IN THE HIGH COURT OF LESOTHO
HELD AT MASERU CIV/APN/403/2008
In the matter between:-
LESOTHO PUBLIC MOTOR
TRANSPORT COMPANY (PTY) LTD APPLICANT
AND
MALUTI MOTORS LESOTHO (PTY) LTD 1ST RESPONDENT
MAMATABOE LEUTA 2ND RESPONDENT
ZHENG S.X. 3RD RESPONDENT
MAKHOABE MOHALEROE 4TH RESPONDENT
JAVEDI c/o FURNITURE WORLD 5TH RESPONDENT
MEMUTI c/o M.T. CELLPHONES 6TH RESPONDENT
JUDGEMENT
Delivered by the Honourable Acting Judge Mr. G.N. Mofolo
On the 12th March, 2009
[1] The Applicant has approached this court for an order in the following terms:-
Dispensing with the Rules regulating the service of process and time limits thereto and directing that this application be heard as an urgent application.
A Rule Nisi issue returnable on the date and time to be determined by this Honourable Court, calling upon the respondents to show cause (if any) why
2nd and 6th Respondents shall not be interdicted forthwith from paying their monthly rental to anyone except the Registrar of the High Court pending finalization hereof.
1st Respondent shall not be interdicted forthwith and restrained from collecting monthly rentals from 2nd to 6th Respondents.
1st Respondent shall not be interdicted and restrained from claiming any right and dealing in every way with the Applicants rented property situated at Cathedral Area, Maseru urban area near Shell oil Garage main bus stop.
2nd to 6th Respondents shall not be directed to pay their monthly rentals to the Applicant herein.
1st Respondent shall not be directed to continue paying his monthly rentals to the Applicant herein.
Costs of suit in the event of opposition.
Granting the Applicant further and/or alternative relief.
The application is opposed.
[2] In his Founding Affidavit, Moeketsi Tsatsanyane has deposed at paragraph 1 of his affidavit that he is Director of the Applicant and he has been authorized to depose to the affidavit as evidenced by an extract of minutes attached marked A. There is no A annexed to the Founding Affidavit except an extract of minutes of the Board of Directors dated 22 November, 2008.
[3] In terms of paragraphs 2.2, 2.3 and 2.4 of the Founding Affidavit, 2nd, 3rd and 4th Respondents are tenants of the Applicant and the relationship of 1st Respondent, 5th and 6th Respondents is at this stage not clear to the court.
[4] Paragraph 4 claims Applicant to be owner and title holder of business site and premises at Maluti Garage otherwise known as Shell Oil Filling Station, main bus stop, Maseru and paragraph 5 claims the site in paragraph 4 is the property of an association called Lesotho Bus and Taxi Association otherwise known as LBTOA registered in the name of Lesotho Public Motor Transport Company. According to paragraph 8, the site was developed and business premises erected by Shell Oil Company on behalf of the company and 1st and 6th Respondents became tenants of the Applicant (para 9).
[5] According to paragraph 10 original Directors of the Applicant have all died giving rise to appointment of new directors and the paragraph goes on:
I then appointed along with Mampai Lebeko,
Mamosala Mokitimi, Motlatsi Mabote and Mahakane Mosala as Directors of the Applicant herein.
[6] Paragraph 11 is to the effect 1st Respondent is tenant of Applicant at Shell Oil Garage, Cathedral Area, Maseru and had a sub-lease with Applicant registered No.16671
of 11 March, 1983 and in terms of paragraph 11.3, 1st to 6th Respondents used to pay their monthly rentals to Directors of the Applicant company who are all deceased. According to paragraph 11.4, since the demise of the last Director, Mr. Mapheleba who was laid to rest in September 2008, the 1st Respondent started collecting monthly rentals from the other tenants ceasing to pay rentals to the Applicant. Paragraph 12 claims the deponent and other incoming directors tried to normalize the companys affairs with the six (6) Respondent tenants in vain 1st Respondent claiming he had authority to do so.
