Yandisa Corporate Holdings (Pty) Ltd v OAK Cap Closed Corporation and Another (2024-098631) [2024] ZAGPPHC 1226 (25 November 2024)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO: 2024-098631

In the urgent application between:

YANDISA CORPORATE HOLDINGS (PTY) LTD Applicant

and

OAK CAP CLOSED CORPORATION

First Respondent

COMPANIES AND INTELLECTUAL PROPERTY

COMMISSION (CIPC)

Second Respondent

JUDGMENT: REASONS

LABUSCHAGNE AJ

[1] On 19 November 2024 I made an order in terms of Rule 45A suspending the court order of Neukircher J dated 30 October 2024, postponing Part B sine die and ordering that the costs of Part A be costs in the cause in the Part B proceedings. In addition, the papers were referred to the Legal Practice Council to investigate allegations of impropriety made against a legal practitioner, Werner Cawood. These are the reasons for the order.

[2] In Part A proceedings the applicant brought an urgent application suspending a court order dated 31 October 2024 granted under case number 2024-098631 pending finalisation of Part B proceedings, in which the applicant seeks an order rescinding and setting aside the aforesaid order.

[3] On 31 October 2024 an order was granted by Neukircher J in an application by Oak Cap CC against Yandisa Corporate Holdings and the CIPC. The court granted an order that:

“1. The first respondent (Yandisa) is found and declared to be in default of the terms of the loan agreement entered between the parties at Pretoria on 13 January 2023.

2. The cession and pledge agreement entered between the applicant and the first respondent at Pretoria on 13 January 2023 is henceforth and on the date of this order by the Honourable Court regarded as having

been perfected.

3. The applicant (Oak Cap) is entitled to take over full right and title in and to the pledged rights, pledged loans and pledged shares in and of the first respondent with immediate effect.

4. The directors of the first respondent (Yandisa) is ordered to deliver to the applicant the following within ten (10) business days from the date of this order pertaining to the first respondent:

4.1 The share certificate/s relating to the pledged shares.

4.2 Signed and completed share transfer forms, blank as to the identity of the transferee and number of shares transferred.

4.3 All other documents related to the pledged shares, pledged rights and/or pledged loans which the applicant may call for and which is identified in the recordal attached to this order as Annexure AB.

5. The directors of the first respondent is (sic) ordered to, within ten (10) days of the date of this order, do everything that may be required of them for the purposes of, and to give effect to the cession and pledge agreement and this order.

6. Should the directors of the first respondent fail to comply with paragraphs 4 and 5 above, the applicant and/or its nominees is authorised, by this order of court, to give effect to and to do whatever needs to be done in order to give effect to the cession and pledge agreement and this order of court which authorisation includes but not be limited to the following:

6.1 That the applicant and/or its appointed representatives is entitled and authorised to complete and/or sign any document on behalf of the first respondent, including completion of share transfer forms and to do anything else which may be necessary to give effect to this order;

6.2 That the applicant and/or its appointed representatives are entitled and authorised to, from date of this order:

6.2.1 Exercise all or any of the rights, including voting rights attaching to the pledged shares, pledged loans and/or pledged rights;

6.2.2 Enforce all or any obligations attaching to the pledged shares, pledged loans and/or ledged rights in such manner and on such terms as the applicant may deem fit in its sole discretion;

6.2.3 Receive payment for, take delivery of and/or receive performance in respect of the pledged shares, pledged loans and/or pledged rights;

6.2.4 That the applicant’s election:

6.2.4.1 Sell or otherwise realise the pledged shares, pledged loans and/or pledged rights or any one of them by public auction;

6.2.4.2 Sell or otherwise realise the pledged shares, pledged loans and/or pledged rights by private treaty;

6.2.4.3 Take over the pledged shares, pledged loans and/or pledged rights at an amount equal to the fair value therefore less any indebtedness the respondent has towards the applicant;

