Rahida Investments (Pty) Ltd v Taukobong and Others (2852/2020) [2020] ZAFSHC 158 (3 September 2020)

IN THE HIGH COURT OF SOUTH AFRICA

(FREE STATE DIVISION, BLOEMFONTEIN)

Case Number: 2852/2020

In the matter between:

RAHIDA INVESTMENTS (PTY) LTD Applicant and FREDERICK KING TAUKOBONG First Respondent KRAMER WEIHMANN & JOUBERT INC. Second Respondent BIF ACCOUNTANTS Third Respondent CHRISTOFFEL GERHARDUS NEL Fourth Respondent THE COMPANIES AND INTELLECTUAL PROPERTY COMMISSION Fifth Respondent

HEARD ON: 27 AUGUST 2020

JUDGMENT BY: GROBLER, AJ

DELIVERED ON: 3 SEPTEMBER 2020

INTRODUCTION:

[1] This matter ultimately served on the urgent roll on 27 August 2020. It was postponed to 3 September 2020 for judgment.

[2] There is only one crisp issue I am called upon to decide and that is whether the present proceedings have been properly authorised.

Should I be with the Applicant on this question, the application to my mind must succeed. That is because the Applicant has a fair case on the conduct complained of on the part of the First Respondent. Should I be against the Applicant on the one and only question, the application contrariwise must be dismissed.

[3] This question however is much more vexing as it would at first appear and I explain the reason for this below.

[4] The Applicant seeks a simple order. It asks that the First to Fourth Respondents be interdicted and restrained from acting for or on behalf of the Applicant, that they be interdicted and restrained from representing to any party that they are authorised to act on behalf of the Applicant and that they be further restrained from, in any manner, acting for or on behalf of the Applicant in registering a bond over any immovable property or in any way raising any finances using the Applicant’s assets as security.

[5] It is undisputed that the First Respondent is so purporting to act on the Applicant’s behalf. At the outset I state that I do not believe that a case has been made against the Second- and Third Respondents, but I was told from the bar that at least as far as the Second Respondent is concerned, the Applicant will seek no order and the Second Respondent will seek no cost order. For reasons I deal with below, I do not deem it necessary to adjudicate the matter separately as far as the Third Respondent is concerned.

[6] The Fourth Respondent is an alleged creditor of the Applicant. The gist of the Applicant’s case is that his and the First Respondent’s interests are aligned, at least to an extent that they appear to champion the same cause and the First Respondent wishes to secure payment for services allegedly rendered by the Fourth Respondent to the Applicant for him.

[7] The gravamen of the case is however against the First Respondent. Should I grant the order against the First Respondent I seriously doubt that any of the other Respondents (including CIPC) would further act simply out of own and pure volition. As far as their actions are concerned, the First Respondent is the driving force.

[8] Before I expose my understanding of the case and the relevant legal principles applicable, I must express my sincerest thanks to both counsel for the manner in which they presented their argument. Wherever necessary concessions were made, and they greatly assisted in pointing my attention to the true issues.

[9] There is an application to strike out before me as well. I am not going to deal with it’s terms in more detail, save to state that the complaint is that the Applicant has tendered new evidence in reply. In light of the what I find on the merits it is not necessary to deal with the application any further.

THE SALIENT FACTS:

[10] What has been put before me is approximately 800 pages of evidence and documents, giving and at least as far as the Applicant is concerned, a completed exposition of the history of the matter. I do not deem it necessary to quote all these facts, primarily because the outcome of this application rests upon my determination of what the true question is, and to my mind the salient facts are more limited.

[11] The Applicant owns the property situated at Remaining Extent and Remaining Extent of Portion 2 of the farm Pensfontein No. 449. This is in the district of Hay in the Northern Cape. It is no ragamuffin company and has an estimate asset value of over $1 billion.

[12] Mr Borris Bannai purchased the entire shareholding in the Applicant from one Hanlie Jansen van Rensburg on 19 April 2001. The aforementioned

property was purchased after Mr Borris Bannai purchased his shares. On 19 April 2001, Mr Borris Bannai was appointed as sole director of the Applicant.