[7] With regard to deponents claim that after the passing away of the last Director Mr. Mapheleba, the directorship of the Applicant was renewed, reference is made to annexure C dated 10 November, 2008 reflecting new Directors of the Company to be:
Chairman : Moeketsi Tsatsanyane
Secretary : Mampai Lebeko
Treasurer : Mamosala Letekha
Members : Motlatsi Mabote
Mahakane Mosala
and it is noteworthy Mr. Moshe was invited to a meeting of 15/11/2008 at Maluti Motors to handover administration property to the new directors. I also note annexure E shows an amount of M5,000.00 having been paid as rent for September on 01/09/2008 by Maluti Motors; an amount of M5,000.00 paid as rent by Maluti Motors on 01/10/2008 as October rent and superimposed with Lesotho Public Motor Transport stamp. Another sum of M5, 000.00 paid by Maluti Motors for November rent on 01/11/2008 also superimposed with Lesotho Public Motor Transport stamp. An annexure folio 07 dated 01/10/2008 shows an amount of M4,000.00 to have been paid by Furniture World for October rent and superimposed with Lesotho Public Motor Transport stamp while folio 08 dated 01/10/2008 shows an amount of M5,000.00 paid by Zheng Shu Xian for October rent and superimposed with Lesotho Public Motor Transport stamp.
[8] Folio 06 dated 01/10/2008 shows M270.00 to have been paid by Mamataboe for October rent and superimposed with Lesotho Public Motor Transport as in folio 05 of 01/11/2008 paid by Mamataboe Leuta for November rent also superimposed with Lesotho Public Motor Transport stamp. To be noticed all receipts certified as true copies of the original except for receipts comprising annexure E. There is another receipt by Furniture World folio 07 dated 01/09/2007 being rent for the amount of R4,000.00 and superimposed with Maluti Motors Lesotho (Pty) Ltd and I may further mention in CIV/APN/97/1995 page 8 paragraph 21 of one of the original Directors of the Applicant, Setenane Habofanoe Mapheleba in his Founding Affidavit paragraph 21 aforesaid shows 4th Respondent herein as tenant of the company premises at Maseru Bus Stop Area. Moreover, audit report of 31 December, 1999 shows Maluti Motors and Mohaleroe as tenants of the Applicant.
[9] As shown above, the application was opposed and in opposing it, Makhoabe Mohaleroe has deposed in his Answering Affidavit at paragraph 3 that he is Managing Director of the Applicant Company Form L registered with the office of the Registrar of Companies in terms of Section 158 of the Companies Act 1967.
He has also taken points in limine namely:
Jurisdiction
Urgency
Interdict
Locus standi
Material dispute of fact
Non-disclosure
And it seems to me wise to deal with these first.
[10] On jurisdiction, Mr. Chobokoane both before me and in his heads of argument has claimed the court has no jurisdiction to decide the matter basing himself on High Court Act 1978 Section 6 that no civil cause or action within the jurisdiction of Subordinate Court shall be instituted in or removed into the High Court save:
(a) by a Judge of the High Court acting on his motion; or
(b) with the leave of a Judge upon application made to him in Chambers and after notice to the other party and
Herbstein and Van Winsen page 364 to the effect:
If the court is not satisfied on the facts stated in the application that it has jurisdiction, it will not entertain the proceedings.
In this particular case this court is satisfied on facts in the application that it has jurisdiction and on courts own motion the court finds the application has been properly instituted in the High Court.
[11] As per urgency, assuming Applicant is entitled to the rentals, he is losing huge sums of money impossible to recover except by expeditious resolution. On interdict, its a case of choice by the Applicant whether to interdict Respondents or to evict them and the Applicant has chosen to interdict them and he stands to succeed in his remedy so long as he can prove a clear right.
[12] It is not contended that Applicant is owner of premises subject-matter of unpaid rentals; in so far as Moeketsi Tsatsanyane is concerned, he appears to have been properly elected as Chairman of the Applicant and it cannot be said that Applicant has no locus standi.