6.2.4.4 Institute any legal proceedings which the applicant may deem necessary in connection with any sale or other realisation or transfer of any pledged shares, pledged loans and/or pledged rights by the applicant;

6.2.4.5 Convey valid title in the pledged shares, pledged loans and/or pledged rights to any purchaser thereof (including itself) and/or to take all such further and/or other steps as the applicant may deem necessary to deal with the pledged shares, pledged loans and/or pledged rights;

6.3 That the applicant and/or its appointed representatives are authorised to sign and execute:

6.3.1 Any proxy in favour of the applicant to enable the applicant to exercise any voting rights attaching to the pledged shares, pledged loans and/or pledged rights;

6.3.2 Such documents as may be necessary to give effect to the cession and pledged agreement, and this order, which includes any documents:

6.3.2.1 In order to render the pledged shares, pledged loans and/or pledged rights negotiable including, without limitation, the signature of transfer declarations;

6.3.2.2 To enable the applicant to receive payment of the purchase price of the pledged shares, pledged loans and/or pledged rights;

6.3.2.3 To enable the applicant to exercise any of its rights granted in terms of the cession and pledge agreement and this order;

7. The first respondent is ordered to, on reasonable notice, make available to the applicant all books and records of the first respondent insofar as they are related to any legal proceedings which may be instituted by the applicant for the enforcement of any of its rights in terms of the cession and pledge agreement and this order.

8. The applicant or its duly authorised nominee, as new shareholder, is authorised to appoint new and/or replace the existing directors of the respondent within seven (7) days of the granting of this order.

9. The second respondent is ordered to recall the transfer of the shares in the name of the applicant, together with any changes relating to the identity of the directors of the respondent in terms of this order or otherwise sanctioned by this Honourable Court.

10. That any party who opposes this application be ordered to pay the cost of the application on the scale as between attorney and own client.

11. No order as to costs.”

[4] The applicant contends that it was unaware of the proceedings that resulted in the above order. The applicant was informed on 5 November 2024 at 16:31 that a court order was obtained on 31 October 2024, which order had the effect of perfecting the cession and pledge in respect of the applicant’s issued shares. In terms thereof the first respondent was entitled to appoint new directors to the board of the applicant within seven (7) days of the order and to take cession and transfer of the shares after ten (10) days of the order, which include the authority to dispose and sell the shares by private treaty or public auction.

[5] The effect of the order was to deprive the applicant’s shareholders and directors of control of the applicant as a result of the sale of shares and pledge which have become perfected by the court order.

[6] The substance of the relief granted and the timelines in the order give the applicant limited time to avoid the assumption of voting rights by the first respondent and replacement of its board of directors. This is sufficient to warrant a hearing of the matter as an urgent application.

[7] The address where the application was served was inserted by Cawood Attorneys in the cession and pledge agreement as the applicant’s selected domicilium address. Mr Cawood, on whose address the main application was served, is however also a director of the applicant, who failed to inform the other directors of the applicant about the application. Mr Cawood had become a director of the applicant on the insistence of the first respondent. Further, the applicant was asked for an undertaking on 6 November 2024 not to proceed in terms of the order, which undertaking was refused and this led to the serving of this urgent application on the first respondent’s attorneys of record on 10 November 2024.

[8] In Rule 45A proceedings, if the court is satisfied that the order granted is being challenged in rescission proceedings then irreparable harm is presumed. The Court need not enter into the merits of the rescission proceedings.

[9] In this application for the suspension of the court order, the applicant advances three defences against the perfecting of the cession and pledge agreement.

[10] The primary defence is that the applicant was not indebted to the first respondent at the time of the court order by virtue of a delegation agreement signed in April 2024. The first respondent was a party and co-signatory to the agreement. The applicant contends that its obligation to pay back a loan in terms of loan agreement to the first respondent was delegated in toto to a third party, Indalo (Pty) Ltd.

