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REPORTABLE

IN THE SOUTH GAUTENG HIGH COURT, JOHANNESBURG

(REPUBLIC OF SOUTH AFRICA)

CASE NO. 19443/2012

DATE:24/10/2013

In the matter between –

DANIËL JOHANNES JACOBS VLOK N.O........................................First Plaintiff

CECILIA JACOBA VLOK N.O........................................................Second Plaintiff

NICOLETTE GREEFF N.O. …............................................................Third Plaintiff

SUZANNE JANSE VAN RENSBURG N.O.....................................Fourth Plaintiff

DANIËL JOHANNES JACOBS VLOK …..........................................Fifth Plaintiff

PIERRE DU PLESSIS.........................................................................Sixth Plaintiff

LEON DU TOIT.................................................................................Seventh Plaintiff

and

SUN INTERNATIONAL SOUTH AFRICA LTD...............................First Defendant

REAL AFRICA HOLDINGS LTD...............................................Second Defendant

GRAND PARADE INVESTMENTS LTD......................................Third Defendant

JUDGMENT

Snyckers AJ: (Heard 23-24 July 2013)

1. This matter comes to me in the form of two interlocutory applications in a trial action – an exception and an application for leave to amend, arising from the exception. The applications concern three discrete objections to the plaintiffs’ particulars of claim. Two of them relate to the proper interpretation of section 124 of the Companies Act 71 of 2008 (“the Act”), and in particular section 124(2). The third relates to the formulation of the plaintiffs’ cause of action in the pleadings.

2. Section 124 is the current incarnation of the compulsory minority buy-out provision that was housed, from 1990 onwards, in section 440K of the Companies Act 61 of 1973, before that in section 321 of Act 61 of 1973, and before that, from 1939, in section 103ter of the Companies Act 46 of 1926.¹ The section provides for a buy-out and a so-called “squeeze out”. For present purposes the relevant provisions of the section are those dealing with the entitlement of an offeror who has made an offer to acquire any class of the shares of a “regulated company”² and who achieves 90% acceptance of its offer from the relevant class within a specified period, to acquire the shares of the remaining minority that did not accept its offer, on the same terms as regulate the offer.

3. Section 124(2) provides for a minority shareholder, whose shares the offeror is intending to acquire compulsorily by invoking the section, and who has received a notice from the offeror to this effect, within 30 days of the notice to apply to court for an order either that his or her shares not be acquired, or that the conditions of the offer be altered. Such a minority shareholder is referred to in the cases as “the dissentient minority”.

4. The main issue to be decided in these applications is whether section 124(2) allows for a power on the part of the court to condone the bringing of the relevant proceedings outside the 30 day period. The second issue, potentially aligned with the first, is whether the fact that the section uses the words “apply to court for an order” precludes bringing the proceedings contemplated in section 124(2) by way of action, as was done in the instant case. The third issue is distinct from the other two and relates to the conditional manner in which the plaintiffs have formulated their claim against the first defendant.

5. Although some of the argument for the first defendant on the second issue depended on considerations advanced in support of its argument on the first issue, the issues are, in my view, readily capable of being separately considered.

The litigation context

6. The first defendant, whom I shall call “SISA”, is the wholly-owned subsidiary of Sun International Limited (“Sun”), a listed company. Sun is not a party to the action to which the interlocutory proceedings before me relate.

7. SISA held 66% of the shares in the second defendant, Real Africa Holdings Limited (“RAH”). On 5 December 2011, an offer circular was sent to all the shareholders of RAH (other than SISA), offering the acquisition of their shares at a stipulated price.

8. It is common cause, at least for the purposes of these proceedings, that this offer is regulated by section 124 of the Act.

9. There is a dispute as to the identity of the offeror of the offer, whether it is SISA or Sun, which depends on the proper construction of the offer circular. This dispute is responsible for the present issues between the parties, but is not directly before me. It is relevant for the determination of the third issue, as explained below. In what follows, I remain agnostic about the identity of the offeror.

10. On 20 January 2012, the offeror announced 95,1% acceptances by the relevant shareholders and gave notice under section 124(1) of the Act that it intended to exercise its compulsory acquisition rights under that section. There is no dispute, for present purposes, about the entitlement of the offeror to invoke the provisions of the section, nor about the fact that it gave due notice as required.

11. The 30 day period stipulated in section 124(2), for a dissentient minority to apply to court, expired on 9 March 2012. On 7 March 2012 the present plaintiffs instituted an action against Sun, purporting to act in terms of section 124(2). The action was instituted on the basis that Sun was the offeror. The plaintiffs contended that the terms of the offer were unfair and sought an order that Sun acquire their shares at a price different from the offer price. The reasons for this, and the merits of this contention, are irrelevant to the present applications. The action against Sun did not cite SISA as a party.

12. The pleadings in the Sun action are not part of the papers in the applications before me. I rely for the characterization of the Sun action on what is common cause in the papers and in the heads of argument.

13. It appears that Sun adopted the attitude in the Sun action that it was not the offeror, and that, as a result, the present action was instituted, against SISA. As I have noted, Sun is not a party to the present action. The present action was instituted on 29 May 2012. The plaintiffs did not dispute SISA’s submission that this was two months and 20 days after the deadline of 9 March 2012 provided for in section 124(2).

14. The action against SISA is formulated in a manner that gave rise to the third issue. The plaintiffs allege in this action that Sun, not SISA, is the offeror and that Sun, not SISA, sent the relevant notice. This is also the attitude adopted by the plaintiffs in the affidavits in the papers before me. There is no allegation that SISA is the offeror. The fact of the action against Sun is pleaded and the following allegation pleaded thereafter:

“If, on a proper construction and interpretation of the Offer, it is in fact found that SISA was the actual offeror and not Sun (via SISA), then the plaintiffs claim the relief sought herein from SISA in its own capacity and this summons is therefore conditional on that finding.”

15. The particulars of claim then proceed to record an intention to apply for the consolidation of the Sun action and the present action in terms of Rule 11.

16. The summons against SISA spawned three exceptions.

16.1 The first exception was that the claim was incompetent as it was brought out of time – after the period of 30 days specified in section 124(2).

16.2 The second exception was that proceedings by way of action, instead of application on motion, were not competent in terms of section 124(2).

16.3 The third exception was to the effect that the conditional nature of the claim against SISA, bereft of any allegation that SISA was in fact the offeror, and depending on a (future) finding in the Sun action against the plaintiffs, failed to disclose any cause of action against SISA.

17. The first and second exceptions spawned an application for leave to amend the particulars of claim. The relevant additional allegations now sought to be inserted into the particulars of claim are:

“On a proper construction of section 124(2):

i) “may apply to court” is not limited to an application made by way of notice of motion but also includes the issuing of summons; and

ii) The court retains its inherent discretion to condone proceedings brought before court in terms of section 124(2) out of the 30 day time period in that the time stipulation is not prescriptive.”

18. In the particulars as sought to be amended, the plaintiffs then advance various bases upon which it is alleged the discretion to condone should be exercised, and a prayer is added specifically seeking such condonation.

19. SISA accepted that, if the power to condone existed, whether sufficient grounds were advanced for its exercise was not a matter for exception.

20. Whether, to meet the second exception, it was necessary for the plaintiffs to amend their particulars of claim to add the contention that proceedings by way of action were competent, is neither here nor there in my view. Either proceedings by way of action are competent, in which case the additional allegation to this effect is unnecessary, but harmless, or they are not, in which case the additional allegation is futile.

21. I treated the matter as if it made no difference whether the first and second grounds of objection were assessed as exceptions to the particulars as sought to be amended, or as objections to amending the particulars. Strictly speaking, the third ground of exception remains to be considered as part of the exception, and the first and second grounds as part of the application to amend. The matter was approached as if on exception on all three bases. All were ad idem that this was appropriate.

22. Whether or not the cogency of any one of the grounds of exception may render it unnecessary to consider any of the others, I was urged by all concerned to address and decide all three issues. Such urging by itself is not necessarily determinative of the propriety of doing so, if some issues are rendered obiter by any finding on any of the others. But here I have three objections to the particulars of claim, and it appears to me that all three fall to be determined, irrespective of the potential effect of the outcome of one on the practical utility of the others.

23. I proceed to do so. Given that SISA relied for the cogency of the second exception partly on the submissions made in support of the first, and given the overriding importance of the first, I deal with the exceptions in the order set out above.

