CASE LAW UPDATE

Facts: Rand Airport Holdings is the owner of the immovable property from which the Rand Airport operates. Rand Airport Management, a wholly-owned subsidiary of Holdings, manages and operates the Rand Airport. The shareholders of Holdings are Rand Operators, holding 50% of the issued shares, Mayondi Investments, holding 30% of the issued shares, and Ekurhuleni Metropolitan Municipality, holding 20% of the issued shares. The approximately 38 shareholders of Operators are occupants of properties at the Rand Airport and conduct business from the Rand Airport. Stuart Colin Coetzee (Coetzee) was employed by Management as airport manager. He was also a director of Operators and the companies. An investigation followed on the companies becoming aware of irregularities and the boards of the companies adopted unanimous round-robin resolutions to proceed with civil action against Coetzee regarding alleged financial mismanagement, fraud and theft.

Application: The board of the companies, other than the applicants, adopted resolutions that the applicants had neglected, or been derelict in the performance of their functions as directors and they were accordingly removed as directors of the companies with immediate effect. It was perceived that the applicants supported Coetzee and his alleged unlawful activity against the companies. It was alleged that it was the intention of the applicants to change the composition of the boards of the companies to enable the new boards to withdraw the criminal charges against Coetzee and to terminate the legal action against him. The applicants have launched a review in terms of section 71(5) of the Companies Act 71 of 2008.

* See the discussion at paras [32]-[40] on the nature of the section 71(5) review.

Discussion: The applicants were appointed as directors of Operators and thus became directors of the companies on 1 June 2023. The conduct of the applicants in supporting Coetzee on 28 April 2023 to demand that a shareholders meeting of Operators be held for the purpose of removing the first and second respondents as directors of Operators was done in their capacities as representatives of shareholders of Operators. In view of the fact that the applicants had not been appointed as directors of the companies at that stage, this conduct is irrelevant and cannot support allegations of neglect or dereliction in terms of section 71(3)(b). The conduct of the applicants on which reliance is placed by the respondents did not amount to the exercise of powers and the performance of functions of directors of the companies. The applicants did not breach their duties.

Findings: The fact that the applicants supported legal action against Coetzee approximately six weeks after they had indicated that the first and second respondents should be removed as directors of Operators and the fact that the legal action against Coetzee is ongoing without any evidence of interference by the applicants therein, support the applicants' allegation that they do not have the intention to terminate the legal action against Coetzee. There is no reason why the applicants cannot simultaneously support legal action against Coetzee and the removal of the first and second respondents as directors of Operators and the companies. The applicants were not negligent or derelict in the performance of their functions of directors of the companies, within the meaning of section 71(3)(b), and the first to sixth respondents could not validly determine to remove the applicants as directors of the companies.

Order: The determinations of the boards of directors to remove the applicants as directors of Holdings and Management are reviewed and set aside. The applicants are forthwith reinstated as directors. The first to eighth respondents are directed to pay the costs of the application on scale B.

OOSTHUIZEN AJ

Application: The applicant has brought a Uniform Rule 43 application against the respondent, her husband. The application is contained in three separate volumes and covers some 260 pages. The applicant’s sworn statement is prolix in the extreme. It contains irrelevant allegations and has attached to it literally dozens of photographs, the precise relevance of which is not clear. Examples of these photographs are a photograph of a Michael Kors handbag allegedly purchased by the respondent, a photograph of the “Respondent’s lipstick and semen-stained T-shirt” and messages recorded on a cellular telephone relating to an incident involving Viagra pills. It is, quite frankly, scandalous that the applicant’s legal advisors have permitted such irrelevancies to find a place in this application.

Discussion: Those who compiled this application obviously have paid no heed whatsoever to the contents of Uniform rule 43 and its specific purpose. That rule was crafted to allow, pendente lite, for disputes involving maintenance and associated relief in matrimonial proceedings to be “speedily and expeditiously” addressed and resolved. The whole purpose behind Rule 43 is brevity. This is entirely understandable, as the relief that is granted is not final relief but interim in nature that will, in normal circumstances, not be in place for very long. Thus, where a party, or both parties, deliver prolix papers, the very essence of the Rule 43 is abused. This court is entitled to regulate proceedings before it and to prevent the abuse of its own processes by a litigant. This application is such an abuse.