[13] Certainly, there is no material dispute of fact in that on the original directors dying, new directors appear to have been elected to replace them and there appears to be evidence that Respondents paid their rentals to the Applicant. Unless I am mistaken, non-disclosure appears to have been dispensed with, of course new facts in a Replying Affidavit are not allowed in that they prejudice a partys case not unless he is allowed to have another bite by denying them. Mr. Potsane for Applicant has alleged he adverted to so called new facts in his Replying Affidavit because some were raised by Respondents in their Answering Affidavits. I have gone through these Answering Affidavits and find the contentious paragraph of the Replying Affidavit is paragraph 10 in which the Applicant in reply to paragraph 9 of the 4th Respondents Answering Affidavit and to put everything in its proper perspective, 4th Respondents paragraph 9 reads:
I am not a tenant over the property of Applicant, but I am the Managing Director of the Applicant.
Applicants reply at paragraph 10 of the Replying Affidavit:
The deponent is not a Director of the Applicant, but he is a tenant over Applicants premises. Attached hereto is a copy of the auditors report to confirm that the deponent was and still is tenant over the Applicants premises.
[14] I do not think that these facts in any way compromise 4th Respondents case in that they were resorted to in order to buttress Applicants defences. Of course a much argued fact was
whether the audit report of 1999 could be taken as showing 4th Respondent is still a tenant of Applicant which in any case cannot be. As for the objection regarding the assertion that 4th Respondent could never be a Director of the Applicant because he is not a taxi owner, taxi ownership is not in issue in this application
rentals being in issue. In any event, Applicants Memorandum has to do with vehicular transport and the name of the company speaks for itself. I have not hesitated to reject points in limine taken.
[15] Merits
Parties have agreed issues for decision are:
(1) Whether 4th Respondent is Director of Applicant.
(2) Whether on the contrary, 4th Respondent is tenant of the Applicant this also going for other Respondents.
(3) Whether Mr. Moeketsi Tsatsanyane is a Director of the Applicant.
[16] In his paragraph 7 (7.1) 4th Respondent claims Moeketsi Tsatsanyane is disputing the validity of annexure A (Form L) filed by 4th Respondent in that it is not a true document - I have perused Form L filed pursuant to section one hundred and fifty-eight of the
Companies Act 1967 as amended. Form L is accompanied by Transfer of Shares, Stock, Debentures or options duly signed by the transferor and transferee the rule, in the usual mercantile way, being that where a directorship is offered and accepted the nominee being a fit and proper person, a circumstance may nevertheless arise whether he was engaged full time in the affairs of the company though, it would appear, it is not helpful to say of a particular director that, because he was not an executive director his duties were less onerous than they would have been if he had been an executive director and whether the inquiry be one in relation to negligence, recklessness or fraud, the legal rules are the same for all directors (see Howard v Herrigel and Another NND 1991 (2) SA 660 (AD). Of the 4th Respondent before me, there is no evidence of 4th Respondent being a member of the Applicant or its Director until 30th May 2008 when, purportedly, he was appointed Director of the Applicant or Managing Director as he has alleged this before the demise of the founding director Setenane Mapheleba who became director on July, 1979 according to Form L the said Setenane Mapheleba being one of the right and proper directors to have appointed 4th Respondent as director since when 4th Respondent was appointed director Setenane Mapheleba was still alive. All that 4th Respondent has done to prove his directorship is filing Form L in terms of Section 158 of the Companies Act, 1967 as amended and the question is whether filing Form L is alone sufficient prove that 4th Respondent is Managing Director of the Applicant 4th Respondent in his Answering Affidavit having only asserted he is Managing Director of the Applicant. It has been submitted on behalf of the Applicant that 4th Respondent is not Managing Director of Applicant and further, that 4th Respondents purchase of Moshes shares is against Applicants Articles of Association. Before me, too, there is no evidence of 4th Respondent having taken any interest in the affairs of the Applicant or being a member of the Applicant save when he purchased Moshes share catapulting him into position of Director or Managing Director of Applicant almost at the same time on purchasing M20 or 0.5% shares of Lesotho Public Motor Transport Company (Pty) Ltd. Agreeably, though, particularly in a Private Company, a majority shareholder and Managing Director of the Company may sell his shares with the purchaser assuming the position of the seller on purchase of the latters majority shares, something which did not happen in the case of 4th Respondent who, according to the transfer form purchased a paltry percentage fixing the percentage share from nowhere in the absence of a share certificate.