A. THE FIRST EXCEPTION – NO CONDONATION

24. The statutory section in question traces its ancestry mainly to the various incarnations of the same provision in England. Westlaw and Jutastat reveal that section 155 of the 1929 UK Companies Act was the model for the original formulation of s103ter in the South African Companies Act 46 of 1926 introduced in 1939. This then became section 209 of the 1948 UK Companies Act. Certain amendments to s103ter of Act 46 of 1926 were introduced in 1952 to align that section with the 1948 English provision. The provision in England then became sections 429 and 430 of the 1985 Companies Act, and then sections 979 and 986 of the 2006 Companies Act. Some aspects of the wording of these sections and of the South African predecessors to s124 are considered below.

25. The full text of s124 is cited below when a closer analysis of the wording is undertaken.

26. The question of a power to condone non-compliance with the time period allowed for the dissentient minority is res nova. Neither party was aware of any comparative case in the Commonwealth that considered the question whether equivalent provisions in the Commonwealth entailed a condonation power. I also could not find comparative law dealing with this issue. I proceed from the assumption that there is none.

27. The formulation of the plaintiffs’ contention above suggests two rather different ways of finding a power to condone in the section:

27.1 whatever the statute says about the time period in which proceedings must be brought, the court always has a general power to condone non-compliance with such a time period; or

27.2 the time period “is not prescriptive”, and the section can and ought to be read as allowing a power to condone non-compliance.

28. Understandably, Mr Trengove, who appeared with Ms Fourie for SISA, devoted much attention to addressing the first of the two propositions above. The formulation of the pleading as sought to be amended certainly warranted such attention.

29. I hope I do no disservice to the high quality of counsel’s written and oral submissions by capturing them thus:

30. Mr Trengove argued that the notion that there was always a general power to condone, albeit apparently supported by high authority, could simply not be reconciled with a powerful battery of case law premised on acceptance of the fact that a statutory time period that was decreed as absolute was not subject to a general power on the part of the court to ignore such a legislative decree. Instead, so the argument went, what the cases that appeared to support the first proposition above established, was that it was always a matter of construing the statute in question to determine whether the legislature intended the relevant time period to operate as an absolute bar, or as allowing for condonation. In this interpretive exercise, Mr Trengove accepted that there was indubitably a bias in favour of finding a power to condone if the section allowed such a reading.

31. Before me, however, Mr Bham, who appeared with Mr Budlender for the plaintiffs, retreated from the first proposition and made much common ground with Mr Trengove’s argument. Yes, it was argued, it did in the end come down to an interpretation of the statute, as to whether it provided for condonation or did not. If it clearly did not, no general power could override such a clear intention. Mr Bham conceded that, since there was no constitutional challenge to the section, if it were so that the section clearly provided for an absolute bar, then the first exception was good. He submitted however that the bias acknowledged by Mr Trengove operated rather compellingly, and, since the wording of the relevant subsection allowed for, or at least did not exclude, a power to condone, the subsection had to be read as providing for it. This was not least because of the constitutional requirement³ to read the statute in a way that best promoted the spirit, purport and object of the Bill of Rights; hence a reading allowing for a power to condone did just that, especially with respect to section 34 (access to court) and section 25 (the right not arbitrarily to be deprived of property).

32. Given the acknowledged bias, Mr Trengove pointed to various features of the legislative scheme in section 124 as support for the proposition that the section simply had to be read as excluding the power to condone. Against this stood Mr Bham’s basic contention that the subsection itself was worded in neutral terms, thereby apparently at least leaving the door ajar for the power to condone – and that this was more than enough to compel acceptance of the existence of the power.

33. On the above common approach, the precise significance of such authority as there may be in favour of the existence of a general power to condone non-compliance with statutory time periods, and the question precisely how such authority fits in with the authority that makes it difficult to accept any coherence in the notion, may end up as a nettle that does not require grasping, for as long as it is accepted that, if the statutory provision is clear that the time bar in question is indeed absolute, only a constitutional challenge, and no resort to a general power, can thwart such a legislative decree.

34. I am however not sure that I may sidestep the nettle quite that easily, and believe it must be grasped.

35. It seems to me that the difference comes down to this: if there is a free-floating general power to condone non-compliance with a statutory time period, and this power exists independently of any interpretation of the time period provision itself, then, even if such power would not override an express legislative exclusion, such an express legislative exclusion would be required to exclude the power, and it would not matter whether a proper construction of the provision suggested the time period was intended to operate with or without a power to condone. If, however, the power to condone had to be found as part of the exercise of construing the statutory provision itself, it would at best operate as a bias, or a factor, or a legislative presumption, within such construction exercise, which would yield to a construction of the provision as intending a time period operating without exceptions.

36. At a more practical level, it amounts to a question relating to the extent to which, in circumstances where the statutory provision does not expressly exclude such power, recourse may nevertheless be had to the intention apparently animating the statutory provision to provide for the absence of a power to condone.

A general power to condone independent of interpretation?

37. It is difficult to avoid the conclusion that there is tension between a clear (obiter) dictum from the unanimous Constitutional Court in Mohlomi v Minister of Defence,⁴ and a “separate” (i.e. additional and independent), perhaps also obiter, finding of a unanimous Supreme Court of Appeal in Toyota South Africa Motors (Pty) Ltd v Commissioner, South African Revenue Service.⁵ The terse invocation (again ultimately obiter) of the finding in Toyota by the unanimous Supreme Court of Appeal in Samancor Group Pension Fund v Samancor Chrome and Others⁶ is also difficult to reconcile with the dictum in Mohlomi.

38. The dictum by Didcott J (concurred in by all) in Mohlomi is clear as can be:

“The wording of that looks odd. It appears to have presupposed a power inherent in the courts to condone defaults of the kind covered which needed to be preserved. But courts have no such inherent power, and none derived from any source unless and until it is conferred on them. That the subsection grants them the power in the circumstances mentioned must necessarily be implicit in its terms, however, since they make no sense otherwise.”

39. In Toyota, the particular finding at issue was anomalous in the context of the reasoning that preceded it. In paragraph [9], Howie JA considered the statutory provision before the court closely, to glean from it whether it implied a power to condone. “The enquiry is simply: what did the Legislature intend?” This anxious search for the presence or absence of an implied power to condone in the presumed intention of the legislature would be nonsensical if the general power to condone were a hovering presence even in the absence of an implied power on a proper construction.

40. Yet in paragraph [10], one reads:

“These conclusions based on interpretation are strengthened, of course, by the separate consideration that the High Court has inherent jurisdiction to govern its own procedures and, more particularly, the matter of access to it by litigants who seek no more than to exercise their rights. It has been held that this jurisdiction pertains not only to condonation of non-compliance with the time limit set by a Rule but also a statutory time limit: Phillips v Direkteur van Sensus 1959 (3) SA 370 (A) at 374G - in fine.”

41. The fact that this “separate” consideration “strengthens” the main finding on interpretation may perhaps fairly be said to render it obiter to the extent that it forms no part of the interpretive exercise. But must it necessarily be taken to mean more than that this “consideration” is simply an important factor favouring an interpretation that allows for such a power within the interpretive exercise? If it is to mean more, it would seem to render the interpretive exercise otiose. If it merely confirms the fact, as admittedly a “separate” consideration, that there is a bias in the law for reading the statute to allow for such a power, given a default position of such a power where the statute is both expressly and implicitly silent on the issue, then it need not be seen as contrary to the dictum in Mohlomi. It would also make sense of the use of the term “strengthened” as indicating that the “separate consideration” forms part of that which supports the interpretation considered in paragraph [9].

42. The authority of Phillips cited in paragraph [10] of Toyota is strong support for this alternative reading of the dictum in Toyota (as employing the notion of the existence of a power of the court to condone as a factor that influences the interpretive exercise and strengthens a particular reading, not as a rule that overrides an interpretive outcome).