Findings: The growing trend of presenting Rule 43 applications that are lengthy and that do not comply with the prescripts of Rule 43 must be halted. Judges simply do not have the time to peruse lengthy affidavits that narrate every misstep and alleged wrongdoing of a spouse. Often these allegations are included simply to colour the court’s mind against a particular party. One way of potentially halting these abuses is to order costs against a party that is guilty of prolixity. The court is prepared to assume that the applicant personally had no knowledge of what her application should contain. Those that had such knowledge, and who must have known that the application that was prepared for the applicant offended the provisions of Rule 43, were her legal advisors. In Visser v Visser 1992 (4) SA 530 (SECLD) the court directed that the attorneys acting for both parties where the papers presented by both sides were prolix should not be able to charge their respective clients for work done in respect of the Rule 43 application. Hopefully, such an order will cause legal practitioners to show greater discipline in preparing these types of applications.

Order: The matter is struck off the roll. There shall be no order as to costs. The applicant’s attorney shall not be permitted to charge the applicant any fees in respect of this application.

MOSSOP J

Facts: The applicant and the respondent are in the process of a divorce. Two children have been born of the marriage. They are married out of community of property with inclusion of the accrual system. Both declared their assets to have a nil value at commencement of the marriage. Despite this declaration, the respondent was the owner of a property which became the matrimonial home. The applicant left the matrimonial home and a year later heard that the property was being sold. The applicant launched an urgent ex parte anti-dissipation application seeking that the net proceeds of the sale of the respondent’s immovable property be held in trust. A rule nisi was granted, calling upon the respondent to show cause why the order should not be confirmed and made final. Transfer of the property had taken place based on an offer to purchase for R4,2 million. The applicant’s stated intention was to secure part of the net proceeds of the sale for purposes of payment of his claim against the respondent for an accrual. The respondent intended securing the other part of the funds for purposes of the tertiary education of the minor children. For this purpose, she intended setting aside R1,5 million to pay for their tertiary education. The balance would be part of the accrual.

Application: Due to the agreement, R1,5 million of the funds that are subject to the interim order will be transferred to pay for the tertiary education of the children. The dispute relates to the balance of the restrained funds, being approximately R1,3 million. The applicant approaches the court on two bases, namely, anti-dissipation; and/or based on his claim to a share of the net proceeds of the property to secure his claim for an accrual, being quasi-vindicatory in nature.

Discussion: The respondent has been consistent in her intentions regarding use of the net proceeds of the sale of the property. Her primary concern was for that of their children and their education. The balance would be available if a claim to share in the accrual is established on the part of the applicant. The fact that the applicant has agreed to the setting up of an educational fund for their children, as the respondent has intended throughout, confirms that the extent of the rule nisi exceeds the amount required to achieve its purpose. Whether the applicant had control of that fund or not, it cannot be said that setting up a fund for the education of his children amounts to dissipation of the respondent’s assets with the intention of thwarting his accrual claim. The facts placed before the court by the respondent cast serious doubt over the subjectively perceived risk of dissipation of the net proceeds of the sale. The applicant’s fear of dissipation turned out to be unfounded.

Findings: The applicant has not established the required intention on the part of the respondent of secreting assets to prejudice the applicant’s accrual claim. As the respondent has sufficient assets to meet the applicant’s accrual claim, there was no risk of irreparable harm in respect of the applicant’s accrual claim. His claim, if established, would not be rendered hollow. The applicant’s prima facie right to a contingent claim for accrual, at dissolution of the marriage, was not placed in jeopardy by the respondent. The respondent has shown fiscal responsibility as far as the tertiary education of their children is concerned. There are no cogent facts indicating that the respondent would recklessly squander the net proceeds after deduction of the educational fund, with the intention of defeating the applicant’s claim to share in the accrual. In the absence of clear evidence of an intention to dissipate, there is no real risk of the respondent dissipating the balance of the proceeds of the sale. The applicant has not established a case for confirmation of the interim order.

