Oppressed A C S A Minority 1 (Pty) Ltd and Another v Government of the Republic of South Africa and Others (898/2020) [2022] ZASCA 50 (11 April 2022)

THE SUPREME COURT

OF APPEAL OF SOUTH AFRICA

JUDGMENT

Not Reportable

Case No: 898/2020

In the matter between:

OPPRESSED A C S A MINORITY 1 (PTY) LTD

(Formerly known as African Harvest Strategic

Investments (Pty) Ltd)

FIRST APPELLANT

UP-FRONT INVESTMENTS 65 (PTY) LTD

SECOND APPELLANT

and

GOVERNMENT

OF THE REPUBLIC OF

SOUTH

AFRICA

FIRST

RESPONDENT

MINISTER OF

TRANSPORT

SECOND

RESPONDENT

AIRPORTS COMPANY

OF SOUTH AFRICA

SOC

LTD

THIRD RESPONDENT

PYBUS THIRTY-FOUR (PTY) LTD

FOURTH RESPONDENT

AIRPORTS

MANAGEMENT SHARE

INCENTIVE SCHEME COMPANY (PTY) LTD FIFTH RESPONDENT

LEXSHELL 342

INVESTMENT HOLDINGS

(PTY)

LTD

SIXTH RESPONDENT

TELLE INVESTMENTS (PTY) LTD

SEVENTH RESPONDENT

ADR INTERNATIONAL

AIRPORTS

SOUTH AFRICA (PTY) LTD

EIGHTH

RESPONDENT

G10 INVESTMENTS (PTY) LTD

NINTH RESPONDENT

MINISTER OF

FINANCE

TENTH RESPONDENT

Neutral citation: Oppressed A C S A Minority 1 (Pty) Ltd and Another v Government of the Republic of South Africa and Others (case no 898/2020) [2022] ZASCA 50 (11 April 2022)

Coram: DAMBUZA, MAKGOKA, SCHIPPERS, PLASKET and GORVEN JJA

Heard: 24 November 2021

Delivered: This judgment was handed down electronically by circulation to the parties' representatives by email, publication on the Supreme Court of Appeal website and release to SAFLII. The date and time for hand-down is deemed to be 10h00 on 11 April 2022.

Summary: Civil Procedure – rescission of judgment – no distinction in approach to rescission of consent orders and other judgments – the starting point is the court order rather than the underlying agreement – lack of authority to conclude settlement agreement and consequent consent court order – good cause for rescission established.

ORDER

On appeal from: Gauteng Division of the High Court, Johannesburg (Yacoob J sitting as court of first instance):

1 The appeal is dismissed with costs including the costs of two counsel.

Dambuza JA (Makgoka, Schippers, Plasket and Gorven JJA concurring)

Introduction

[1] This appeal is against an order granted by the Gauteng Division of the High Court, Johannesburg (high court, Yacoob J), in terms of which a consent order made by the same court, per Matojane J, was rescinded. The appeal is with the leave of the high court.

Background

[2] The two appellants, Oppressed ACSA Minority 1 (Pty) Ltd (formerly known as African Harvest Strategic Investments (Pty) Ltd) and Up-Front Investments 65 (Pty) Ltd, are part of a 4.21%[1] minority shareholder component in Airports Company of South Africa (ACSA), the third respondent in this appeal. ACSA is a statutory entity established by the first respondent, the Government of the Republic of South Africa (the Government), in terms of the Airports Company Act 44 of 1993 (Airports Act). The appellants acquired their share in 1998 at a price of R172 million. The Government, holds 74.6% of the shares. The second respondent (Minister of Transport) is the designated Government representative on the ACSA Board.

[3] On 29 July 2015 the appellants brought an application in the high court under s 163 of the Companies Act 71 of 2008 (Companies Act), seeking an order directing ACSA to acquire their 1.8% stake in ACSA at fair value.[2] The application was a culmination of a longstanding dissatisfaction on the part of the appellants with the business direction adopted by ACSA, subsequent to the appellants’ acquisition of their shares. It was not in dispute that subsequent to the appellants’ acquisition of their shares, ACSA had deviated from undertakings it had made when the appellants acquired their shares. Instead of pursuing a public offering (IPO) as promised and listing on the Johannesburg Stock Exchange (JSE), ACSA adopted business practices that prioritized its economic developmental role. In addition, the Government retained its shares in ACSA instead of divesting of them as the appellants had been led to believe it would.

[4] In the s 163 application the appellants contended that ACSA’s deviation from the promised commercial route resulted in their return on capital being limited to the cost of their capital. At some stage ACSA also stopped declaring dividends, leaving the appellants burdened with the debt they had assumed in order to buy the shares, with no escape avenue.

[5] While admitting that during June 1998 it had considered a public offering of its shares as recorded in its prospectus, ACSA maintained that it could not be held responsible for the appellants’ debts. It contended that there was never a time limit for effecting the IPO, and that, in any event, the appellants had rejected an offer to buy their shares at R12.87 per share. They never proved that the offer was unreasonable and they never showed mala fides or unlawfulness in ACSA’s developmental role. Instead, they were only prepared to sell their shares at R26.51 each, the value as per ACSA’s interim accounts for the six-month period ending on 30 September 2014, so it was asserted.

[6] ACSA insisted that its Board of Directors had acted within its rights and mandate in determining its business direction. And the appellants had not shown any oppressive or prejudicial conduct on the part of ACSA and the Minister. Therefore the appellants had not proved an entitlement to a relief based on s 163 of the Companies Act.