43. In Phillips, the then Appellate Division had to parse a provision regulating how a person racially classified as a “native” could object to this legal disadvantage bestowed upon him by the administration of apartheid. The assessment as to the existence of a power to condone at 374-5 of the judgment of Van Blerk JA (again unanimous) was undeniably one of interpreting the provision in question, ascertaining whether it demanded the absence of a power to condone, applying a principle of reluctance to construe a provision thus, and finding no reasons in the purpose of the statute that would justify construing it so as to exclude the power to condone. Reference to “die vraag of die Wetgewer deur hierdie voorskrif ‘n verbeuringsbedoeling gehad het”⁷, and continued references to how the provision was to be “uitgelȇ”,⁸ to “vertolking”⁹ and to what “die Wetgewer bedoel het”,¹⁰ make the nature of the exercise as interpretive quite clear. The passage specifically cited in Toyota contains the terms “uitgelê” and “vertolking”.¹¹

44. If this is all that Phillips and Toyota did, must it be said that Samancor did more? I do not think so. The full extent of the relevant finding in Samancor is the following:¹²

“The High Court, because of its inherent jurisdiction, has powers to govern its own procedures. The said jurisdiction pertains not only to non-compliance with the Rules of Court, but also to statutory time limits - see Toyota South Africa Motors (Pty) Ltd v Commissioner, South African Revenue Service. In this matter the High Court was entitled to deal with Samancor's application for condonation. As will appear hereunder, the High Court should not have granted condonation because of prejudice to the Pension Fund and the fact that the appeal was perempted.”

45. The finding was clearly obiter. Also, the terms employed did not tell the reader what interpretation of Toyota’s use of the notion of the “separate consideration” of a power to condone was engaged in the cryptic application of Toyota. I believe I am entitled to, and should, assume that the application of Toyota in Samancor tracked the application of Phillips in Toyota, and applied the reading of Toyota more internally consistent with its own reasoning, more correctly derivative of the authority it cited, and more harmonious with the clear later dictum of a unanimous Constitutional Court on the issue.

46. Mr Trengove demonstrated the correctness of the following proposition without leaving room for reasonable dispute: the anxious consideration whether a statutory time period provision for enforcing rights was intended to operate as a “vervaltermyn”, which operated absolutely, or as a “prescription” period, which was subject to some of the exceptions applicable to prescription, in cases such as President Insurance Co Ltd v Yu Kwam,¹³ Hartman v Minister van Polisie¹⁴ and Pizani v Minister of Defence,¹⁵ would make no sense at all if there were a free-floating power to condone non-compliance with statutory time periods that existed independently of an exercise of interpreting the time periods themselves.

47. The same can be said of the approach of the Constitutional Court in Road Accident Fund v Mdeyide.¹⁶ Both the majority and the minority recognized a particular statutory time-period relating to the enforcement of rights as not providing for a power to condone,¹⁷ but they split on whether the limitation of section 34 of the Constitution that the time-period entailed could be justified in terms of section 36 by the legislative purposes it served, the majority holding the limitation to be justified. None of this would make much sense if there always were a general power to condone non-compliance with a statutory time-period, unless expressly excluded. The same can be said of Engelbrecht v Road Accident Fund and Another.¹⁸

48. It may also be noted that the accepted absence of a condonation power in Mdeyide¹⁹ was certainly not stated in the statute by way of any express exclusion in terms. Nor in Engelbrecht. The negative wording of the provision in Engelbrecht²⁰ certainly supported a reading that it was not intended to have a condonation power operate, but there was no exclusion of any such power.

49. It does not seem to me that section 173 of the Constitution compels any different approach to the question. The section stipulates in relevant part that “The Constitutional Court, Supreme Court of Appeal and High Courts have the inherent power to protect and regulate their own process…”.

50. Mr Trengove placed heavy reliance on the following passage from the Constitutional Court in Phillips and Others v National Director of Public Prosecutions:²¹

“Whatever the true meaning and ambit of s 173, I do not think that an Act of Parliament can simply be ignored and reliance placed directly on a provision in the Constitution, nor is it permissible to side-step an Act of Parliament by resorting to the common law.

I doubt that the inherent jurisdiction of the Court under s 173 is such that it empowers a Judge of the High Court to make orders which negate the unambiguous expression of the legislative will. Moreover, the power that a Court has to use its inherent power is a special and extraordinary power which should be exercised sparingly and only in clear cases. This is not such a case.”

51. I think the reliance placed on this passage is apt. I also agree that there is nothing in South African Broadcasting Corporation Ltd v National Director of Public Prosecutions and Others²² to compel a different conclusion on the interplay between s173 and statute. There, the majority of the Constitutional Court declined to overrule the manner in which the Supreme Court of Appeal had balanced fair trial rights and free expression rights in regulating its own process with respect to the televising of proceedings before it. It was undeniably a case where section 173 applied, and the question was simply how to apply it. It did not affect the interplay between section 173 and statutory provisions considered in Phillips v NDPP, nor did I understand Mr Bham to suggest it did.

52. Mr Trengove placed some reliance on what the minority in SABC had to say about employing section 173 in interfering with vested rights.²³ This is best considered further below when analyzing the proper approach to construing section 124.

53. I am therefore free, in my view, to consider the proper interpretation of section 124(2), untrammeled by the operation of a power dehors such interpretation but contending with it.

Interpreting s124(2)

54. I believe that the role played by the authority apparently favouring the existence of the free-floating power, and by s173, in the interpretive process, apart from adding the bias conceded by SISA, is this: when it comes to statutory provisions that relate to what someone must do to engage the jurisdiction of the court, all else being equal the jurisdiction of the court will tend to include the jurisdiction to condone non-compliance with time-periods for engaging it. The bias in favour of construing a statutory time-limit as providing for, or allowing, a power to condone is most compelling when the provision in question deals with the subject’s engaging the courts to enforce rights.

55. It is this latter aspect that was most heavily emphasized by Mr Bham. On the premise that I was compelled to accept a construction of s124(2) that “better” promoted the advancement of s34 of the Constitution,²⁴ the submission was that clearly an interpretation of section 124(2) that gave “better” protection to s34 was one that included a power to condone, and accordingly, as long as the interpretation was reasonably capable²⁵ of being adopted on the words of the statute, I was bound to adopt it.

56. Mr Trengove submitted that it was misconceived to consider the dissentient minority’s application as one enforcing their rights, as their rights were determined by and subject to the statute itself, which provided for the mechanism in section 124. Instead, he submitted, the statute vested rights in the offeror the moment the 30 day period passed, and those vested rights ought not to be interfered with by implying a power to condone into the section. In this regard he relied on the minority judgment in SABC which emphasised the importance of not allowing s173 to “limit or deny vested or entrenched rights”.²⁶

57. If it comes down to a clash of rights, the plaintiffs have, it seems to me, the upper hand. I paraphrase the following persuasive submissions by Mr Bham:

57.1 First, the submission based on the absence of any pre-existing rights independent of the statutory provisions that create them conditionally, subject to the enforcement mechanism they create, runs headlong into Barkhuizen v Napier²⁷ and Engelbrecht v RAF.²⁸

57.2 Second, the offeror’s right compulsorily to acquire the shares of the dissentient minority is in any event defined in section 124(1)(b) as “subject to section 124(2)”, thereby begging the chicken and egg question.

57.3 Third, the dissentient minority is affected by an attack on their pre-existing property rights – they have these rights quite independently of the section, and here the section creates a mechanism whereby these property rights can be compulsorily taken away from them on terms they reject. This engages section 25 of the Constitution which provides that “no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property”.²⁹ Section 124(2) is the only avenue afforded to the dissentient minority to challenge the deprivation, and a construction that better avoids arbitrary deprivation is to be preferred over one that renders it more likely.

58. In support of a reading that would have the existence of a condonation power better promote rights, especially the right of access to justice and the right not to be arbitrarily deprived of property, the plaintiffs relied on endorsement of the proposition that “it is therefore necessary for courts to have the power to adjust the application of rules to avoid injustices” by the Constitutional Court in PFE International and Others v Industrial Development Corporation of South Africa Ltd³⁰ and its entrenchment again in Mukaddam v Pioneer Foods (Pty) Ltd and Others³¹ in the following terms:

“Flexibility in applying requirements of procedure is common in our courts. Even where enacted rules of courts are involved, our courts reserve for themselves the power to condone non-compliance if the interests of justice require them to do so. Rigidity has no place in the operation of court procedures. Recently in PFE International and Others v Industrial Development Corporation of South Africa Ltd, this court reaffirmed the principle that rules of procedure must be applied flexibly.”

59. In addition, reliance was placed on the interpretation accorded by the Supreme Court of Appeal to the Institution of Legal Proceedings Against Certain Organs of State Act 40 of 2002 in Minister of Safety and Security v De Witt.³² Here, the question was whether the power to condone non-compliance, clearly provided for in the statute, could be invoked after summons had been served out of time, or only before this was done. In this context, in holding that the legislature clearly intended a condonation application to be possible as a response to objection being taken after a summons was served late, Lewis JA observed:³³

“The Act is meant not only to bring consistency to procedural requirements for litigating against organs of State but also, it is clear, to render them compliant with the Constitution. The way in which it seeks to achieve a procedure that is not arbitrary and that operates efficiently and fairly both for a plaintiff and an organ of State is to give a court the power to condone a plaintiff's non-compliance with procedural requirements in certain circumstances. Thus access to courts is facilitated, while at the same time procedures against large governmental organisations that need to keep their affairs in order are regulated.”