[13] On 13 February 2011 Boris Bannai and the First Respondent entered into a written sale of shares agreement. On its terms Mr Bannai sold to the First Respondent 26% of the shares in the Applicant for a purchase consideration of R150 million. The agreement was subject to, inter alia, the parties entering into a shareholders agreement within 30 days of signature of the sale agreement. This period was extended to 60 days and the shares agreement was entered into on 11 April 2011. Apart from its other terms the following are the relevant clauses:

12.1 Clause 1.1 recorded that the Applicant was at that stage already the holder of a prospecting right issued in terms of the Minerals and Petroleum Resources Development Act, 28 of 2002 (‘the Act’) for iron ore and manganese on the property.

12.2 The prospecting right was to expire – as per clause 1.3 – on 5 May 2011. The company recorded its intention to lodge an application for a mining right for iron ore and manganese before close of business on 6 May 2011.

12.3 Clause 1.5 reads and records:

“…..in order to obtain a mining right the company must comply with the MPRDA and other relevant legislation in respect of Broad Based Black Economic Empowerment”

12.4 Clause 1.6, 1.7 and 1.8 deal with the creation of so-called “A” and “B” class shares. Clause 1.8 records (Bannai holding A class shares and the First Respondent B class shares):

“The effect of this is that the holders of the A class shares will enjoy, to the exclusion of the B class shares, 100% of the benefits flowing from the assets of the company including the prospecting right and the extension, the mining right and the exploitation of the iron ore and manganese or deposits, whereas the B shares will enjoy only the benefits flowing from the prospecting right and the extension, the mining right and the exploitation of the iron ore and manganese ore deposits, the latter being limited to those to be mined and extracted in the future, and not extant at the date of signature hereof.”

12.5 Clause 1.9 states:

“The definition of Broad Based Black Economic Empowerment in the MPRDA, the black empowerment legislation and the mining charter (‘the charter’) empowerment requires that empowerment is broad based. As an individual King does not qualify as an empowerment entity. In order to obtain a mining right it will be necessary for King to transfer some or more or all of the B shares, the extent still to be agreed, to empowerment persons as defined in the MPRDA, the other legislation referred to in this clause and the charter. This reduction in King’s shareholding will lead to a pro rata reduction in the price which he will have to pay for in the company, which he will continue to hold after empowerment has been achieved, which will be reflected in a written amendment to the sale of shares agreement mentioned in clause 1.5 above. It is recorded that introducing King’s shares in the company, it will not be necessary for the recipients of the shares to pay either a pro rata portion of the R150 million referred to above, or any consideration at all, the prime object of the transfer of shares to the empowerment persons being to ensure compliance with the MPRDA, the other empowerment legislation and the charter.”

12.6 Clause 1.10 states that in order to achieve empowerment to the satisfaction of the DMR and of Bannai, it may be necessary for King to relinquish all his shares in the company in favour of empowerment persons, and King hereby undertakes to transfer such portion and/or the whole of the shareholding in the company to such empowerment persons as are nominated in writing by Bannai on demand therefore as more fully set out in this agreement.

12.7 The A and B shares were never created as there was no resolution ever passed in terms of clause 5.4 of the agreement.

12.8 Para 5.11 is also relevant. It reads:

“Should Bannai require King to transfer any or all of the B shares to an empowerment person, King undertakes that he will within two business days of receipt of written notice of this effect from Bannai sign all such documents and do all such other things that may be necessary to give effect to the said transfer, whether this transfer will be only for part of or the whole of the shares which he owns at that time. In the event of Takobong failing to comply strictly with the time limits and the extent of his obligations in terms his (sic) undertaking he hereby gives and grants to Bannai a power of attorney in rem suam to do all of the aforesaid things in his name, place and stead.”

[14] On 3 April 2011 Mr Bannai signed the security transfer form and the First Respondent became the owner of 26 ordinary shares.

