THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No:  665/12
Reportable

In the matter between:

GRANCY PROPERTY LIMITED

APPELLANT

and

LANCELOT LENONO MANALA

FIRST RESPONDENT
SEENA MARENA INVESTMENTS (PTY) LTD

SECOND RESPONDENT
DINES CHANDRA MANILAL GIHWALA NO

THIRD RESPONDENT
SHANTI GIHWALA NO

FOURTH RESPONDENT
KANTIELAL JERAM PATEL NO

FIFTH RESPONDENT
NARENDRA GIHWALA NO

SIXTH RESPONDENT
KIRAN GIHWALA NO

SEVENTH RESPONDENT

Neutral citation:
Grancy Property Limited v Manala (665/12) [2013] ZASCA 57
(10 May 2013).

Coram:

Mthiyane DP, Nugent, Lewis, Tshiqi and Petse JJA

Heard:

18 March 2013

Delivered:

10 May 2013

Summary:
Company law ─ Section 163 of the Companies Act 71 of 2008 ─
exercise of court’s discretion to grant relief from oppressive or prejudicial or
abusive conduct ─ court enjoying wide latitude in the exercise of its discretion
under s 163.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from:   Western Cape High Court (Henney J sitting as court of first
instance):
The appeal is upheld with costs including the costs of two counsel.
The order of the court below is set aside and in its stead is substituted the
following:
„1
It is ordered in terms of s 163(2)(f)(i) of the Companies Act 71 of 2008
that:
1.1
Mr B J Manca SC, a senior advocate practising at the Cape Bar, and
Mr Louis Strydom, a senior Chartered Accountant (SA) of Pricewaterhouse
Coopers Inc, are appointed independent directors of Seena Marena Investments
(Pty) Ltd.
The independent directors appointed in terms of paragraph 1.1 of this
order shall have the sole right, in their absolute discretion, to the exclusion of any
other directors nominated by the shareholders of Seena Marena Investments
(Pty) Ltd, to determine whether an investigation into the affairs of Seena Marena
Investments (Pty) Ltd, in the light of the complaints made on behalf of Grancy
Property Limited, is necessary and if so to conduct such an investigation.
The said independent directors may not be removed as directors save by
a unanimous vote of the shareholders of Seena Marena Investments (Pty) Ltd or
an order of the high court, having jurisdiction.
The independent directors shall constitute the Board of Directors of Seena
Marena Investments (Pty) Ltd together with such directors as each of the
shareholders may appoint to the Board save that each shareholder shall be
entitled to appoint only one director.
The directors are to receive such reasonable remuneration as determined
by the Head of the Legal Department at Deloitte & Touche at Woodlands Drive,
Woodmead, South Africa.

This order shall operate pending the finalisation of the action proceedings
pending in the Western Cape High Court under case no 12193/11 in the matter
between Grancy Property Limited & another v Dines Chandra Manilal Gihwala &
others unless the Western Cape High Court determines otherwise.
The first and third to seventh respondents are ordered to pay the costs of
this application jointly and severally, the one paying the others to be absolved,
including the costs of two counsel.‟

________________________________________________________________

JUDGMENT
________________________________________________________________

PETSE JA (Mthiyane DP, Nugent, Lewis, Tshiqi JJA concurring):

[1] This appeal is concerned with one of several legal wrangles which have
occurred during what appears to be the somewhat tortuous journey of the
litigation involving the same parties in the court below. It emanates from one of a
number of interlocutory applications in interrelated proceedings instituted in the
court below. The pending main action, to which the application now on appeal in
this court is said to be incidental, was instituted by the appellant, Grancy Property
Limited (Grancy), as the first plaintiff, against the respondents on 17 June 2011
in which wide-ranging relief is claimed.

[2] The principal issue on appeal is whether Grancy had made out a case ─
on the facts presented by it in the court below against the respondents ─ entitling
it to relief under s 163(2)(f)(i) of the Companies Act 71 of 2008. More particularly
the appellant made multiple allegations of malfeasance and moral turpitude
against the first respondent, Lancelot Lenono Manala and the third respondent,
Dines Chandra Manilal Gihwala in their capacities as directors of Seena Marena
Investments (Pty) Ltd (SMI).

[3] It is necessary to set out a brief narrative of certain facts and
circumstances giving rise to the litigation, which bear on the questions to be
decided in this appeal, as they emerge from the record.

[4] On 28 September 2011 Grancy brought an urgent interlocutory application
under rules 6(11) and (12) of the Uniform Rules of Court in the Western Cape
High Court seeking  an order for, inter alia, the appointment of what it described
as „objective and independent‟ directors for SMI. The one director was to be
appointed by the Chairperson of the Cape Bar Council from the ranks of senior
advocates practising in the field of corporate law. The other director, a senior
Chartered Accountant and registered Auditor, was to be appointed by the Chief
Executive Officer of the Independent Regulatory Board for Auditors.