[11] The second defence is one of non-joinder. The applicant contends that the shares which the applicant seeks to take transfer of are held by three shareholders, who are not cited in the application or in the court order. As those shareholders’ interests stand to be prejudiced substantially if the shares were to be attached under the cession and pledge agreement, those shareholders have a substantial legal interest in the matter and should have been joined to the proceedings.

[12] The third defence is that the cession and pledge agreement is ineffective against the applicant, since a company may not be the holder of its own shares in terms of the Companies Act. The applicant has pledged its issued shares, which shares are not held by the applicant but by its shareholders. The cession and pledge agreement relied upon is therefore in contravention of the Companies Act and consequently of no effect against the applicant.

[13] The applicant approached the court in terms of Rule 45A for an order suspending the court order pending rescission thereof, contending that a substantial injustice would be perpetrated if the order were not suspended. Usually it is sufficient to establish this requirement if the order is challenged and rescission proceedings are pending and without going into the merits ( See Gois trading as Shakespeare’s Pub v Van Zyl 2011(1) SA 148 (LC)).The court will be guided by the principles applicable to interim interdicts, except where the applicant is not asserting a right, but seeking to avert an injustice (Ibid).

[14] In assessing the challenge, I do so from the vantage point of assessing whether a substantial injustice would be averted if the order were suspended and whether such an injustice would ensue if the order were not suspended. This is relevant to the reasonableness of an apprehension of irreparable harm, and the balance of convenience. If the rescission has no prospects of success, that would imply that a suspension would not be justified.

There would not be a reasonable apprehension of irreparable harm. This is a case by case issue and is not intended to extend the ambit of current case law.

[15] In response to the primary defence, the first respondent contends that the delegation agreement did not divest the applicant of its obligations in terms of the loan agreement secured by the cession and pledge agreement. Based on this premise, the existence of the delegation agreement was not disclosed to the court prior to granting of the court order.

[16] In the rescission proceedings, the applicant has the onus of establishing that its liability to Oak Cap CC was discharged by delegation of the debt to Indalo (see Desai v Inman & Co 1971 (1) SA 43 (N) at 51 B – E; Tooth and Another v Maingard and Mayer (Pty) Ltd 1960 (3) SA 127 (N) at page 135).

[17] The first respondent places reliance on Trust Bank of Africa Ltd v Dhooma 1970 (3) SA 304 (N) for the contention that, in the absence of an express novation, the delegation agreement did not divest the applicant of its obligations under the loan agreement.

[18] In Trust Bank of Africa Ltd v Dhooma 1970 (3) SA 304 (N) at 307 the court records that voluntary novation is the result of a contract. In the absence of express terms to novate the intention to do so will be inferred:

(a) Where the terms of the new arrangement are inconsistent with the continued existence of the original rights;

(b) Where the admissible evidence as to the circumstances giving rise to the new arrangement lead to the necessary inference that the parties intended their original right to be novated.

[19] The cession assignment and delegation agreement is Annexure YAN8 to the founding affidavit. The parties are the applicant (referred to as “the assignor and delegator”), Indalo

Mining (Pty) Ltd (referred to as "the assignee and delegatee”) and Oak Cap CC (“the first respondent”).

[20] In the introduction reference is made to the loan facility agreement which forms the foundation of the order of the court. For purposes of clarity, I quote clauses 1 to 4 of the agreement:

“1. INTRODUCTION

1.1 On or about 13 January 2023, the Assignor and Oak Cap entered into Loan Facility Agreement (LFA) and inter alia agreed that Oak Cap

lend and advance money to the Assignor to assist with cite establishment and various other financial obligations to start mining

activities at Rietvlei Mine (owned by Corobrik SA). These monies (multiple payments and payment dates) paid to or paid on

behalf of the Assignor was agreed to, as the loan with agreed interest obligations and repayment terms linked to the said loan, as per the terms of the LFA concluded between Oak Cap and the Assignor.