[15] On 25 May 2014 the First Respondent was appointed as a director to the Applicant. He continued to serve so as a director –

according to the Applicant – until a resolution was passed at a shareholders meeting held on 19 May 2016. The resolution itself records that only Mr Borris Bannai was present at the meeting and that the First Respondent was afforded a reasonable opportunity to make a presentation (sic) to the meeting before the proposed resolution for removing him as a director was put to a vote, that the First Respondent did not attend and thus it was resolved to remove him as a director of the applicant in terms of resolution passed on strength of section 71(1) and 71(2) of the Companies Act.

[16] The First Respondent later contested obtaining knowledge of either the meeting or the resolution and stated that he was never allowed to make representations. There is some discrepancy in his evidence on this and I deal with the consequences below.

[17] The Applicant alleges that the First Respondent had acquiesced in his removal as a director, because it is clear from the fact that from 16 May 2016 up and until 25 February 2020 he never sought to challenge or assert any rights as a director or to even set aside the said resolution.

[18] Mr Borris Bannai sold his entire shareholding in the Applicant in 2016 to his son Mr David Bannai. On 2 June 2016, the First

Respondent and Mr David Bannai entered into a new shareholders agreement. The Applicant describes the shareholders agreement

as “….being the only shareholders agreement in the Applicant, at that time.” The shareholders agreement has the same terms and conditions as those quoted hereinabove albeit it with different numbering,

[19] The mining right was granted to the Applicant on 25 August 2016, three months after the First Respondent was removed as a director in terms of the resolution.

[20] It is to my mind no oversight that Mr David Bannai does not indicate when exactly he had purchased his shareholding in the Applicant from Mr Borris Bannai. He simply says this was in 2016 and that the shareholders agreement was concluded on 2 June 2016. Here it must be remembered that less than 2 weeks prior to Mr David Bannai and the First Respondent entering into their shareholders agreement, Mr Borris Bannai had in his capacity as purported sole shareholder of the Applicant resolved to remove the First Respondent as a director of the Applicant.

[21] Nevertheless and on 28 March 2017, Mr David Bannai sold to a Mr or Mrs Gotcha Okropuridze and Mr David Chediya 7,5% of the shares in the Applicant. The issued shares in the Applicant were then increased from 100 to 1000 and allocated pro rata to the shareholding percentage then held by the stakeholders. As at 1 November 2019 the First Respondent continued to hold 260 shares.

[22] The Applicant says that the sale agreement with Okropuridze and Chediya was null and void, and it seems as if at least Mr Okropuridze is not taking this lying down.

[23] The DMRE (“the Department”) on 30 September 2019 suspended mining activities on the mine. An audit and compliance inspection conducted on 17 September 2019 precipitated this – which is an order in terms of section 93(1)(b)(ii) of the Act. The suspension order specifically

records:

“Your undertook to adhere to the terms and conditions of the issued mining right however, during the abovementioned inspection the following noncompliance were (sic) observed:……”

This includes issues on ownership.

[24] On 23 October 2019, Mr Borris Bannai wrote to the First Respondent. He told him with reference to the shareholders agreement entered into in both 2011 and 2016, notice is given in terms of clause 5.11 of the agreements. These will be recalled deal with empowerment and the transfer of any or all shares within the Applicant in order to achieve broad based black empowerment. As the First Respondent did not comply the Bannais confiscated the First Respondent’s shares in terms of their powers under this clause

[25] On 27 November 2019 the Department issued a section 47 in terms of the Act notice to the Applicant. On its terms it gave the Applicant an opportunity to give reasons why its mining right should not be cancelled. In the letter the Applicant was told that as far as the Department was concerned “…..it also came to the attention of the office that controlling shares in the company were transferred to various individuals without

ministerial consent in terms of section 11 of the Act. Therefore, the submitted information on the shareholding structure of the company is misleading, incorrect and inaccurate.”

[26] Defined more fully and according to the Applicant, the Department was concerned about the status of the First Respondent as the BBBEE shareholder, the shareholders agreement and the mining right. The notice also addressed the issue of A and B class shares. The Department was dissatisfied with this distinction. It must not be forgotten then that the mining right was issued on strength of the terms of the shareholders agreement apropos the First Respondent’s BBBEE shareholding, the achievement of broad-based black empowerment, etc. Given what was done, it is to my mind no wonder that the Department was concerned.