[17] According to annexure C being election of Directors of the Applicant, the election took place on 10/11/2008 when Form L was submitted to the Registrar on 08/09/2008 apparently by the 4th Respondent. In terms of Article 158 (2) of the Companies Act, 1967 as amended, Register of Return of Directors and Secretaries is to be submitted within twenty-one (21) days of their appointment and there is penalty for submitting them later. I am not able to say why the return in respect of the directors appointed several years before was submitted after the expiry date and by the 4th Respondent who, until his alleged purchase of shares from Moshe on 6 June, 2008 was not a member of the Applicant Company.
[18] Looking at Form K, the consent form, it appears 4th Respondent has filed the form as evidence, alone, that filing it is proof of his directorship of a company and need I say 4th Respondent has gone a long way to prove his bona fides of the directorship of the Applicant Company. Another queer form is Form I of a notice of meeting on 28 May, 2008 and Resolution passed on 30 May, 2008 which conveniently omits who were in attendance and the quorum only showing T. Moshe resigning as Director of Company and transferring all his shares to the 4th Respondent. When the meeting set, the founding director Setenane Mapheleba was still alive and if for some reason he was incapacitated
to attend, this should have been shown or simply that he was absent having been served notice of the meeting, otherwise this meeting was surreptitious intended to invade rights of other directors bearing in mind according to Article 95 the quorum is two unless fixed by the directors and nothing shows it was so fixed. This certainly is a false form apart from the fact that, on resignation of a director, anybody does not become a Director of the Company.
[19] Masupha Katiso appears to feature as Director in Form L notwithstanding judgement in CIV/APN/289/1985 by Molai J declaring him not to be a Director of the Applicant. As remarked above, 4th Respondent could only have become a Director on buying majority share of a Managing Director which qualifies the purchaser to become by operation of law a Managing Director. He could also have become a Director or Managing Director (1) if he qualified and (2) nominated from existing directors by a properly constituted meeting of Directors and I have shown as I do, that meeting of 30 May, 2008 was not properly constituted. Except by saying he is Managing Director of Applicant Company, as to and by whom 4th Respondent was appointed Managing Director of the Applicant this is not very clear save, for an unknown reason, this having been a case of rapid promotion but not through the ranks. Quite significantly though, it appears on Moshe resigning 4th Respondent wasted no time to install himself as Director of the Applicant for Moshe in his Supporting Affidavit he has deposed: I have been a Director of the Applicant company since 19th August 1981 until the 3rd June 2008 when I resigned and yet, according to Form I and resolution of 30 May 2008 Moshe resigned as Director of the Company
on 30 May, 2008 though, it seems, he remains a Director until a transfer of shares has been effected being 06/06/2008. Moshe also
deposes upon my resignation the 4th Respondent was appointed as director as if the appointment was automatic for if there was a meeting to appoint 4th Respondent he would have said so this showing the scarcity of necessary details in the appointment of 4th Respondent as Director or Managing Director of the Applicant Company, I am of the view that 4th Respondent was appointed Director and Managing Director of the Applicant Company is not enough considering the Applicant is a creature of the law governing it.
[20] Mr. Potsane has applied for viva voce by Moshe considering there is no record of what happened and Mr. Moshe may shed light on this. He has however changed his mind and Mr. Chobokoane is of the view no viva voce evidence is required or at least that he does not need it.
[21] Among some of the objects of the Applicant are:
(xv) To carry on business of motor garage owners, and dealers in motor cars, motor vehicles, motor accessories of every description, and other wheeled vehicles; motor fuel, lubricants, etc.
3(i) Properties of public transport vehicles, etc.