1.2 The Assignor wishes to cede, assign, delegate, transfer and make over all of its rights and obligations that it has in the abovementioned loan, including all addendums and amendments to the loan to the Assignee. See annexure A attached.

NOW THEREFORE it is agreed as follows:

2. CESSION ASSIGNMENT AND DELEGATION

2.1 In execution of the abovementioned agreement, the Assignor/Delegator hereby assign, delegate, ceded, make over and transfer to the Assignee/Delegatee its rights, title and interest in the abovementioned loan and delegate to the Assignee/Delegatee all its obligations in the said agreement as from date of signature of this agreement.

2.2 The Assignee/Delegatee hereby accepts the cession, assignment and delegation in respect of the said agreement with all the rights and obligations attached thereto.

3. AUTHORITY

The Assignor/Delegator authorises the Assignee/Delegatee to give all the parties to the Loan notice of this agreement, in order to ensure that all the parties will know and understand that the Assignee/Delegatee is from now on the party who has taken over all the rights and obligations of the Assignor/Delegator.

4. ACCEPTANCE

The Assignee/Delegee accepts the assignment cession and delegation upon and subject to the terms and conditions of this agreement.”

[21] The aforesaid delegation agreement records the intention to transfer all rights and obligations in the loan agreement to Indalo and records the acceptance of the transfer of the rights and obligations on behalf of Indalo. The pledge agreement reflects both the transfer and the acceptance of rights and obligations. Consistent with the abstract theory of transfer of rights, it is arguable that all the rights in the loan agreement and all the obligations in respect thereof which vested in the applicant have been transferred and delegated to Indalo.

[22] The aforesaid delegation agreement was not disclosed to the court. Its impact was therefore not debated before that court and the court could not consider its impact.

[23] Counsel for the first respondent contended that the applicant did not deal specifically with all the elements of an interim interdict. That is why the first respondent responded by trying to demonstrate that the disclosure of the delegation agreement would not affect the order granted.

[24] There is no replying affidavit, implying that factual averments in the answering affidavit, that have not been dealt with in the founding affidavit, are admitted. The answering affidavit however in the main contains legal argument, which is not evidence. Nothing therefore turns on the absence of an express denial in a replying affidavit.

[25] The requirements for an interim interdict are self-evidently

established from the substantive provisions of the court order. Unbeknown to the applicant, the applicant was found to be in default

of a loan agreement the liability for which, the applicant contends, was extinguished by a consensual delegation agreement, which was not disclosed to the court. The application was served in a manner that prevented the applicant from knowing of the proceedings before Neukircher J. The order facilitates the transfer of shares and the exercise of voting rights in respect of the applicant’s

issued share capital and the replacement of the board of directors of the applicant by those appointed by the first respondent.

[26] A reasonable apprehension of irreparable harm is established. The consequences of the order will deprive the current directors of the applicant of the capacity to restore the status quo. They will be replaced as directors and current shareholders will be powerless to use their voting rights as such rights vest in the first respondent. A suspension pending rescission proceedings is the only effective remedy that is available to the applicant.

[27] As far as the allegations against Mr Cawood are concerned, his role in insertion of the domicilium address of the applicant into the cession agreement and receiving service at the domicilium raises the spectre of an orchestrated strategy to steal a march on the applicant. Mr Cawood has a fiduciary duty to the applicant as a director of the applicant.

[28] His failure to advise his co-directors of the service of the application at the domicilium address, which was erroneously disclosed to the sheriff as being the principal place of business of the applicant, warrants an explanation. The failure on the applicant’s part to oppose the court proceedings was ostensibly caused by the silence of Mr Cawood after service at his address, also the domicilium address. These facts require further investigation into the conduct of Mr Cawood in his capacity as legal practitioner and business rescue practitioner, both of which require fitness and propriety as minimum character qualities.

[29] On balance I was persuaded to suspend the court order and hence I made the order referred to above.