[27] It is perhaps apposite that I pause at this stage and mention clause 17 of the mining right. It reads:

“In the furthering of the objects of this act, the holder is bound by the provisions of an agreement or an arrangement dated 13 April 2011 entered into between the holder/empowering partner and Borris Bannai (74%) and Frederick King Taukobong (26%) (the empowerment partner) which agreement or arrangement was taken into consideration for purposes of compliance with the requirements of the Act and/or broad based economic empowerment charter developed in terms of the Act and such agreement shall form part of this right.”

[28] It is so that on 24 November 2016, Borris Bannai informed the Department of the change of ownership of the Applicant’s majority

shareholder. There is a dispute on whether section 11 of the act was applicable, but it is common cause that no application

had been made in terms of section 11 of the Act for ministerial consent to transfer the controlling interest in the Applicant from

Borris Bannai to David Bannai. The First Respondent contends that the Bannais are now indeed asking for such ministerial consent.

[29] The section 93 notice also instructed the shareholders of the Applicant to:

“……..align the shareholders agreement with the objectives of the MPRDA and the mining charter by submitting an addendum to the agreement in certain severability clauses suspending clauses 1.9, 1.10 and 5.9 of the original agreement.” ( these are the relevant corresponding clauses to those quoted above in the original 2011 shareholders agreement, that deal with the transfer of the First Respondent’s shares in the Applicant to achieve empowerment)

[30] On 5 December 2019 the Department was told via the Applicant’s attorney that the Applicant has since concluded negotiations with Lixocol Propriety Limited which is a 100% black owned company, in contemplation of Lixocol’s acquisition of the 26% shares taken from the First Respondent and that the Applicant had set apart for empowerment purposes. These shares were to sold for R260 million but this transaction never materialised.

[31] However and on 3 June 2020, Mr David Bannai concluded an agreement with a new BBBEE partner. In paras 108 to 110 of his founding affidavit Mr David Bannai alleges that he transferred the First Respondent’s shares to himself in terms of the provisions of clause 1.8 read with clause 5.11 of the 2016 shareholders agreement and he sold onward 300 of the Applicant’s shares to the new BBBEE partner, Inastep, for R300 million. What is immediately striking, is that none of the clauses upon which this transaction was concluded with Inastep empowered Mr David Bannai to sell the shares to a new BBBEE partner. Indeed, if to achieve empowerment, the new BBBEE partners would not have been obliged to make any payment for their shares and the First Respondent would have received a reduction in the original purchase price in terms of the 2011 shareholders agreement. The 2016 agreement records no obligation on the part of the First Respondent to make any payment to Mr David Bannai.

[32] The sale of shares agreement between Mr David Bannai and Inastep records further:

“The sale equity was subject to an agreement between the seller and an empowered partner for a purchase consideration which the empowerment

partner failed to pay and acted in a hostile and harmful manner to the company. As a result of the empowerment partner failing to (pay) the purchase consideration and acting in a hostile and harmful manner to the company, the seller has exercised his rights in terms of the agreement with the empowerment partner to sell the sale equity to another empowerment partner.”

[33] The inaccuracy of this clause, given what had happened, is disturbing.

[34] And so, the First Respondent lost his shares in the Applicant. Subsequently and on 13 July 2020, the “shareholders” of the Applicant company passed a resolution in terms of section 60 of the Companies Act. The shareholders were at that stage those recognized consequent to the sale of shares agreement Mr David Bannai concluded with Inastep. The shareholders then resolved to appoint Mr David Bannai, Mr David Chediya and Ms Virginia Mnule Lebeloane as a director of the Applicant company.

[35] It is these directors who then purportedly on 3 August 2020 resolved in that capacity to institute the present urgent application out of the Free State Division of the High Court. It further authorised Mr David Bannai or Mr David Chediya to do all such things and sign all such documentation as might be necessary for purposes of instituting the urgent application.

[36] The application followed on 5 August 2020.