[1] ACSA was formed by the Government in 1993 to operate the nine main South African airports. In 1998 it was partially privatised when 25.4% of its shareholding was sold to private sector shareholders. By 2015 the Government held 74.6% shares and the balance was held as follows: ADR International Airports South Africa (Pty) Ltd (a wholly owned subsidiary of the Public Investment Corporation (PIC) SOC Limited) held 20%, a staff share incentive scheme (constituted by Amsis and Lexshell 342 Investment Holdings (Pty) Ltd) held 1.19%, Minority Shareholders held 4.21% (formerly African Harvest Strategic Investments (Pty) Ltd) - 1.40% shares, G10 Investments (Pty) Ltd – 1.21% shares, Upfront Investments 65 (Pty) Ltd – 0.40% shares, Pybus Thirty Four (Pty) Ltd – 0.40% shares, and Telle Investments (Pty) Ltd – 0.80% shares).

[2] In terms of s 163(1)(a) of this Act a shareholder or director of a company may apply to a court for relief if any act or omission by the company, or related person, has had a result that is oppressive, or unfairly prejudicial to, or that unfairly disregards the interests of the applicant. The same relief is available under s 163(1)(b) [where] the business of the company, or a related person, is being or has been . . . conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of the applicant; or (under s 163(1)(c) [where] the powers of a director or prescribed officer of the company, or a person related to the company, are being or have been exercised [in a manner] that is oppressive or unfairly prejudicial to, or that unfairly disregards the interests of the applicant.

[3] The specific sections of the PFMA which, it was alleged, would be contravened if the s 163 application were to be granted, are set out in the paragraphs that follow.

[4] Section 3 of that Act provides:

‘(1) The State shall be the holder of the shares in the company; (2) The said shares shall only be sold or otherwise disposed of with the approval, by resolution, of Parliament; (3) The rights attached to the shares of which the State is the holder shall be exercised by the Shareholding Minister on behalf of the State; (4) The State President shall designate a Minister as the Shareholding Minister.’

Section 4 provides that:

‘the objects of the company are the acquisition, establishment, development, provision, maintenance, management, control or operation of any airport, any part of any airport or any facility or service at any airport normally related to the functioning of, an airport.’

[5] The relevant provisions of the MOI provide that:

‘9.5 In addition to any prescribed obligations which the Shareholders may agree to and notwithstanding any provisions of this MOI, no Securities in the Company held by any other Holder, other than the Minister, shall be transferred to any party without the consent of the Minister.

9.6 Where the Minister consents to the sale or disposal or transfer of securities in the manner contemplated in clause 9.5 above, the Minister shall be entitled , at his or her discretion, to stipulate any conditions which shall apply to the granting of the consent.’

[6] Section 54(2) provides:

‘Before a public entity concludes any of the following transactions, the accounting authority for the public entity must promptly and in writing inform the relevant treasury of the transaction and submit relevant particulars of the transaction to its executive authority for approval of the transaction:

. . .

(c) acquisition or disposal of a significant shareholding in a company. . .’.

[7] Section 66, in relevant part, provides:

‘(1) An institution to which this Act applies may not borrow money or issue a guarantee, indemnity or security, or enter into any other transaction that binds or may bind that institution or the Revenue Fund to any future financial commitment, unless such borrowing, guarantee, indemnity, security or other transaction -

(a) is authorised by this Act; and

(b) in the case of public entities, is also authorised by other legislation not in conflict with this Act;

. . .

(3) Public entities may only through the following persons borrow money, or issue a guarantee, indemnity or security, or enter into any other transaction that binds or may bind that public entity to any future financial commitment:

(a) A public entity listed in Schedule 2: The accounting authority for that Schedule 2 public entity. . .’.

[8] Four Wheel Drive CC v Leshni Rattan NO [2018] ZASCA 124; 2019 (3) SA 451 (SCA) para 7.

[9] The application for the share buy–back under s 163(2) of the Companies Act.

[11] Hlatshwayo v Mare & Deas 1912 AD 242 at 247.

[12] Booi v Amathole District Municipality and Others (CCT 119 of 2020) [2021] ZACC 36; 2022 (3) BCLR 265 (CC) at para 31.

[13] Booi para 29.

[14] D E Van Loggerenberg et al Erasmus: Superior Court Practice 2 ed (2015) at B1–308.

[15] Ibid fn 14 at B1- 204.

[16] Moraitis Investments (Pty) Ltd and Others v Montic Dairy (Pty) Ltd and Others [2017] ZASCA 54; [2017] 3 All SA 485 (SCA); 2017 (5) SA 508 (SCA) at para 10.

[17] Ibid fn 16 para 17.

[18] Between ACSA, the Minorities and the Government.

[19] The contested issues were the inclusion of a reference to s 163 of the Companies Act 2008 in the preamble of the proposed order and a reference to oppressive conduct in relation to the contemplated valuation exercise.

[20] Eke v Parsons [2015] ZACC 30, 2016 (3) SA 37 (CC), 2015 (11) BCLR 1319 (CC); Valor IT v Premier, North West Province and Others [2020] ZASCA 62, [2020] 3 All SA 397 (SCA), 2021 (1) SA 42 (SCA); Road Traffic Management Corporation v Waymark Infotech (Pty) Limited [2019] ZACC 12, 2019 (6) BCLR 749 (CC), 2019 (5) SA 29 CC.