60. Specific emphasis was attached to the fact that Lewis JA saw the purpose of the condonation power provided in the Act as ameliorating the potentially fatal limitation on the right to access to courts that “an inflexible precondition to the institution of proceedings” would probably entail.³⁴ Although this was not a case of reading a condonation power into the statute where none was provided for, the “better” to promote the right of access to justice, it did amount to recognition that the condonation power provided for by the legislature was provided precisely in order to avoid a potential violation of such right.

61. The plaintiffs also submitted, in their written argument,³⁵ that the Constitutional Court endorsed the reading in of a condonation power by the High Court in Brümmer v Minister for Social Development.³⁶ SISA correctly, in my view, submitted that this could not be inferred from the judgment. The matter concerned the period during which an application to court must be brought to challenge a refusal to provide information under the Promotion of Access to Information Act 2 of 2002. The High Court implied into the statute a power to condone non-compliance with the period, essentially on the basis of adopting a reading that better promoted the right to access to justice, thus:³⁷

“[22] Section 78(2) of the Act provides that a requester that has been unsuccessful in an internal appeal may, within 30 days, apply to Court for appropriate relief in terms of section 82. I must point out at the outset that section 78(2) of the Act does not provide for condonation nor does it state that non-compliance with the time period cannot be condoned. I will assume that the Court has a discretion to condone non-compliance with any of the time limit provisions and that the section has not taken away the Court's discretion.

[23] Section 78(2) must be construed in the context of section 32(1)(a) read with sections 34, 36 and 39(2) of the Constitution. Section 34 of the Constitution guarantees everyone a right of access to Courts and which right may be limited only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society. Section 78(2) of the Act must therefore be interpreted in such a way that it does not take away or interfere with an individual's right to approach Courts. A Court is obliged in terms of section 39(2) of the Constitution to promote "the spirit, purport and objects of the Bill of Rights" when interpreting any legislation. There is no indication in the Act either expressly or implicitly to suggest that non-compliance with any of its provisions may not be condoned. I therefore find that non-compliance with the time period provided for in section 78(2) of the Act may be condoned on good cause shown.”

62. The High Court declined to grant condonation.³⁸ But it went on to consider the constitutionality of the provision in light of the short period it provided in the circumstances and held the section to be unconstitutional.³⁹ The Constitutional Court took issue with this approach. It considered that the High Court ought first to have considered the constitutionality of the section as its finding in this regard would have meant that “the issue of condonation would not have arisen”.⁴⁰

63. This can hardly be seen as support for reading in the power to condone to save the section from unconstitutionality. Quite the contrary. Nor can it be read as support for the idea that a general power to condone existed quite independently of any interpretation of the section. If anything, it is support for the proposition that such an exercise of implying a power to condone was not appropriate in the circumstances and that the presence or absence of a power to condone was not critical in dealing with the constitutionality of the section. This appears also from the passage the plaintiffs relied on for the contention that the Constitutional Court accepted the High Court’s assumption of the existence of the power to condone:⁴¹

“Section 78(2) has the effect, in my view, that many of the requesters whom it hits are not afforded an adequate and fair opportunity to seek judicial redress. They are left with too short a time within which to launch an application to court. The existence of the power to condone does not save it. What matters, as our jurisprudence makes plain, is the availability of the real and fair opportunity to exercise the right to seek judicial redress in order to vindicate the right of access to information. As the affidavit filed on behalf of SAHA illustrates, requesters will almost always have to apply for condonation in order to exercise their right to seek judicial redress in order to enforce their right of access to information. This shows the absence of an adequate and fair opportunity to seek judicial redress.”

64. All this says about the power to condone that the High Court implied is that any such power in the instant case does not save the provision from unconstitutionality. In light of the criticism of the High Court’s approach, this cannot be read as endorsement of an approach that reads into such a provision a power to condone to seek to save it from unconstitutionality, or even to have it “better” promote the right of access to court.

65. The argument on compelling the reading that “better” promotes a right is powerful, and has been demonstrated to be of application in relation to the power to condone and the right of access to court. It should not, however, be taken too far. The principle in question does not, in my view, require the following approach to the interpretation of a statutory provision: Find a right in some way implicated by the provision. Ask yourself how that right could be “better” promoted by the provision than the provision seems to achieve. Posit a “better” provision that achieves such better promotion. Then say unless the words of the provision expressly or compellingly exclude a construction that makes it look more like the “better” provision, the better provision must be taken to be the proper construction of the provision. Something is wrong somewhere if the construction exercise is approached thus.

66. I must not be taken to suggest that the caricature offered here captures the submissions made on behalf of the plaintiffs. I merely seek to illustrate the way in which the undeniable attraction of a principle strongly relied on by them may lead the interpretation exercise astray.

67. This is not the place for the metaphysics of texts and meanings. But I do think that for as long as we as lawyers eschew radical skepticism and cling to the notion, vital to respect for the separation of powers,⁴² that what is being applied or interpreted is the statute and what it seems to mean, it will remain important to do the interpretation exercise in the right direction. In considering constructions a provision is “reasonably capable” of bearing, one still starts with what the provision appears to say, and why it is there, and then asks what it appears to do to rights, and whether what it may also reasonably appear to say can do something more or less to those rights. Starting with the rights, asking what kind of provision might help them more, and then saying a provision that is not clearly something else must be turned into such a provision, will leave any pretense to the interpretive exercise behind.

68. As for the implication of the dissentient minority’s property rights, the following: One must consider the question whether the fact that the dissentient is bound by the conduct of the super-majority in section 124 can be said to form part of the governance of the offeree company, in respect of which the principle captured thus by the Appellate Division in Sammel and Others v President Brand Gold Mining Co Ltd ⁴³ may be said to operate:

“By becoming a shareholder in a company a person undertakes by his contract to be bound by the decisions of the prescribed majority of shareholders, if those decisions on the affairs of the company are arrived at in accordance with the law, even where they adversely affect his own rights as a shareholder.”

69. Sammel is the leading case on the application of s103ter of the Companies Act 46 of 1926, the then incarnation of the current section 124. Sammel concerned a dissentient minority’s challenge to a compulsory buy-out. It is interesting to note that the rendition of the heads of argument in Sammel reflects that it was an important part of the argument advanced against the dissentient minority that the “take-over” transaction contemplated by the statutory provision related to the governance aspect of shareholding, not to the ownership aspect of shareholding:⁴⁴

“The section is concerned with the approval or disapproval of a scheme or contract. It is not concerned with ownership of the shares, but with decision-making flowing from ownership, that is with control through voting power arising from ownership….That the section is concerned with decision-making and not with ownership is confirmed by the exclusion,⁴⁵ in calculating the 90 per cent majority, of shares in the transferor company held at the date of the offer by a subsidiary of the transferee company.”

70. It appears at first blush possible to regard the passage from the judgment at 678 cited above as endorsement of this argument, thereby establishing a relatively radical but not unattractive proposition that the decision to accept or to reject the offeror’s take-over offer is more in the nature of a “vote” with respect to the ultimate fate of the offeree company and its governance than in the nature of so many private contracts of purchase and sale relating to the property rights of each shareholder in the offeree company.

71. I do not think one can stretch the observations and findings in Sammel that far, and this was not a submission advanced by SISA. The passage in Sammel occurred at the point where the court was considering the position of the minority in the context of the resolutions taken at the offeree company about a reconstruction exercise that formed an initial necessary step in the implementation of the take-over scheme, one later aspect of which would be the making of the offer that led to the invocation of the compulsory buy-out rights. The court was not at that point commenting on the degree to which the dissentient minority was bound by the acceptances of the majority with respect to the offer. I could find no indication in the report of the judgment of any acceptance (nor of any rejection) of the argument cited above with respect to the decision to accept the offer itself.