To construct, equip, maintain and work public transport vehicles, motor coaches or other vehicles, appropriate for the carriage of passengers or goods, and to carry on the business of carriers of passengers and goods, both public conveyance and in private vehicles, in such places as may from time to time be thought fit and it appears it is from this object that a taxi association was formed whose parent company, if so formed, is, in may view, the Applicant though I am to repeat in the present application the taxi association is not in use.
[22] As to transfer of shares, this is governed by Articles 24 and 25 of the Articles of Association and Article 25 reads:
No Member shall be entitled to transfer any share otherwise than in accordance with the following provisions:
(a) A member desirous of selling his shares or any of them (hereinafter called the Selling Member) shall give written notice
(hereinafter called the notice of sale) to the Secretary of the Company containing and offer to sell the same, and stating the number and class of shares which he desires to sell and the price which he is willing to accept for such shares and the manner of payment thereof.
(b) The Secretary shall thereupon send to each of the other Members of the Company a circular containing the same particulars, and naming a day (being fourteen days after the service on him of the notice of same) on or before which offers to purchase the same will be received. If on or before the day so named offers to purchase all or any of the shares referred to in the notice of same at the price named shall be received from Members of the Company by the Secretary, he shall, as agent for the Selling Member and the proposing purchaser or purchasers, declare a contract of sale to be concluded and shall give notice thereof to the Selling Member and the purchaser or purchasers.
(c) If the offers to purchase shall together constitute offers to purchase a greater number of shares than those offered for sale, the shares offered for sale shall be divided among the proposing purchasers in the proportions as nearly as possible in which they already hold shares in the Company; provided that no proposing purchaser shall be liable to take more shares than those he shall offer to purchase. The Selling Member and Members declared to be the purchasers of the shares shall give effect to the contract or contracts so made as aforesaid by the execution of proper transfers and the payment of the purchase price.
(d) If within twenty-one days after the service of the notice of sale on the Secretary, the Selling Member shall not receive notice that his offer to sell has been accepted on behalf of some Members or Members of the Company, he may within six months from the date of serving the notice of sale (but subject to Article 26 hereof) sell or dispose of the shares referred to in such notice of sale. From the foregoing, if written notice of sale of shares given, it would be part of Form L and bundle of forms submitted to the Registrar of Companies or part of 4th Respondents evidence after all Mr. Chobokoane submitted no evidence was necessary on merits. So far as Articles 24, 25 and 26 above are concerned, number and class of shares to be sold not identified whether they are ordinary or preference shares or for that matter controlling shares and theres the danger that shares purportedly sold could have encroached on other Members shares in that again, shares purportedly sold were not valued. Also please note where there is the intention to sell according to these articles, the Secretary of the Applicant has to be involved for he/she is agent of the seller and in this case he/she does not appear to have been involved at all the transactions having been restricted to a resolution by contrivance and circumspection of Applicants statute by the 4th Respondents. Articles referred to above make it clear for any Members shares to be sold there has to be notice of sale making
the sale not a private deal but one of public knowledge to Members of the Applicant who, on proposing to buy a contract is created between the seller and the purchaser such a contract of sale not having been created as is envisaged by the articles of the Applicant above but 4th Respondent having resorted to the shoddy expedient of a resolution not sanctioned by the articles another problem being by what vested authority 4th Respondent acted as he did in terms of the resolution part of Form I which has nothing to do with articles of the Applicant regarding sale of shares, for according to Form I in contradiction with articles of the Applicant above, it was resolved that Moshe resign as Director of Applicant and his shares be transferred to 4th Respondent upon which, on the stroke of a pen, 4th Respondent became and was appointed Director of Applicant. Oh, no, hold it, not so fast This looks more a coup d etat than negotiated appointment, sort of appointment not envisaged by Applicants Articles 24, 25 and 26 above in disposing of shares and appointment of directors. Powers of Article 24 and 25 are wide requiring several transactions between seller and purchaser(s) for the procurement of shares, its not a case of toss a coin heads I win tails I lose as was the case with 4th Respondent purchasing Moshes shares and appointment as Director of the Applicant for while shares may be sold and purchased, they are nevertheless protected from invasion by unscrupulous non-members. These articles make it clear sale of shares cannot depend solely on passing a resolution of company though, as I have said above, even resolutions require quorum and proper efficacy of directors passing them. It is to be noted in accordance with these articles a contract of sale so formed may not be between seller and purchaser only but among seller and several willing member purchasers so that unlike sale between 4th Respondent and Moshe, in law according to Applicants articles of association above, sale of shares is not restricted to a single