[5] The relief sought ─ which was characterised as interim1 in nature ─ was
intended to operate until either confirmed or discharged at the trial of the action
proceedings instituted by Grancy against the respondents which are pending in
the court below. We were informed at the hearing of this appeal that the trial is
imminent.

[6] In its application, Grancy essentially sought an order compelling Manala
and Gihwala who are majority shareholders in SMI to undertake certain defined
acts to appoint two independent directors who would constitute the Board of
Directors of SMI. Once appointed these directors would, over and above their
routine responsibilities, also investigate the affairs of SMI from 2005 (which is
when Grancy became a minority shareholder of SMI) to date. Grancy predicated
its case upon allegations of misconduct against Manala and Gihwala which, inter
alia, entailed alleged breaches of fiduciary obligations, misappropriation and
misuse of assets, misrepresentations, fraud, unauthorised use of company funds
and denying Grancy its entitlements as a shareholder of SMI.

1 Considerable time and effort was devoted to this aspect in counsel‟s heads of argument but
given what lies at the heart of the dispute between the parties, as will emerge from the judgment,
it is not germane.

[7] Both Manala and Gihwala were appointed directors of SMI in June 2003
until they resigned from their directorships on 28 February 2011 and 18
September 2011 respectively. SMI was incorporated as a special purpose
vehicle with the sole purpose of channelling investment in Spearhead Property
Holdings Ltd (Spearhead) to be made by Manala, Gihwala, Dines Gihwala Family
Trust (DGFT), Montague Goldsmith AG in liquidation (MG) and Grancy. The
proceeds derived from investments made in Spearhead for the benefit of SMI‟s
shareholders would be paid as dividends to SMI‟s shareholders in proportion to
their respective contributions to the acquisition costs once any profits on the
investment were realised by SMI.

[8] In its main founding affidavit (deposed to by Karim Issa Mawji) Grancy
elaborated on its allegations of unfair and prejudicial conduct on the part of
Manala and Gihwala against it as follows:
‟31. In January 2010, Grancy and MG instituted the 2010 action proceedings against,
inter alios, Manala, Gihwala and SMI to recover various amounts that are owing to
Grancy and MG under the Agreement.
. . .
32.
In the 2010 action proceedings, Grancy and MG set forth, inter alia, the following
conduct by Manala, Gihwala, the DGFT and SMI (acting on the directions of Manala and
Gihwala):
32.1
breaches of numerous contractual and/or fiduciary obligations contained in the
Agreement and imposed by law;
32.2
unlawful preference by Manala and Gihwala of the DGFT and Manala as
creditors above Grancy;
32.3
misappropriation, by Gihwala and Manala, of funds from Ngatana which were
destined to SMI and its shareholders, including Grancy;
32.4
acting in bad faith and with the fraudulent intention to deceive and prejudice
Grancy and MG; and
32.5
carrying on the business of SMI, for the purposes of s 424(1) of the Companies
Act, 1973 (“the 1973 Companies Act”), with the intent to defraud creditors, alternatively
recklessly.

. . .
36.
In October 2010, Manala and Gihwala, in their capacities as directors of SMI,
circulated a “draft” copy of SMI‟s annual financial statements for the year ended 28
February 2010; further “draft[s]” of these financial statements were circulated in January
and February 2011 (collectively, “the 2010 financial statements”).
. . .
37.
All three versions of the 2010 financial statements reveal numerous, serious
ethical breaches, and civil and criminal wrongs having been committed by Manala,
Gihwala, the DGFT and SMI (acting on the directions of Manala and Gihwala), including
theft, fraud and multiple statutory and fiduciary breaches.
38.
These breaches and wrongs include the:
38.1
unauthorised and unlawful payment of directors‟ remuneration to Manala and
Gihwala in the amount of R5, 500, 000.00 for the 2010 financial year (“the Directors‟
remuneration”);
38.2
unauthorised and unlawful payment of fees in the amount of R1, 114, 539.00 to
Manala and Gihwala, purportedly for “providing suretyship[s]” on behalf of SMI (“the
Suretyship fees”);
38.3
unauthorised and unlawful payment of an amount of R2, 898, 145.00 to Manala;
38.4
unauthorised and unlawful payment of an amount of R101, 529.00 to Mr Hyman
Bruk and Bruk Munkes & Co (“the Auditors”), as “Auditors’ remuneration”;
. . .
41.
In effect, Gihwala and Manala have transferred funds out of SMI to themselves
when these funds should have been transferred, by way of dividends, to the three
shareholders. The party who has been excluded and thus . . . unfairly disregarded is
Grancy. Manala and Gihwala . . . have consistently preferred themselves and DGFT
above the interests of Grancy as a minority shareholder.‟

[9] Following the resignation of Manala and Gihwala as directors of SMI the
latter was left without directors. This state of affairs prompted Grancy to invite
Manala and the DGFT, as shareholders in SMI, to consent to a mechanism in
terms of which the appointment of two independent directors to the board of SMI
could be made. This invitation elicited no response from Manala and Gihwala

representing the DGFT. This in turn precipitated the application mentioned above
in the court below which is now on appeal in this court.