72. Furthermore, there is the important caveat that it seems that the decision to accept or to reject an offer to purchase one’s shares at a certain price would be regarded as of the “personal” rather than the “corporate” kind, employing the terms employed in Communicare and Others v Khan and Another.⁴⁶ This is so especially when one considers the shareholder rights at issue in Communicare and compares them with the shareholder rights at issue here, and recognizes that despite the stronger case that existed for regarding the rights in Communicare as falling on the “corporate” side of the line, they were regarded as “personal” in nature, such that they were not susceptible to control by a majority.

73. Nevertheless, the fact that the provision is housed within a series of sections comprehensively governing the take-over of regulated companies, and that acceptance or non-acceptance of the offer ends up affecting the control and governance of such companies must, in my view, be the starting point of interpreting its purpose and context, rather than the fact that it relates to commercially valuable property rights that a shareholder in such a company happens to have for being a shareholder.

74. After all, as noted in SISA’s written submissions, the main purpose of these kinds of provisions is described thus by Blackman:⁴⁷

“The legislature is concerned that the offeror, who may expend considerable sums of money in the expectation of acquiring total ownership of the shares in the target company, should not be prevented by a small minority of shareholders from acquiring total ownership of the shares and, if a corporate offeror, from converting the company into a wholly-owned subsidiary, and so obtaining the commensurate and legitimate benefits financial, administrative and commercial that go with such ownership. In England, experience, prior to the introduction in 1928 of legislation to facilitate by the coercion of dissenting shareholders the amalgamation of companies, suggested that holders of small numbers of shares might, out of desire to exact better terms than the vast majority of their fellow shareholders were content to accept, hamper the arrangement or prevent it from materializing. Thus the object of the legislation was in effect to prevent an oppression of the majority by a minority.”

75. It is because of the consequences for the control of the offeree company that flow from take-overs that the compulsory purchase provisions were introduced. The legislature felt it made sense to provide that some specified tipping point of a super-majority favouring a certain form of change of control (100% ownership of the target company) should be regarded as a sufficient “vote” in favour of such change.

76. An option to seek to opt out is then provided to those who believe this in the circumstances to be unfair, with the fairness question being made justiciable before a court.

77. The opt-out option operates in the nature of an election, in reaction to the offeror’s notice of compulsory acquisition. The offer was declined by those who failed to accept it. But then, another stage of the transaction is triggered: the offeror has reached a tipping point level of acceptances, and gives notice that it “desires” to take the rest.⁴⁸ At this point, the declining minority is in effect given a second opportunity to consider the desirability of the offer. The almost unanimous acceptances may well have had an effect on the price they could command for their shares, and there may be many other reasons why, given that they now know of such acceptance level, they may alter their stance on whether they should yield to the notice or object to it.

78. To exercise the opt-out option, they must speak now or forever hold their peace. As a failure to speak now in the chapel means the marriage is solemnized and wife and husband wed one to the other, so a failure to bring the proceedings under s124(2) means the offer is implemented, for all remaining offerees, on the same terms, and the offeror can arrange its affairs such as to implement a whole potential series of transactions specifically premised on attaining 100% control.

79. The character of the opt-out as a form of election is supported by the following observation in Mia v Anglo-Alpha Cement Ltd:⁴⁹

“If the Court does not make such an order or is not asked to make any order at all, the transferee company, that is Anglo-Alpha, will be entitled and bound to acquire the shares of the dissentient shareholder, that is the applicant, and on the terms contained in the offer accepted by the approving shareholders. Should the dissenting shareholder therefore not want his shares to be acquired by the transferee company on the basis of the offer, he must make application to the Court “to order otherwise”, that means that the onus is on him to move and persuade the Court to stop the process which would otherwise result in the acquisition of his shares by the transferee company as set out in the offer.”

80. Speaking out in the chapel before the vows are exchanged brings proceedings to a crashing halt. So it also appears to be with exercising the election under s124(2) to approach a court.

81. The importance of these different consequences flowing immediately from the expiry of the 30 day period, or from the bringing of proceedings within such period, was a central plank in SISA’s argument.

82. It is at this point necessary to set out the section, given the arguments that served before me about different potential ways of interpreting it, and particularly the effect this has on the consequences contended for by SISA.

83. The section reads as follows:

124 Compulsory acquisitions and squeeze out

1) If, within four months after the date of an offer for the acquisition of any class of securities of a regulated company, that offer has been accepted by the holders of at least 90% of that class of securities, other than any such securities held before the offer by the offeror, a related or inter-related person, or persons acting in concert, or a nominee or subsidiary of any such person or persons-

a) within two further months, the offeror may notify the holders of the remaining securities of the class, in the prescribed manner and form-

i) that the offer has been accepted to that extent; and

ii) that the offeror desires to acquire all remaining securities of that class; and

b) subject to subsection (2), after giving notice in terms of paragraph (a), the offeror is entitled, and bound, to acquire the securities concerned on the same terms that applied to securities whose holders accepted the original offer.

2)Within 30 business days after receiving a notice in terms of subsection (1) (a), a person may apply to a court for an order-

a) that the offeror is not entitled to acquire the applicant's securities of that class; or

b) imposing conditions of acquisition different from those of the original offer.

3) If an offer to acquire the securities of a particular class has not been accepted to the extent contemplated in subsection (1)-

a) the offeror may apply to a court for an order authorising the offeror to give a notice contemplated in subsection (1) (a); and

b) the court may make the order applied for, if-

i) after making reasonable enquiries, the offeror has been unable to trace one or more of the persons holding securities to which the offer relates;

ii) by virtue of acceptances of the original offer, the securities that are the subject of the application, together with the securities held by the person or persons referred to in subparagraph (i), amount to not less than the minimum specified in subsection (1);

iii) the consideration offered is fair and reasonable; and

iv) the court is satisfied that it is just and equitable to make the order, having regard, in particular, to the number of holders of securities who have been traced but who have not accepted the offer.

4) If an offer for the acquisition of any class of securities of a regulated company has resulted in the acquisition by the offeror or a nominee or subsidiary of the offeror, or a related or inter-related person of any of them, individually or in aggregate, of sufficient securities of that class such that, together with any other securities of that class already held by that person, or those persons in aggregate, they then hold at least 90% of the securities of that class-

a) the offeror must notify the holders of the remaining securities of the class that the offer has been accepted to that extent;

b) within three months after receiving a notice in terms of paragraph (a), a person may demand that the offeror acquire all of the person's securities of the class concerned; and

c) after receiving a demand in terms of paragraph (b), the offeror is entitled, and bound, to acquire the securities concerned on the same terms that applied to securities whose holders accepted the original offer.

5) If an offeror has given notice in terms of subsection (1), and no order has been made in terms of subsection (3), or if the offeror has received a demand in terms of subsection (4) (b)-

     

a) six weeks after the date on which the notice was given or, if an application to a court is then pending, after the application has been disposed of, or after the date on which the demand was received, as the case may be, the offeror must-

   

i) transmit a copy of the notice to the regulated company whose securities are the subject of the offer, together with an instrument of transfer, executed on behalf of the holder of the those [sic] securities by any person appointed by the offeror; and

ii) pay or transfer to that company the consideration representing the price payable by the offeror for the securities concerned;

b) subject to the payment of prescribed fees or duties, the company must thereupon register the offeror as the holder of those securities.

6) An instrument of transfer contemplated in subsection (5) is not required for any securities for which a share warrant is for the time being outstanding.

7) A regulated company must deposit any consideration received under this section into a separate interest bearing bank account with a banking institution registered under the Banks Act and, subject to subsection (8), those deposits must be-

a) held in trust by the company for the person entitled to the securities in respect of which the consideration was received; and

   

b) paid on demand to the person contemplated in paragraph (a), with interest to the date of payment.

1. If a person contemplated in subsection (7) (a) fails for more than three years to demand payment of an amount held in terms of that paragraph, the amount, together with any accumulated interest, must be paid to the benefit of the Guardian's Fund of the Master of the High Court, to be held and dealt with in accordance with the rules of that Fund.

2. In this section any reference to a 'holder of securities who has not accepted the offer' includes any holder who has failed or refused to transfer their securities to the offeror in accordance with the offer.

84. It should be noted that subsection (5)(a) suspends the implementation of the offer for all concerned if an application is pending, until it is “disposed of”.

85. It is not immediately clear to me why this should be so, if the application brought under s124(2) relates only to the acquisition of the shares of the dissentient minority actually bringing the application, and the orders that may issue in terms of sections 124(2)(a) or (b) affect only the immediate transactions as between the offeror and the dissentient litigating applicants, and not the transactions as between the offeror and the rest of the offerees who accepted, or the rest of the dissentient minority who did not come to court.