willing buyer. It is also to be noted according to the articles and particularly Article 25 that publicity of sale of shares to members is a sine qua non except where, members duly notified, show no interest in which case, within six months of the notice to sell, the seller may dispose of his shares to anybody subject, notwithstanding to Article 26 that Directors shall nevertheless refuse to register any transfer of shares or transfer of a share to a person of whom they do not approve so that, according to Article 26 sale of a share undergoes several mutations in that even where a sale is concluded, Directors may, for the reason that a purchaser is not approved by them, fail to have the sale transferred and the question may be posed whether 4th Respondent passed this ultimate test posed by Article 26 and as far as this court is concerned, it does not seem that 4th Respondent has done so considering against the spirit of the applicants articles he played a major role both in the purchase of shares and their transfer.
[23] In this courts view, the so-called sale of shares by Moshe and their alleged purchase by 4th Respondent was no more than a backdoor transaction and invalid. I am well aware details of transactions have not been given since this is an application unlike a trial but I am of the view at least considering applicants locus standi is not challenged it having been alleged 4th Respondent is not either Director or Managing Director of the Applicant, it was up to 4th Respondent to prove, on a balance of probability, that he is, in fact, either Director or Managing Director of the Applicant and in my view 4th Respondent has failed to do so for I fail to comprehend, if this is 4th Respondents defence, how 0.5% purchase of shares against the spirit and dictation of Applicants statute would make 4th Respondent Managing Director of the Applicant; on the other hand, if this is 4th Respondents other defence that having bought his shares he is majority shareholder and hence Managing Director, at least this
should have been alleged by the 4th Respondent and he has not done so. I reject with the contempt it deserves that the highly specious and inadequate resolution Form I of 30 May 2008 is sufficient evidence to make 4th Respondent either Director or Managing Director of Applicant.
[24] I have already said that the alleged sale of shares and acquisition of Management of the Applicant by 4th Respondent is suspect for why, if 4th Respondent was desirous of joining forces with shareholders of the Applicant did he not make hay while the sun shines by announcing his intentions to the Board of Directors of the Applicant or by simply paying his share instead of waiting until ranks of the directorship
were thin? Even if this was not his intention, why did the 4th Respondent in joining Applicant not go through the front door instead of the back door by following Applicants statutes? Clearly he appears to have furtively and surreptitiously stolen a march on the Applicant who, at the time he was approached, membership of his directorship was depleted and although Mapheleba was still alive he was not invited to a meeting of 30 May 2008 or being invited and not turning up for the meeting, 4th Respondent should have said so instead of preferring to deal alone with a director from whom he sought some benefit. This conduct by 4th Respondent was certainly underhand, it cannot be said to be overboard in that it appears to me 4th Respondent awaited a suitable opportunity to pounce on Applicants interest and at a time when there would be little or no opposition to his designs. I find though articles relating to this company, a Private Company, closely related to articles of a Public Company
recalling membership of a Private Company unlike that of a Public Company is limited with Private Companies not holding general
meetings and appointment of directors depending on shareholding of individual shareholders. However, this court is not called upon to decide this save to say Article 90 of Applicants Articles of Association is to the effect:
No person other than a director retiring at a meeting shall be eligible to the office of director at any general meeting unless not less than three or more than twenty-one days before the date appointed for the meeting there shall have been left at the registered office of the company notice, in, writing, signed by a member duly qualified to attend and vote at the meeting for which notice is given of his intention to propose such person for election, and also notice in writing, signed by that person, of his willingness to be elected.