Order: It is ordered that R1,500,000 of the proceeds held in trust by JJR Attorneys be paid over to Weavind & Weavind Attorneys’ Trust account. R750,000 is be allocated to the major child in respect of her tertiary educational needs. R750,000 is be allocated to the minor child’s tertiary education. The remainder of the net proceeds of the sale of the property shall be released by JJR Attorneys to the applicant.

LABUSCHAGNE AJ

Facts: The employee was employed as a baker by the applicant employer at its bakery at one of its Shoprite stores. The matter originated from the applicant’s loss of sugar in its bakery. The employee was charged with serious misconduct. This took the form of the stirring of sugar into the employee’s warm drink on company time in an area which was undesignated for the consumption of food or drink. The direct evidence on the latter point is security CCTV footage. However, the video evidence fails to capture the employee drinking his warm drink. An inference was made by the applicant’s management that the employee drank this sugared drink. One of the charges preferred against the employee at the disciplinary hearing stage is the consumption of company stock (the sugar from a company store adjacent to the bakery). The employee was dismissed after an internal disciplinary hearing. He referred an unfair dismissal dispute to the Commission. After conciliation failed, it was arbitrated before the commissioner throughout. Procedural and substantive fairness were placed in issue.

Application: The commissioner found that the employee was procedurally fairly dismissed, but that the dismissal was substantially unfair. His award made provision for the calculation of back-pay and reinstatement. The commissioner determined that the applicant had not proved to a sufficient standard that the employee had consumed foodstuffs in an undesignated area. It is this principal finding to which the applicant has mounted its challenge on the reviewability of the commissioner’s decision. The applicant urges the court to either substitute a decision of procedural and substantive fairness or to remit the dispute for consideration afresh before a different commissioner.

Discussion: Video footage shows an unidentified person stirring something into a mug of either tea or coffee. The employee stipulated that the person depicted in that video was him. He also admitted that the substance which was stirred into that warm drink was sugar. The video doesn’t show the person drinking the warm drink, only him holding the mug. The employee made no concession that he drank the warm drink and therefore, consumed any of the applicant’s trading stock. The legal question for determination by the commissioner was: from whence did the sugar come? The answer is from one of two alternatives, the employee’s own provision, or from the applicant’s cannister. The grocery manager, Mr Beukes, gave evidence of the location and ownership of the sugar stirred into the warm drink, as being dispositive of the question of consumption. Namely, that the sugar, which was taken, was Shoprite’s sugar and not the employee’s own provision. Mr Beukes’s evidence was not direct evidence. It was an inference which he made unreasonably. His logic suggests that because the sugar was stirred-in inside the store, it must therefore have come from the 25kg cannister and not from the employee’s packet. The inference is not the most probable inference to be drawn from the admitted or common ground facts.

Findings: The live evidence of Mr Beukes’s on the location and ownership of the sugar which was stirred into the warm drink is immaterial as it was an impermissible inference which was drawn by him. The video doesn’t show the location from which the sugar was taken and then stirred-in the warm drink. The employee never admitted to taking sugar from the department’s cannister. No live, direct evidence could be led by the applicant. There was no record of a stock-take on the sugar in the department’s store which reveals the existence of stock-shrinkage. The employee was charged with the consumption of the applicant’s stock. The applicant could offer no evidence of consumption, irrespective of whether it be sugar from the 25kg cannister or the employee’s own provision. Neither the video evidence nor direct evidence could demonstrate the employee taking a sip from the mug. The outcome, and process of reasoning, is found to be reasonable by the commissioner. Her finding that the applicant failed to discharge the onus of proof, namely, to prove firstly, the existence of the rule, and secondly, its contravention, cannot be faulted.

Order: The application is dismissed.

SMITH AJ