[10] The court below (Henney J) dismissed the application with costs. It
subsequently granted leave to appeal to this court. In dismissing the application
the learned judge essentially approached the matter along the following lines.
First, he found that Grancy had not made out a case for the relief it sought. In this
regard he reasoned that: (a) it was not enough for Grancy to base its case
„squarely‟ on the same allegations which are the foundation for its claims in the
action proceedings; (b) that serious doubt was cast upon the case of Grancy
since Manala, Gihwala and the Dines Gihwala Family Trust had satisfactorily
refuted the allegations of impropriety made against them; and (c) that Manala
and Gihwala had relinquished their directorships; offered Grancy the right to
institute an independent forensic investigation into the affairs of SMI at its cost;
Gihwala had repaid the disputed director‟s remuneration whilst Manala asserted
that he was entitled to the remuneration paid to him; the fact that Manala and
Gihwala had offered Grancy a right to appoint two directors notwithstanding that
clause 107 of SMI‟s articles of association accords Grancy a right to nominate
one director only.

[11] Second, the high court found that Grancy contented itself with presenting
evidence of past infringements only and thus failed to establish a well-grounded
apprehension of irreparable harm. Third, it found that in any event Grancy had
another satisfactory alternative remedy available to it, namely its right to
nominate someone for appointment as a director of SMI. I shall return to these
grounds later in this judgment.

[12] It is apposite at this stage to mention that Grancy‟s application in the court
below was resisted on a number of grounds. First, it was contended that the relief
sought by Grancy was not of an interim nature but was final in effect. It was thus
contended that Grancy was required to satisfy the test for final relief on motion

which it had failed to do. Second, that Grancy had, contrary to the prescripts of
s 163(2)(f)(i) of the Act, sought that the court below delegate its powers to
appoint directors to third parties and also to impose obligations on such directors.
Third, that Grancy had satisfactory alternative remedies at its disposal that it
could have pursued before approaching the court below for relief. Fourth, that the
denials on the papers by Manala and Gihwala of the allegations of impropriety
imputed to them by Grancy created a genuine dispute of fact that rendered the
matter incapable of resolution on the papers. Fifth, that the application was in any
event not urgent.

[13] The foregoing grounds were persisted in on appeal in this court. For
reasons that will become apparent later in this judgment it is, in my view,
unnecessary to traverse all the grounds advanced by Manala and Gihwala in
resisting the grant of the relief sought by Grancy nor all of the findings of the
court below.

[14] As I have mentioned, the final fate of the relief sought by Grancy in the
court below, if granted, will be determined at the trial of the action instituted by
Grancy against, inter alios, Manala, DGFT and Gihwala. In that pending action,
allegations of malfeasance are made which are denied. More particularly it is
alleged that: (a) the 2010 financial statements of SMI reveal ethical breaches and
various wrongs perpetrated by Manala and Gihwala as directors of SMI. These
wrongs entail alleged unauthorised and unlawful payments of directors‟
remuneration, suretyship fees, a payment of R2 898 145 to Manala and payment
of R101 529 to SMI‟s auditors.

[15] In considering the approach of the court below to the matter, one should
not lose sight of what Grancy sought to achieve when it instituted its so-called
interlocutory application. The sole purpose of that application, as Mr Hodes, who
appeared together with Mr McNally for the appellant, contended in argument
before us, was to arrest the continuation of the oppressive and unfairly prejudicial

conduct that unfairly disregarded the interests of Grancy as a minority
shareholder in SMI perpetrated by Manala and Gihwala. This would be achieved
by the court itself appointing directors either in place of or in addition to those
directors in office to ensure that SMI was not exposed to further risks.

[16] To my mind, we must determine whether Grancy had made out a case
entitling it to relief under s 163 of the Act.

[17] It was submitted on behalf of Grancy that its averments in its various
affidavits established, at the very least on a prima facie basis, that: (a) Manala
and Gihwala abused their powers as directors and shareholders of SMI; (b)
consistently acted in a manner that was oppressive and unfairly prejudicial to
Grancy; and (c) their decisions and actions as directors and shareholders of SMI
manifested a complete and unfair disregard for the interests of Grancy and SMI,
serving exclusively their own interests. The cumulative effect of these factors
warrant, concluded the argument, the court‟s intervention to appoint independent
and objective directors not only to oversee SMI‟s financial and corporate affairs
but also to investigate such affairs so as to unravel the extent of the malfeasance
complained of by Grancy.