So that whenever a director retires not less than twenty-one (21) days before a date appointed for the meeting, there is to be left at the registered office of company notice signed by a member of his intention to propose an eligible person as director and the person proposed of his willingness to be elected. In other words, on Moshe retiring twenty-one (21) days before a date appointed for a meeting to elect a director on account of a director having retired, a notice in writing is left at offices of the company by a competent and qualified member of his intention to propose a person for election as director and the person proposed is to reciprocate in writing that he is willing to be elected. On Moshe retiring no such procedure as laid down by articles of the Applicant was put in place notice of a meeting having been purportedly given, a resolution adopted and without much ado 4th Respondent appointed director of the Applicant. I can think of nothing more arbitrary and capable of usurpation of powers though it seems to me, once again, for a person to be director he must be elected though I say this with reservation in that Directors in a Private Company are not elected but appointed bearing in mind, also, that the quorum necessary for the transaction of business of directors may be fixed by the directors and unless so fixed, it is two and when 4th Respondent purportedly appointed living and active directors were Mapheleba and Moshe notwithstanding that according to Article 104 of the Articles of Association of Applicant from time to time directors appoint one or more of their body to office of Managing Director and there is no evidence before court that 4th Respondent at any stage was one or more of Applicants Body of Directors to be appointed to office of Managing Director for it
appears one to be appointed by Directors to be Managing Director one is to be one of their body, a far cry from the 4th Respondent.
[25] Mr. Chobokoane has made heavy weather of the Applicants Replying Affidavit saying it raises new issues of which Respondents are unable to respond to and it accordingly prejudices Respondents case. In this courts view allegations raised are not new and in no way prejudice
Respondents case mindful of the fact that as far as this court is concerned, 4th Respondent is guilty of grave misrepresentation of facts and in any event given circumstances of each particular case a court has a discretion to permit evidence in a Replying Affidavit of retrospective ratification of relevant conduct as this court has done
(see Cyberscene Ltd and Others v in Kirch Internet and Information (Pty) Ltd 2003 (3) SA 406 (C).
[26] As for proceedings by and authority of person acting for Company, there has to be proof of authority to act for Company in that a court is unable to imply such authority from Managing Directors Affidavit - see Griffiths and Inglis (Pty) Ltd v Southern Cape Blasters (Pty) Ltd 1922 (4) SA 249 (C). This court is satisfied by minutes of the Board of Directors of the Applicant, a Board elected on 10 November, 2008 that it did resolve on 22 November, 2008 to authorize Moeketsi Tsatsanyane to sign all the affidavits and related documents on behalf of the Company. On the contrary, this court is not satisfied that 4th Respondent was so authorized to represent the Applicant in that save claiming that he is Managing Director of the Applicant there is no resolution of Directors giving him authority to act on behalf of the Applicant for the reason that such a requisite Member of Directors to give him such authority does not exist. Annexure A faulty in many ways as it is, in no way authorizes 4th Respondent to act on behalf of the Applicant.
[27] On sale of shares, this court has expressed its view articles of Applicants Company restrict transfer of shares to non-members
unless it can be shown that notice of sale having been served on members the latter showed no interest in purchase of shares in which case the shares can be sold to any other person provided that such sale or disposal be at a price not less than that named in the notice of sale (Article 25 (c) and (d). (I have underlined). There is no evidence 4th Respondent acted in accordance with Article 25 (c) and (d) of Articles of the Applicant.
