenberg’s claim has prescribed

13.4 Rosenberg has made out no case for an interdict or the extension of an interdict because he has no interest in the main application.

The 2002 Act

[14] Section 5 (4) (b) deals with certain approvals. It provides:

“ No person may prospect for or remove ………… explore for and produce any mineral or petroleum or commence with any work incidental thereto on any area without –

………..

a ……….. prospecting right, as the case may be; …………”

Section 11 (1) complements Section 5 (4) (b) and provides:-

“ A prospecting right or mining right or an interest in any such right, or a controlling interest in the company or close corporation, may not be ceded, transferred, let, sublet, assigned, alienated or otherwise disposed of without the written consent of the Minister, except in the case of change of controlling interest in listed companies.”

The validity of Mogale’s application

[15] When Mr Pauw made the submissions, Mogale had not yet filed its Replying Affidavit, with no fault on its part. In fact, it was due to the fault of the Respondents who filed their Answering Affidavit after the prescribed date (contrary to the Court order of 21 February 2008). The main application was therefore not ripe for hearing. In my view therefore, it would be unreasonable to judge any party unheard under the circumstances. The submission by Mr Pauw to the contrary, is without merit.

Applicability of the 2002 Act to Rosenberg’s application.

[16] The 2002 Act came into operation on 1 May 2004. It has no retrospective effect. The agreements which give rise to the present application were executed in 1989 and 1991. Sections 5 (4) (b) and 11 (1) of the 2002 Act were not in operation by then. The submission that Rosenberg has to comply with sections 5(4)(b) and 11(a) is absurd.

Prescription

[17] Rosenberg’s case is that in September 1991, it became the owner of shares in Nuco; that right of ownership was never lost. Respondents argue that he has no shares, and therefore no real right over shares – his alleged right is that of performance and it became extinct in 1993. Respondents relied on the share register to support their argument.

[18] I have stated earlier that there is no challenge, on the facts, that Rosenberg became the owner of shares in Nuco in 1989 and 1991. The fact that his name does not appear in Nuco’s share register is not in itself a negation of its right of ownership over shares; see Section 109 of the Companies Act, No 61 of 1973. A register of members is prima facie proof but not conclusive proof of the matters reflected thereon.

[19] Even if the Court were to assume that the alleged right is that of performance and not a right o f ownership, but Rosenberg became aware only in February 2008 about the contents of the shareholders’ register. From 1989 up to January 2008 he has been under the impression that his name or that of his nominee, was reflected in Nuco’s share register. My view is that this is a matter where an owner is simply enforcing his right of ownership. Anyone who alleges prescription of this right of ownership has to prove all the necessary requirements. The Respondents have failed to do so. See Chapters I to III of the Prescription Act, No. 68 of 1969.

The nature of the onus on Rosenberg

[20] Rule 12 of the Uniform Rules of Court provides:-

“ Any person entitled to join as a plaintiff or liable to be joined as a defendant in any action may, …………. at any stage of the proceedings apply for leave to intervene as a plaintiff or a defendant. ………………”

Rule 10 (3) is of relevance also here and reads:-

“Several defendants may be sued in one action either jointly, jointly and severally, separately or in the alternative, whenever the question arising between them or any of them and the plaintiff or any of the plaintiffs depends upon the determination of substantially the same question of law or fact which if such defendants were sued separately, would arise in each separate action.”

[21] In an application for intervention or joiner, the interested party must prove that it has

a direct and substantial interest in the particular case or application. See Hebstein

& Van Winsen; The Civil Practice of the Supreme Court of South Africa 4 Ed.

Pages 177 – 181; United Watch & Diamond Co (Pty) Ltd & Others v Disa

Hotels Ltd & Another 1972 (4) SA 409 (C) at 416 B. I associate myself with Bliss

AJ’s sentiments:-

“At the leave to intervene stage, it is sufficient for the party seeking leave to intervene to rely on allegations which, if they can be proved in the main action,

would entitle him to succeed. This is in my opinion the criterion which should be applied at this stage and it is the same criterion which constitutes a bona fide defence as required by a defendant who wishes to stave off an application for summary judgment in terms of Rule 32 of the Supreme Court Rules (See Bentley Maudesley and Company v Carburol (Pty) Ltd and Another, 1949 (4) SA 873 (C) at 874).”

(Ex parte Moosa : In re Hassim v Harrop – Allin 1974 (4) SA 412 (T).

[22] Mogale’s complaint is that it is a shareholder in Nuco but the latter refuses to recognise its right. Similarly, Rosenberg avers that it is a shareholder in Nuco but the latter, again, treats it as a total stranger to the company. In the interdict proceedings, Mogale and Rosenberg have one common concern – the underlying assets of the company (Nuco) are being denuded. Both Mogale and Rosenberg intend to sue Nuco in future for recognition as owners of shares therein and for the enforcement of their rights of ownership.

Conclusion

[23] In the circumstances, it is my considered view that this is a proper case where Rosenberg has made out a case for intervention.

SAMKELO GURA

JUDGE OF THE HIGH COURT