86. This of course raises the question whether the orders contemplated in subsection (2) are indeed limited to the terms and transactions as between the offeror and the litigating minority, or whether the subsection contemplates orders binding on the offeree body as a whole, and the offer as a whole, or the non-accepting minority as a whole, including those who did not approach a court and were content to be compulsorily bought out.

87. Neither party was in a position to refer me to any authority on this question. Both accepted, at least prima facie, that the answer to the question appeared to affect the consequences of the bringing of an application, and may also affect the issue to be determined in these proceedings.

88. Mr Trengove made two main submissions in this regard –

88.1 The difference in wording between paragraphs (a) and (b) of subsection 124(2) strongly suggests that the court is concerned in paragraph (a) only with the transactions with the litigating minority, but that paragraph (b) would allow the court to impose conditions on the offer as a whole – binding on the other remaining offerees; such a reading would better justify the suspension of the implementation of the offer to await the outcome of the application; and

88.2 Whether this was so or not, the fact remained that the implementation of the offer was suspended for all remaining offerees to await the outcome of the dissentient litigating minority’s application, making the scheme of the section simply unworkable if it could not be known, the moment the 30 day period passed, whether the offer should or can now be implemented or not.

89. Mr Bham submitted that the orders contemplated in section 124(2) could never be orders binding on the other offerees not party to the litigation. Such a situation would mean the dissentient applicant who happened to get his or her application into court first would speak for all offerees, even other dissentient applicants who wished to bring proceedings but were too late.

90. The submission went further: there was no need for a concern about suspension of the implementation of the offer pending the outcome of the dissentient minority’s application, as the “application” in subsection (5)(a) the “pending” character of which would suspend the implementation of the offer was not the application of the dissentient minority, but rather the application by the offeror envisaged as possible in subsection (3).

91. On this submission, the implementation of the offer with respect to those who did not go to court is not suspended at all while the transactions of the dissentient minority are the subject of court proceedings.

92. It is true that such a construction would remove the problem that an application under s124(2) suspends the implementation of the whole offer for everybody.

93. It may be noted that the wording of s440K(2) was such as to make it clear that the pending application was in fact that of the dissentient minority.⁵⁰ This was also clear from s430C of the 1985 UK Companies Act and remains clear in s986 of the 2006 UK Companies Act. Henochsberg’s commentary⁵¹ on s124 also clearly assumes that the pending application at issue is that of the dissentient minority. Although one may sometimes regard differences in the wording of the sections as significant indications of material differences in effect, this is one case where linguistic adjustments and differences over time and across jurisdictions are less important than an obvious degree of uniformity of structure and mechanism. Suffice it to say that the interpretation suggested by the plaintiffs would be a radical departure from the orthodox structure, hitherto apparently unheralded.

94. But that construction cannot be correct. There are two important reasons for this:

94.1 Subsection (5) operates only once there has been a notice under subsection (1). The application envisaged in subsection (3) occurs only if there has not yet been such a notice. The application that is pending in subsection (5) therefore cannot be the application of the offeror contemplated in subsection (3). In fact, the structure of subsection (5)(a) simply does not fit together with what is contemplated in subsection (3) if “an application” in subsection (5)(a) were to be read as referring to, and especially referring only to, an application under subsection (3).

94.2 If the suspension of the offer in subsection (5) does not relate to the dissentient minority’s application, then there is no provision in the section that even suspends the implementation of the offer with respect to the dissentient minority themselves once they bring their application, as subsection (5) would decree implementation despite the launch of their application.

95. Mr Bham accepted that the offer must at least be suspended with respect to the dissentient minority if it brings proceedings under s124(2). But this would require reading such a suspension provision into the statute, where there already is precisely such a provision in subsection (5) – only extending to the whole of what remains of the offer, not only to the transaction of the dissentient applicants.

96. Mr Trengove submitted that the pending application in subsection (5) must at least include the dissentient minority’s application, whatever else it includes. This must be right. It seems clear to me that the pending application in subsection (5) is that of the dissentient minority – as it has always been in the historical versions of the mechanism that were more clearly worded thus, and as it still is in the current direct English model.

97. As for the question whether section 124(2)(b) contemplates imposing altered conditions on the offer as a whole, or only with respect to the transactions of the dissentient minority, the following:

97.1 The wording of s103ter and its English counterparts left very little room for any possible construction that contemplated the imposition of terms for others besides the litigating dissentient minority. In relevant part, s103ter read:

“and where such notice is given the transferee company shall, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given the Court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which under the scheme or contract the shares of the approving shareholders are to be transferred to the transferee company.”⁵²

97.2 Although Sammel accepted the orthodoxy that the fairness of the terms of the offer was generally to be considered with regard to the body of offerees as a whole, and not only with respect to the dissentient minority,⁵³ it was clear from that judgment that the orders contemplated would relate only to the immediate litigating parties:⁵⁴

“Mr. Suzman, however, contended that the non-disclosures constituted a 'special circumstance', within the meaning of the term as used in Hoare's case, justifying the Court in ordering otherwise for the benefit of the dissenting minority shareholders.”

97.3 After all, 7 actions were instituted in Sammel by different groups of dissentient minorities, something that would have made no sense if the outcome of one’s proceedings determined the terms of the offer for all.

97.4 The current formulation of the different orders in s124(2)(a) and (b) echoes the formulation of the orders in s440K(1)(a)(i) and (ii), which in turn echoed the relevant provisions of section 430C of the UK Companies Act 1985. The current UK Companies Act 2006, however, makes it clear in section 986 that the different terms that the court can impose relate only to the shares of the recipient of a notice who has applied to court. Despite this difference in wording, the assessment of the provisions of the 1985 Act by the Chancery Division in Re Chez Nico (Restaurants) Ltd⁵⁵ made it clear that the conditions of offer that the court could impose related only to the transaction with the litigating minority (i.e. also under the 1985 Act). The alteration in wording in 2006 merely clarified what was never apparently doubted to be the position.

98. In my view, the provisions of s124(2)(a) and (b) apply only to the transactions with the litigating dissentient minority.

99. The question as to the scope of application of the orders contemplated in s124(2)(b) was not squarely before me, although it was concededly relevant to the cogency of the first exception. Whether the conclusion reached above in this regard is correct, it is not necessary for the determination of the matter, and it may well require revisiting when it is squarely before a court. What is important for present purposes about the historical and comparative survey is that it makes it clear that the policy animating this statutory mechanism regards it as important, or at least has no difficulty, to suspend the operation of the implementation of the whole offer upon the launch of an application by the dissentient minority, pending the disposal of such application, even where such application can yield only orders that specifically apply only to the transactions with the litigating dissentient minority.

100. The exercise of the option to bring proceedings therefore entails a series of legal consequences for the offer and body of remaining offerees as a whole, immediately the option is either exercised (the whole process is suspended) or the time for exercising it expires (the offer must now be implemented, corresponding rights and obligations vest for all concerned).

101. Critical is Mr Trengove’s submission that, if a condonation power were to be read into section 124(2), relatively radical engineering would be required to be effected also to other parts of the section – especially subsection (5). Reading a condonation power into subsection (2) would in effect require re-legislating the transaction mechanism set out in the section.

102. How would this be done? Clearly, there can be no suspension of the implementation of the offer when there has been no court process and the period for halting the process has expired. Subsection (5) therefore operates, and the steps taken in subsections (6) and (7) must be taken. But if the application is then launched? How does one re-write subsection (5), and up to what point of implementation would suspension then apply? Is there to be restitution of implementation steps already taken? None of these potentially differing consequences can simply be implied into the section as the obvious necessary corollary of reading a power to condone into section 124(2).

103. On reflection, it seems to me that, to the extent that one is inclined to view the application envisaged in section 124(2) purely as regulating the justiciability of a dispute between the dissentient minority and the offeror about enforcing the rights of the former, the arguments advanced by the plaintiffs appear powerful. But to the extent that one regards the mechanism in s124(2) as a step within an integral part of a wider transaction, entailing the exercise of an election with consequences for the wider transaction when exercised and when not exercised, it becomes very difficult to avoid a finding that the section simply does not work if one allows the option period in section 124(2) to unravel. Then the mere fact that the objection as to fairness is determined by a court becomes insufficient to warrant hacking away at the structure of the statutory transaction in order to confer procedural entitlements upon the dissentient minority that do not fit into such structure.