[28] And while Sachs v Gilliland and Others 1959 (2) SA 233 (W.L.D) appears to be authority for the proposition that articles can restrict transfer of shares to non-members and a view held by Mr. Potsane that the Articles of Applicant restrict transfer of shares to non-members, Moosa and Lalloo and Another 1956 (2) SA 237 (N) appears to go in a different direction in that according to Caney J, duty to transfer shares not affected by provisions in articles that shares not to be sold to outsiders without directors consent in that seller only obliged to tender to purchaser shares with completed transfer forms, exactly what the transferor has done in the instant application and Sachs case being a latter case than Moosas case this court is disposed to follow Sachs case particularly because this court is of the view it is essential that provisions of the articles be complied with by reason of their peremptory nature. I may also add the courts contention is fortified by decision in Suid-Afrikaanse Vroue Federasie, Transvaal v Thackery NO en Andere 1867 (2) SA 468 (T) where two brothers S and F held shares in the proportion of 999 to 1 article 11 providing a share can be
transferred to any member of the company or with written approval of all to any person but without such approval the share can be transferred to any person who is not a member of the company. The executor of S estate had offered the shares to F in terms of Article 11 and F accepted the offer and the applicant averred that the articles of association conferred no offer to F and in an application for a declaratory, Held, in terms of the Articles of Association the executor was competent to make an offer and the application could not succeed on the ground that the articles prevented the sale to F and by the same token this court although this application is not couched in similar terms, it is in effect a declaratory and accordingly the court holds that the sale to 4th Respondent of shares by Moshe is irregular in that it contravenes Articles of Association of the Applicant which forbid sale of shares to non-members except where members, though notified, have not shown interest and the said shares having been sold to non-members are subject to ratification by Directors of the Applicant, something which does not appear to have transpired in the instant application
the 4th Respondent having taken an unfair advantage of laws governing Applicant in the sale and transfer of shares by members of the Applicant nor is this court unmindful of the fact that in its view Moshe resigned in order to put stooge director on his place making Moshes resignation a sham de jure and to be disregarded (S v Jager 1965 (2) SA 616 (A) 622-623). And further, may I warn, any company which publishes and every director or officer of a company who knowingly is a party to the publication of the name of any person as a director of the company when such person is not a director, or has not validly been appointed as a director of the company, is guilty of an offence.
[29] As demonstrated above, 4th Respondent has not been validly appointed as Director of the Applicant Company and he is not Director or Managing Director of the
Applicant in that to be appointed there must be proper quorum at the meeting - see Nortje v Fransman NO, 1975 (1) SA 532 (C).
[30] I am satisfied Plaintiff has affirmatively shown the presence of persons not entitled to be present or being present did not form a quorum in accordance with Plaintiffs Articles of Association and that by their presence or lack of necessary quorum their acts and proceedings proposed and carried would not otherwise have been arrived at - see Smuts v Robertson and Others (1863) 45 128 at 136 and especially Grundlingh v Beyers 1962 (2) SA 131 (W) at 135 and 152.
[31] Mr. Potsane has submitted the 1st Respondent Maluti Motors (Pty) Ltd is not properly authorized as there is no authorization to depose to the application and 1st Respondents affidavit is to be struck off. The court agrees and 1st Respondents affidavit is accordingly struck off.
[32] The court accordingly finds:
(a) 4th Respondent is not Managing Director of Applicant but its tenant;
(b) Moeketsi Tsatsanyane to be Director/Chairman of the Applicant;
(c) 1st, 2nd, 3rd, 5th, and 6th Respondents to be tenants of the Applicant.
[33] In the result, the application is granted to the effect:
(i) 1st Respondent is stopped and restrained from collecting rentals from 2nd to 6th Respondents;
(ii) 2nd to 6th Respondents are stopped and restrained from paying their rentals to anyone save the Applicant at the latters business premises;
(iii) 1st Respondent is stopped and restrained from claiming any right and dealing in any way with the Applicants rented property situated
Cathedral Area, Maseru urban area near Shell Oil Garage, Main Bus Stop save, like all tenants, to pay its monthly rentals to Applicant
at the latters business premises;
(iv) 4th Respondent is directed to continue paying his monthly rental to the Applicant herein;
(v) Costs of suit.
[34] In course of argument Mr. Potsane informed the Court the Registrar of Companies refused audience with the new directorship of the Applicant; even if this is not so, the Registrar of Companies is to be furnished with this judgement for proper action.
G.N. MOFOLO
PUISNE JUDGE
For the Applicant : Mr. Potsane
For the Respondents : Mr. Chobokoane
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