[37] On 11 August 2020, the First Respondent served a notice in terms of Rule 7(1) of the Uniform Rules of Court upon the Applicant. It disputed the authority of the Applicant’s appointed attorneys to act on the Applicant’s behalf, and required a board

resolution that was “valid” on 13 July 2020. By this I understand the First Respondent to have called upon the Applicant to submit a validly passed (by proper

appointed directors) on 13 July 2020.

[38] The Applicant replied to this notice and referred, under cover of a letter, to annexure “DC2” to the founding affidavit. This is the same board resolution I mentioned hereinabove.

[39] And so the question becomes clear. The First Respondent says that the usurping of his shareholding in the Applicant company was unlawful and invalid ex tunc, axiomatically the new shareholders (excluding him) could not have passed a resolution to appoint a board of directors and furthermore,

the directors could not have passed a resolution to institute the present proceeding. Of course the Applicant contends quite the contrary. It says that the terms on the terms of shareholders agreement of 2011 and 2016, the First Respondent’s shares were rightly and lawfully taken away.

[40] I asked both counsel to argue whether the determination of the confiscation issue dispositively dealt either way with the issue of whether the proceeding has been properly authorised. That is to say, if I find that the First Respondent’s shares were unlawfully taken away, does it axiomatically mean that the appointment of the directors in the Applicant was unlawful and then the passing of the resolution to authorise and institute the proceedings was unlawful as well? Could – in other words – the unlawful usurping of the First Respondent’s shares not have led to further valid consequential acts?

[41] Both counsel agreed that if I were to find that the shares were unlawfully taken away and transferred, the shareholders resolution is invalid as is the board resolution authorising the institution of the proceeding. In that event the application must be dismissed. As this is urgent proceedings I was unable – with the time afforded to me – to find any firm authority for what counsel agreed upon. I deal with the matter on this basis and as expressed above, my thanks to both counsel.

RULE 7:

[42] Mr Smit for the Applicant, submitted that it was not open to the First Respondent to further challenge the authorisation issue. That is because he says of the working of Rule 7 of the Uniform Rules of Court, and the fact that the First Respondent had abided by the answer provided to the Rule 7 notice and by filing an opposing affidavit.

[43] Mr Zietsman, for the First Respondent, disagrees. He submits that it was open to the First Respondent to persist with the issue subsequent to the answer provided.

[44] Rule 7 serves a dual purpose. On the one hand it allows for the filing of a power of attorney to establish the mandate of the attorney concerned and to prevent a person whose name is being used throughout the process from afterwards repudiating the process all together and saying he had given no authority. It is further there to prevent persons bringing in action the name of person who never authorised it. See: Eskom v Soweto City Council 1992 (2) SA 703 ( W) at 705 E – F .

[45] Erasmus (eds.): Superior Court Practice (loose leaf) at D1- 94 to 95 writes that the sub rule does not lay down the procedure to be followed by the party challenging the authority of a person acting for a party. It would seem – the learned authors write – that the challenge, which may be brought at any time before judgment, may be raised in a variety of ways. The authors then list that it may be done in appropriate circumstances, by notice with or without supporting evidence, in the defendant’s plea or special plea and the answering affidavit or even orally at the trial (provided that prior notice had been given).

[46] In Creative Car Sound v Automobile Radio Dealers Association, 1989 (Pty) Ltd, 2007 (4) SA 546 D it was held that the challenge should not be raised for the first time as a technical point in heads of argument. It should be raised in terms of the sub rule and, if necessary, in the answering affidavit.

[47] To my mind, the sub rule provides a procedural remedy for a respondent who wishes to challenge the “at first blush” authority of a person allegedly acting on behalf of the purported applicant. See: Unlawful Occupiers, School Site v City of Johannesburg, 2005 (4) SA 199 (SCA) at 206 H.

[48] The requirement of the sub rule is that the person concerned shall satisfy the court that he or she is so authorised to so act.

This the person concerned may do by adducing any acceptable form of proof and not necessarily by filing a written power of attorney.

In the event of any of the parties being a company, a resolution of such a company that the proceedings have been properly authorised may constitute such proof. See Poolquip Industries (Pty) Ltd v Griffin, 1978 (4) SA 353 (W). Nothing in the Rule – it has been held – suggests that the court is required to investigate the validity of past acts in the context of the authority to act. See for instance: Marais v City of Cape Town, 1997 (3) SA 1097 (C) at 1101 D.