104. Had the provision required the dissentient minority, if it wished to exercise the opt-out election, to post or to submit an objection or election notice by a certain date, which was then, say, to be put to the board of the offeree company for consideration, there would be little doubt that any construction of the section that extended the date for the exercise of the election, simply because that would better promote the property rights of the minority, would receive short shrift. The introduction of the court as the entity to adjudicate the issue once the objection is launched should not in my view by itself decisively determine the approach taken to the essential character of the transaction fashioned by the legislative scheme.

105. One must also not lose sight of the major purpose of the provision: to avoid allowing the minority to oppress the (new) majority by holding the fate of its take-over bid to ransom, having the tail wag the dog. This purpose is served by providing for the compulsory buy-out when a tipping point is reached in the change of control. And yes, there is the corrective of applying for an opt-out, exercised under the auspices of the court. But unless that corrective is rendered subject to a strict and absolutely applied time-frame and mechanism for its exercise, the purpose of avoiding the tail wagging the dog can be defeated entirely. If a Damocles sword of a potential application were allowed to imperil the implementation of the transaction, even if only for a number of days, let alone weeks or months, the attendant uncertainty puts the mini-minority right back to its position of potential extortionist that was the very mischief the statutory mechanism sought to combat.

106. Mr Trengove submitted that there was nothing in the right to property or in s34 of the Constitution to suggest that a deadline must be fluid in order not to be arbitrary.

107. That seems correct. But perhaps more fundamentally, it is precisely the absence of fluidity in the deadline that is critical for the achievement of the statutory purpose.

108. This application does not concern the adequacy of the opportunity afforded by s124(2) – such a question would need to be assessed if the section were to be challenged as unconstitutional.

109. It concerns instead the degree to which the section must be read as precluding the potentially indefinite extension of the time period it sets that would be entailed by reading a condonation power into it. Unlike the provision in Phillips v Direkteur vir Sensus in respect of which the Appellate Division could see “geen duidelike noodsaaklikheid aanwesig … vir die instelling van ‘n onverbiddelike valbyl,”⁵⁶ the current provision entails precisely such a “duidelike noodsaaklikheid” to achieve the purpose of the section.

110. I am therefore of the view that, despite the power of the principles relied upon by the plaintiffs, and despite the fact that the words of the subsection itself are concededly neutral and contain no express exclusion of a power to condone, the exclusion of a power to condone must be implied into the subsection by way of necessary construction.

111. I accordingly conclude that the first exception is well taken, and that the application for leave to amend falls to be refused insofar as it fails to cure the grounds of exception set out in paragraphs 2 to 6 of the Notice of Exception dated 6 July 2012.

B. THE SECOND EXCEPTION – IS AN ACTION COMPETENT?

112. In light of the finding in the first exception, and on the assumption of its correctness, the practical relevance of this second exception may well have been reduced for the parties.

113. Ms Fourie addressed me on behalf of SISA on this exception, and Mr Trengove in reply.

114. In the case of the first exception, it does seem meaningful to say that the claim lacks legal competence after the expiry of the statutory period, and to have this raised on exception if this phenomenon appears clearly from the particulars of claim. It seems to me, however, that the kind of objection entailed by the second exception is more appropriately raised by way of objecting to the regularity of the proceedings in terms of Rule 30 than by taking exception to the legal competence of the cause of action. “You should have advanced this cause of action on motion, not by summons” is not a challenge to the legal competence of the cause of action; it is instead an objection to the procedural step taken by the opposing litigant. Be that as it may, Mr Bham did not wish to take this point, and was content to have the merits of the objection determined without recourse to the form in which it was couched.

115. SISA conceded that the term “apply to court for an order” as used in section 124(2) could be used broadly, to mean little more than “ask the court for”, without specifying a particular procedure, or more narrowly, to refer to proceedings by way of an application on motion.⁵⁷

116. The plaintiffs relied on case law dealing with various similarly worded provisions where, despite use of the term “on application” or “apply to court”, action proceedings were specifically allowed.⁵⁸ Even the phrase “apply by motion” has been held not to preclude proceeding by way of action.⁵⁹

117. It does not help in this regard that the term “application” has over the years in England entailed a more generic procedural meaning than in South Africa, readily including initiating proceedings by way of summons,⁶⁰ and that the words of these provisions are the progeny of English models.

118. It was urged by Mr Bham with reference to Neumann⁶¹ that, particularly where the kinds of disputes envisaged by the provision were such as would invariably entail disputes of fact, the broader meaning was to be ascribed to the term.

119. I agree that the kinds of dispute that would arise in considering whether the terms of the offer are fair, or the conditions are to be altered, are of the order that would place this provision in the category where this was a factor in favour of allowing proceedings by way of action. This appears clearly from the fact-intensive complexity of the Commonwealth cases that have considered the fairness of the offer when challenged by the dissentient minority.

120. Neumann was assumed to be correct by the Appellate Division in Howard v Herrigel & Another NNO ⁶² and this assumption was critical to the finding of the court – having held action to have been a competent option, the applicant failed because he had “elected” to go on motion and had to have the case decided on the respondent’s version.⁶³

121. SISA argued that, given the statutory imperative to proceed speedily to finality in the implementation of the transaction, and the fact that such implementation must await the outcome of any application, it would invite abuse to allow the dissentient minority to choose a form of proceeding that inevitably entailed the delays of trial, whereas a referral to trial for disputes of fact in motion proceedings would occur only where the court held this to be appropriate.

122. It seems to me that, once the jurisdiction of the court is engaged, whether by way of motion or by way of trial, the transaction is well and truly derailed, and the degree to which the transaction is derailed is then not necessarily different by orders of magnitude as between trials and motions.⁶⁴ In any event, I do not think the greater potential for abuse to be a sufficient basis for regarding the section as precluding proceedings by way of action.

123. SISA also relied on the fact that the Supreme Court of Appeal in Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein (Kyalami)(Pty) Ltd⁶⁵ remarked that “motion proceedings have been dictated by the legislature”, with reference to s163 of the Act (dealing with business rescue), where the identical words “apply to court for an order” were employed. Similarly, the court a quo in Oakdene⁶⁶ used the words “unfortunately, the legislature has deemed it fit to prescribe motion proceedings in matters where an order is sought for the business rescue of a company,” suggesting strongly that it was understood that this procedure was imperative.

124. That the words “dictate” and “prescribe” suggest a peremptory procedure is undeniable. What is not clear, however, was exactly what the Oakdene courts were saying about the use of motion proceedings. The application in that case was indeed brought on motion, and the court a quo, having first pointed out that this was “unfortunately prescribed” by the legislature, then proceeded apparently to warn legal practitioners that they ought nevertheless to heed the fact that motion proceedings were singularly inappropriate for the resolution of disputes of fact such as were likely to arise in these kinds of matters.⁶⁷ This warning appeared to make sense only to the extent that it implied an option rather to choose proceedings by way of action. The endorsement of these sentiments in the Supreme Court of Appeal⁶⁸ was equally difficult to reconcile with the statement that motion proceedings were “dictated”.

125. It appears that this warning might well be taken to mean that the courts in Oakdene meant by “prescribed” or “dictated” merely that the procedure carried the imprimatur of the legislature – and that practitioners were told that this did not mean they ought not nevertheless in appropriate cases rather employ action proceedings. Such a reading is concededly somewhat strained, but I confess to some difficulty with ascertaining the precise purpose of specifically warning practitioners to count the cost of proceeding by way of motion, where motion is said to be inappropriate, unless this were in some way to suggest some other option were preferable and open to be employed.

128. Be that as it may, Oakdene is a relatively tenuous foundation on which to build a case for regarding s124(2) to preclude proceedings by way of action. This is so not least because s163(2)(l) specifically contemplates an order referring the application to trial, which is a factor that can by itself be a decisive indication that the legislature had only application proceedings in mind in the context of s163, and s124 contains no such provision. The ratio of a decision SISA relied upon, namely Rembrandt Fabrikante en Handelaars (Edms) Bpk v Gulf Oil Corporation⁶⁹ depended on a construction of the section in issue in that case as contemplating only application proceedings because of the fact that the section specifically contained the power to order the trial of issues of fact in the manner directed by the court.⁷⁰

127. SISA also relied on the reasoning in Rembrandt for the proposition that, where the remedy is a unique statutory remedy, the procedure laid down by statute for enforcing it must be peremptory. This may well be so, but it begs the question whether the procedure of motion proceedings is in fact laid down by statute in s124(2). Furthermore, as already noted, Rembrandt relied on the presence of a provision similar to that in s163(2)(l) for construing the provision before it as requiring motion proceedings.

