IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

In the matter between:
CIVILS 2000 HOLDINGS (PTY) LTD 				Plaintiff
and
BLACK EMPOOWERMENT PARTNER 			
CIVILS 2000 (PTY) LTD					First Defendant
CIVILS 2000 (PTY) LTD					 Second Defendant
SHARIF PANDOR						Third Defendant

JUDGE:						P.A.L. Gamble

FOR THE PLAINTIFF				Adv. MJ. Fitzgerald SC and 							Adv. I.C. Bremridge

INSTRUCTED BY:					C&A Friedlander

INSTRUCTED BY :					 KJ. Bredenkamp	
DATES OF HEARING:				22 November 2010 
DATE OF JUDGMENT:				8 February 2011 

IN THE HIGH COURT OF SOUTH AFRICA 
WESTERN CAPE HIGH COURT, CAPE TOWN

					
						CASE NO: 1565/2010
In the matter between:
CIVILS 2000 HOLDINGS (PTY) LTD						Plaintiff
and
BLACK EMPOWERMENT PARTNER CIVILS 2000(PTY)LTD			First Defendant

CIVILS 2000 (PTY) LTD								Second Defendant

SHARIF PANDOR								Third Defendant

JUDGMENT DATED 8 FEBRUARY 2011

[1] On 26 January 2010 the Plaintiff company issued summons against the three Defendants for relief based on Section 252 of the Companies Act. 1973 ("the Act').

[2] On 1 April 2010 the First and Third defendants filed a special plea of nonjoinder as also a plea on the merits.

[3] On 15 June 2010 the First and Third defendants filed an exception to the Plaintiff s particulars of claim, the substance whereof I shall revert to shortly. Since the exception was filed out of time and after service of the plea, it was capable of being set aside as an irregular step under Rule 30. The Plaintiff elected however not to file a Rule 30 notice but arranged for the exception to be heard as a matter of semi-urgency.

[6] It is common cause that Pandor was duly appointed as a director of the Second Defendant and that a certain Shireen van der Schyff was appointed as an alternate director in Pandor's stead.

[8] The Plaintiff says that it is unable to remove either Pandor or van der Schyff as directors of the company due to the structure of the shareholders agreement - the terms are such that it cannot muster the requisite 76% of shareholder support to achieve this end. It has therefore approached the Court for an order under Section 252 to secure the transfer of the First Defendant's shares in the company to either the company, or it, at no consideration.

[9] The relevant provisions of Section 252 of the Companies' Act. 1973 are to the following effect:

"(1) Any member of a company who complains that any particular act or omission
of a company is unfairly prejudicial, unjust or inequitable, or that the affairs of
the company are being conducted in a manner unfairly prejudicial, unjust or
inequitable to him or to some part of the members of the company, may.
subject to the provisions of sub-section (2), make an application to the Court
for an order under this section	

(2) If on any such application it appears to the Court that the particular act or omission is unfairly prejudicial, unjust or inequitable, or that the company's affairs are being conducted as aforesaid and if the Court considers it just and equitable, the Court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the future conduct of the company's affairs or for the purchase of the shares of any members of the company by other members thereof or by the company and. in the case of a purchase by the company for the reduction accordingly of the company's capital, or otherwise.

(3) Where an order under this section makes any alteration or addition to the memorandum or articles of a company -
a)	the alteration or addition shall, subject to the provisions of paragraph (b), have effect as if it had been duly made by special resolution of the company: and
b)	the company shall, notwithstanding anything contained in this Act, have no power, save as otherwise provided in the order, to make any alteration in or addition to its memorandum or articles which is inconsistent with the order, except with the leave of the Court."

[10] It has been held that the purpose of the section is to afford equitable relief to any members of a company who have a legitimate complaint of any act or omission by the company or of the conducting of its affairs which is prejudicial, unjust or inequitable towards them.

[11] In bringing a claim based on the section it is not necessary that specific reference be made in the pleading to the statutory provision. However, to succeed in such a claim the Plaintiff would have to establish the following:

11.1   an act or omission by the company itself which is unfairly prejudicial to the Plaintiff or some part of the members of the company;
11.2. that the affairs of the company are being managed in such a manner;
11.3. the nature of the relief sought to remedy the matters complained of; and
11.4. that it is just and equitable that such relief be granted. 

[12]   The substance of the First and Third Defendants' exception is as follows:

“5...(T)he Honourable Court is only entitled to exercise the powers contained in Section 252 if the jurisdictional facts contemplated by the said section have been fulfilled.

to the Plaintiff as a member of the company or to some part of the members of the company as contemplated and required by Section 252 of the Companies Act.

as contemplated and required by Section 252 of the Companies Act.

Defendant on the Board of the company and. inter alia, acting on behalf of First Defendant:
27.1. Have set up a company or companies which compete or are intended to compete with the business of the company:
27.2. Are taking advantage of their association with the company in a manner that is fraudulent, unfair and unlawful and intended to benefit African Footprint and its shareholders to the detriment of the company and ultimately the Plaintiff, as a member of the company, more particularly, in assisting African Footprint to compete unlawfully with the company "

[15] It is further alleged in the Particulars of Claim that these directors were in breach of various of their fiduciary duties owed to the company.

[16] A director of a company will be in breach of the fiduciary duty owed to that company where he/she is placed in a position in which his/her duties or interests conflict with those of the company, for example, by becoming a director or taking up office in a competitor company . This is precisely the nature of the corporate misconduct of which the Plaintiff complains,

" 'In addition to these wrongs to the minority, this is the type of case in which a wrong is done to the company itself and the control vested in the majority is wrongfully used to prevent action being taken against the wrongdoer. In such a case the minority is indirectly wronged.' There are a number of reported cases under the current legislation in which petitions have been entertained by the courts where the wrongdoers' conduct consisted wholly or partly of wrongs done to the company"

"Clearly, acts or omissions of the directors and managing directors are acts of the company; and in the circumstances so too are those of senior officers.
Acts or omissions of such persons are acts or omissions of the company even when they injure the company and constitute a breach of a duty owed to the company, indeed, it has been held that acts of such persons are acts of the company even when not perfonned in the positive conduct of its affairs, if done in breach of a duty owed to it, eg. the setting up of a business by a director in competition to the company's business, for such acts constitute positive misconduct in relation to the company's affairs."

[20] The development of one company law over the past century has drawn richly from English law. And while our 1973 Companies Act is said to have ushered in a marked divergence from that colonial legacy, our courts have often looked to English company law when interpreting statutory provisions with similar import in both countries.  Given the similarities between Section 252 of the Act and Section 459 of the English Companies Act of 1989, I am of the view that such an approach is warranted in the instant case.

[21] Accordingly, I hold that the Plaintiff's allegation that the breach of their fiduciary duty on the part of the directors who represent the First Defendant on the board of the company is conduct of the company as contemplated under Section 252 of the Act. is legally sound. In my view, there is therefore no merit in the first ground of exception raised by First and Third Defendants.

[27] In my view the exceptions must therefore fail. I am satisfied that the complexity and importance of the matter warranted the engagement of two counsel on the part of the Plaintiff

[28]   Accordingly I make the following order:
(a) The First and Third Defendant's Exception to the Plaintiffs Particulars of Claim is dismissed.
(b) The First and Third Defendants are to bear the Plaintiffs costs of suit in the Exception jointly and severally, the one paying the other to be absolved, such costs to include the costs consequent upon the engagement of two counsel.