[49] Of course in the matter here such a resolution was filed, and ex facie there appears to be absolutely nothing wrong with it. But the point is that dealing with true nature of the dispute in such a fashion - under Rule 7 and almost mechanically - will not air the true clash between the parties.

[50] What is in here in issue is – to my mind – not a matter that requires adjudication by means of the procedure envisaged by Rule 7. What is in issue is whether or not a valid shareholders resolution was passed appointing directors, and whether those directors have the capacity legally to appoint the attorney now acting for the Applicant and to take the steps that they have. This to my mind involves a question of whether the board had the legal capacity to act, because of past happenings which led up to the issuing of the resolution. Stricto sensu a Rule 7 notification was unnecessary, as I am required to delve into the depths of the history of the matter in order to deal with what essentially is in issue in this proceeding.

[51] Botha J held in Johannesburg City v Elesander Investments, 1979 (3) SA 1280 A:

“We can find nothing in the rule to suggest that the Magistrate is obliged, or even entitled, to investigate the validity of past acts in the context of the authority to act. When an attorney’s authority is challenged, he may not act further until he satisfies the court that he is authorised to do so, but the effect of the rule does not go beyond that; the rule does not require him, either expressly or by implication, to satisfy the court that he had authority at any particular point of time in the past. The concept of representation as dealt with in the rules involves no more than an investigation into the state of affairs relating to authority as at the time when the challenged attorney seeks to satisfy the court on that score. In our view, the argument of counsel for the appellant constitutes an attempt to use a rule relating to a formality of procedure for the purpose of having an issue of substance between the parties decided by the Magistrate, and in that respect the argument is unsound.”

[52] By parity of reasoning I find then that the Rule 7 notification was inappropriate in this case as well. The fact that it has been

followed does not in my view mean that the court is now disentitled to embark upon the substantive issues that have been raised. I cannot agree with Mr Smit on this basis.

THE TAKING OF THE FIRST RESPONDENT’S SHARES:

[53] The interpretation of any document is now a unitary one. It involves as the starting point the words used. A court is

required to consider them in light of the relevant context, and the former distinction between background and surrounding circumstances

is no longer to be made. The document must be considered as a whole.

[54] Every word must be given a meaning, impractical or unbusinesslike, oppressive consequences or consequences that will stultify the

broader operation of the contract under consideration is not be allowed. See in this regard Bothma-Batho Transport (Edms) Beperk v S Bothma & Seun Transport (Edms) Beperk, 2014 (2) SA 429 (SCA). See also Firstrand Bank Ltd v Clear Creek Trading 12 (Pty) Ltd and another, 2018 (5) SA 300 (SCA) at para 16. See furthermore Natal Joint Municipal Pension Fund v Endumeni Municipality, 2012 (4) SA 593 (SCA) at para 25 and 26.

[55] The consideration of context is paramount even where the words to be construed are clear and unambiguous. See Department of Land Affairs v Goedgelegen Tropical Fruits, [2007] ZACC 12; 2007 (6) SA 199 (CC).

[56] Applying these principles to the matter at hand, it seems rather clear to me that Mr David Bannai could not have resorted to those clauses in the shareholders agreement dealing with the achievement of Black Broad Based Economic Empowerment as a means to commandeer the First Respondent’s shares.

[57] Mr Smit valiantly tried to persuade me that clause 1.7 and 1.8 of the shareholders agreement should not be read together. This is so because – as he correctly indicated – the Applicant contended that it was entitled to take up the First Respondent’s shares in terms of clause 1.8 and with clause 5.11 of the shareholders agreement.

[58] Clause 1.7 to my mind simply speaks to the obligation that will befall the First Respondent should or when ( in context this was a contemplated certainty) it be or is necessary for him to transfer some of his shares “…… in order to obtain a mining right”. This the parties recorded will be necessary because the First Respondent on his own did not qualify as an “empowerment entity” .