128. What to me is ultimately decisive of the issue is the fact that the seminal case on section 103ter, namely Sammel, itself entailed the bringing of proceedings by way of action (7 actions), the first of which spanned 32 days of trial, “in which massive documentary and oral evidence was adduced”.⁷¹

129. The relevant wording of s103ter that served in Sammel was “on application made by the dissenting shareholder within one month”. I can see no significant difference between this and “apply to court for an order”, save that “on application” is more, rather than less, suggestive of a reference to the process itself than of a generic reference to seeking relief from the court.

130. The competence of proceeding by way of action was not raised in Sammel. But the Appellate Division clearly had no difficulty with accepting the appropriateness of action proceedings to deal with the objection by the dissentient minority, and saw no obvious bar to such proceedings in the provisions of the section that were more strictly worded than the provisions of s124(2). A finding by me that the purpose behind s124(2) demands a reading of that section as precluding action proceedings would entail accepting that the failure by the Appellate Division in Sammel to recognize this for s103ter was per incuriam. I see no good reason for this.

131. In my view, the second exception is not sound, and so the objection to the amendment it embodies falls to be dismissed. The additional words sought to be introduced into the particulars of claim that refer to the competence of action proceedings on a proper construction of the section must therefore, in theory, be allowed. But, on the basis that the first objection was held to be good, these words would form part of an incompetently brought action, and it would not be appropriate to give leave to effect an amendment to the particulars of claim of such an action.

C. THE THIRD EXCEPTION

132. As with the second exception, the fate of the first, on the assumption that it is correct, may render the outcome of the third practically academic to the parties. I do however believe it appropriate to deal with it. As with the second exception, Ms Fourie addressed me on behalf of SISA on the third exception, and Mr Trengove in reply.

133. No doubt the formulation of the claim against SISA strikes one as anomalous. The particulars of claim say the following to SISA: “I have received no offer from you. I received one from someone else. I have sued that other person to enforce a statutory remedy arising out of the offer he sent me. Should it be held that it was not he who sent me the offer, but you, then the relief I seek against him is now sought against you.”

134. It is not only the conditionality of the claim that is potentially problematic. It is the fact that the only allegations in the claim as to who the actual offeror is are destructive of the claim itself. SISA argued that it could admit these allegations and thereby leave the claim bereft of a cause of action against SISA. This has been held to be a classic basis for rendering a claim excipiable.⁷²

135. SISA argued that the condition in the claim must be interpreted as relating to a future finding in the Sun action. On this basis, it was argued that, although the objection was not to the conditionality of the claim per se, it was to the fact that the fulfilment of the condition hinged on a future contingency, thereby by definition depriving the claim of a cause of action at the time of institution of proceedings. Reliance was placed in this regard on Nel v Silicon Smelters (Edms) Bpk en ‘n Ander⁷³ and cases cited in it.⁷⁴

136. Nel is indeed in my view the closest case in point, and the one that governs the third exception.

137. In Nel, the appellant N had concluded a contract of sale with the respondent S, to deliver a certain quantity of wood to S at a certain rate. At some point, N concluded a contract with D in terms of which D would deliver the remaining quantities of wood to S on N’s behalf. The contract with D contained a guarantee from N as to the remaining quantity. A dispute arose between S and N about the rate and quantity delivered, and S purported to cancel. N took this as a repudiation and cancelled. N then sued S for damages on the repudiation. Thereafter, before the matter proceeded to trial, D sued N for damages for breach of the guarantee. N then amended his particulars of claim against S to add a damages element in the event that it be held that he was in fact liable to D, something he denied, as such liability depended on his being wrong in his dispute with S. There was no exception or objection to the amendment at the time, and the two actions were then consolidated as one. Before the trial, however, S raised an exception to the claim for the additional damages on the basis that this claim was wholly conditional. The exception was upheld, but the decision reversed on appeal.

138. It was argued, with reference to Munro and Another v Tayfield,⁷⁵ British Oak Insurance Co Ltd v Gopali,⁷⁶ and Rondalia Bank Bpk v Pieter Nel Motors (Edms) Bpk,⁷⁷ that, although since Rondalia it was clear that conditional counterclaims were allowed,⁷⁸ a purely conditional original claim, such as the claim for that portion of damages based on liability to D, was not competent.

139. The Appellate Division rejected the argument on two bases.

1.39.1 It held that the D damages really formed part only of the scope of damages of the same cause of action advanced against S, and that it was accordingly only this aspect of the cause of action, not the cause of action itself, that was “voorwaardelik of onvolledig”.⁷⁹ This would tend to support the proposition that if the conditionality affects the whole cause of action, the cause of action is “onvolledig” for being “voorwaardelik”.

139.2 But the court also held that conditional claims were in any event sometimes allowed, whether directly or indirectly (“regstreeks of onregstreeks”) especially because of the strictures of the “once and for all” rule, and whether this was to be allowed in any given case depended on all the surrounding circumstances of the action and the type of claim at hand (“al die omliggende besonderhede van die saak of die soort saak”).⁸⁰

140. These two independent bases for the finding in Nel were confirmed at 801G:

“Maar hierdie Hof het besluit dat die eis nie voorwaardelik is nie, en daar skyn in elke geval geen rede te wees waarom so 'n eis nie in gepaste omstandighede erkenning kan geniet nie.”

141. In the instant case, much depends in this regard on the question whether the particulars of claim must be read as basing the condition upon a finding in the Sun action (which can only be contemplated as a future contingency when the present claim is being advanced). If this is so, then the exception must be sound, based on the principle recognized in Nel that the cause of action, whether conditional or not, must be complete as at the date of institution of proceedings.

142. I do not think the particulars need to be construed thus. If the instant claim is to be read in isolation, then it can reasonably be taken as pleading an implicit alternative allegation that SISA is the offeror. “If it be held” that this is indeed so would then, in the absence of any consolidation of the actions, be a finding in this action, not in the Sun action.

143. The finding would relate to a state of affairs existing as at the time action was instituted – who was, at all material times, the offeror? There would then be no problem entailed by advancing a claim conditional upon a future contingency.

144. This is admittedly a relatively artificial way of considering the summons, mainly because it was never intended to operate in isolation from the Sun action. It specifically pleads the Sun action and pleads an intention to consolidate, having introduced the two alternative findings in respect of the identity of the offeror into the pleadings.

145. In Nel, S objected to the approach adopted by N, of first amending the claim against S by making a part of it conditional upon a finding as to the liability to D, and then consolidating the actions, instead of joining D to the present proceedings. The Appellate Division rejected the objection as the consolidation route was seen as amounting to another way of achieving joinder.⁸¹

146. Apart from the fact that in Nel the conditional aspect of the claim was held not to affect the whole cause of action, but only the scope of the damages, the only real difference between that matter and the present for present purposes is that the exception arose in Nel only after the amendment and consolidation had already been effected as a fait accompli. But the exception was assessed on its merits, irrespective of the fact of the achievement of the consolidation. It seems to me that Nel must be regarded as sufficient support for allowing the plaintiffs to achieve joinder by the clumsier route of amendment and consolidation, at least in circumstances where one is not viewing the SISA action in isolation. Had I viewed the SISA claim in isolation, I would have upheld the exception.

147. For these reasons, the third exception falls to be dismissed. As it stands apart from the application for leave to amend, there is no procedural anomaly in dismissing it despite the finding above on the first exception.

D. ORDERS

148. There can be little doubt, in my mind, that the first defendant was substantially successful on the whole and that costs of two counsel should be awarded. This is not a case where costs ought appropriately to be apportioned as among the exceptions. The following orders are made:

A. The plaintiffs’ application for leave to amend is refused.

B. The exception captured in paragraphs 10 to 13 of the first defendant’s notice of exception dated 6 July 2012 is dismissed.

C. The plaintiffs are directed to pay the first defendant’s costs of the application for leave to amend and of the exception, jointly and severally, the one paying the others to be absolved, such costs to include the costs attendant upon the engagement of two counsel.

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FA Snyckers

Acting Judge

18 October 2013

COUNSEL FOR PLAINTIFFS: AE BHAM SC

S BUDLENDER

Instructed by Mervyn Taback Incorporated, Johannesburg

COUNSEL FOR FIRST DEFENDANT: WH TRENGOVE SC

N FOURIE

Instructed by Bowman Gilfillan Incorporated, Johannesburg

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