[59] Clause 1.8 simply dealt with the position where it might be necessary for the First Respondent to transfer all of his shareholding in favour of employment persons, to the same point and for same purpose as that envisaged in clause 1.7.

[60] Clause 5.11 simply then says that if such a transfer of any or all of the shares be necessary, the First Respondent undertakes that he within 2 business days of receipt of the written notice to that effect, sign all such documents and do all such other things that may be necessary to give effect to the said transfer, whether this transfer will be only for part or the whole of the shares which he owns at that time. Only if the First Respondent defaults, was Mr David Bannai given the power of attorney to do all of the aforesaid things in his name.

[61] These clauses speak to a very specific purpose. That was for the purpose of firstly obtaining “empowerment” and secondly to consequentially obtain a mining right. The two are interlinked and inseparable. Empowerment had to be achieved in order to obtain the mining right – the latter being the ultimate goal. As the mining right was achieved, empowerment was achieved. The invocation of the clause in order to commandeer the First Respondent’s shares in the Applicant thus was quite unlawful.

[62] Mr Smit submitted that clauses 5.11 was inserted into the contract for purposes of allowing Mr David Bannai to get rid of his BBBEE

partner. Such an interpretation will cause the unbusinesslike, oppressive consequences for which the Applicant essentially

contends. To my mind Mr Bannai had no right to invoke the clause, the usurping of the First Respondent’s shares in the Applicant was as a consequence unlawful and invalid. Both Misters Bannai’s actions are morally and legally repugnant. The Applicant galloped on the First Respondent’s shareholding in order to satisfy the Department of it’s desire to comply with the BBBEE legislated initiative to obtain a mining right. When this was achieved, and without any form of compensation, Mr Bannai snatched at an inapplicable clause of the shareholders agreement, pirated the First Respondent’s shares and sold them to a new token BBBEE partner for an enormous amount of money. This action flies in the face of one of the core purposes of the whole BBBEE need, and I certainly cannot and will not countenance such actions.

ABANDONMENT:

[63] Mr Smit had another string to his bow. He submitted that the First Respondent had abandoned his shares and rights. This is so – he argued – because between 2016 and 2020 the First Respondent had done nothing to assert his rights further.

[64] I have difficulties with this submission:

62.1 Firstly, the First Respondent was indicated as a beneficial shareholder by the Applicant’s directing minds as late as 1 November 2019.

62.2 Secondly, the question of his shareholding is not to be conflated with his actions as a director.

62.3 Thirdly, in order to prove abandonment I must for present purposes be able to totally discard the First Respondent’s version as to the facts. I cannot come to such a finding, given what has been stated.

[65] Mr Smit also relies on Moraitis Investments (Pty) Ltd and Others v Montic Dairy (Pty) Ltd, 2017 (5) SA 508 (SCA). He submits that the principle of unanimous consent applies to the facts of the matter at hand and that the First Respondent had

accepted his removal as a director. I disagree, simply because the evidence does not support that finding.

[66] It is so – as Mr Smit points out – that the First Respondent, in business rescue proceedings instituted in June 2020 in his replying affidavit contended that he knew of the resolution that was passed to remove him as director, but he was never allowed to make representations. In the current proceedings he denies being aware of the resolution at all.

[67] The simple fact of the matter however is the fact that he was a shareholder – to my mind – means that the appointment of the board of directors by the “shareholders” in 2020 is invalid. And as these are motion proceedings, I cannot discard the First Respondent’s evidence out of hand. His

version does not allow for that .

[68] For these reasons I find in favour of the First Respondent. It does not seem to me as if I can find that the proceedings “could have validly been authorised” - given the history of the dispute.

I THEREFORE MAKE THE FOLLOWING ORDER:

1. The application is dismissed with costs.

_______________

S. GROBLER, AJ

On behalf of the Applicant: Adv. Mark Smit

On instruction of:

Cliffe Dekker Hofmeyr

c/o Van der Berg & Van Vuuren Attorneys

BLOEMFONTEIN

On behalf of the Appellant: Adv. P.J.J. Zietsman

Shardelow Smith Attorneys

123 Walter Sisulu Road

Gardeniapark