[18] Grancy‟s averments are, unsurprisingly, denied by Manala and Gihwala
on whose behalf it was submitted that such denials cast a shadow of doubt
thereon. Mr Hodes sought to meet this argument by submitting that Manala and
Gihwala have contented themselves with bare denials of Grancy‟s factual
allegations. Thus, so went the argument, such denials come nowhere close to
creating a dispute of fact and are consequently no bar to the grant of the relief
sought by Grancy. This is particularly so, it was argued, if regard is had to the
fact that: (a) the payment of R5,5 million to Manala and Gihwala as directors‟
remuneration; R1 114 539 million to Manala and Gihwala supposedly in respect
of suretyship fees; R2 898 145 million to Manala; and the resolution to pay
Manala R15 000 per month are all not seriously disputed; (b) the report made by

SMI‟s auditors to the Independent Regulatory Board for Auditors reporting on
grave irregularities committed by Manala and Gihwala in conducting SMI‟s
corporate affairs which has not been gainsaid; and (c) both Manala and Gihwala
persist in their assertions that they were entitled to the various amounts paid to
themselves.

[19] It is apposite at this juncture to deal with the contention of the
respondents‟ counsel that the denials of the appellant‟s allegations by Manala
and Gihwala are not of such a nature that a court would be justified in rejecting
their evidence on the papers. For this contention counsel called in aid the often
cited judgment of Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd.2 As
I have already said, counsel for the appellant countered this contention by
arguing that the respondents contented themselves with bare denials without
refuting the substance of the allegations in the appellant‟s affidavits. It seems to
me that the proper approach to a situation such as the one that has arisen in this
case is that re-stated in Wightman t/a JW Construction v Headfour (Pty) Ltd 2008
(3) SA 371 (SCA) in which the following was stated (para 13):
„A real, genuine and bona fide dispute of fact can exist only where the court is satisfied
that the party who purports to raise the dispute has in his affidavit seriously and
unambiguously addressed the fact said to be disputed. There will of course be instances
where a bare denial meets the requirement because there is no other way open to the
disputing party and nothing more can therefore be expected of him. But even that may
not be sufficient if the fact averred lies purely within the knowledge of the averring party
and no basis is laid for disputing the veracity or accuracy of the averment. When the
facts averred are such that the disputing party must necessarily possess knowledge of
them and be able to provide an answer (or countervailing evidence) if they be not true or
accurate but, instead of doing so, rests his case on a bare or ambiguous denial the court
will generally have difficulty in finding that the test is satisfied. I say „generally‟ because
factual averments seldom stand apart from a broader matrix of circumstances all of

2 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634E-G
where it is stated that where factual disputes in motion proceedings arise, relief may only be
granted if the facts averred in the applicant‟s affidavit that have been admitted by the respondent,
together with the facts alleged by the respondent, justify the order sought.

which needs to be borne in mind when arriving at a decision. A litigant may not
necessarily recognise or understand the nuances of a bare or general denial as against
a real attempt to grapple with all relevant factual allegations made by the other party. But
when he signs the answering affidavit, he commits himself to its contents, inadequate as
they may be, and will only in exceptional circumstances be permitted to disavow them.
There is thus a serious duty imposed upon a legal adviser who settles an answering
affidavit to ascertain and engage with facts which his client disputes and to reflect such
disputes fully and accurately in the answering affidavit. If that does not happen it should
come as no surprise that the court takes a robust view of the matter.‟

[20] In my view Grancy‟s submissions that the denials of Manala and Gihwala
do not constitute real disputes of fact, at least in relation to the payment of the
amounts mentioned in para 18 above, are correct. Accordingly, to the extent that
the court below approached the matter on the basis that the versions of Manala
and Gihwala on this score sufficiently cast a shadow of doubt on Grancy‟s
version, it erred. As I see it the record reveals that the versions of Manala and
Gihwala did not appropriately answer the central case made by Grancy but
sought to „envelope [their case] in a fog which hides or distorts the reality‟.3 The
reality is that there is no serious dispute in relation to the amounts mentioned in
para 18 above nor the irregularities reported on by SMI‟s auditors. Indeed Mr
Slon, who appeared for Manala, was constrained to concede as much.

[21] In my view, as I have said, the central issue for determination is whether
or not Grancy has made out a case for the relief it sought in its application in the
court below. As alluded to earlier, Grancy‟s case is founded on s 163 of the Act.
Section 163 of the Act provides a shareholder (which is what Grancy is) with a
remedy against any oppressive or unfairly prejudicial acts or omissions of a
company or related person that unfairly disregard the interests of a party such as
Grancy. It provides:
„(1)
A shareholder or a director of a company may apply to a court for relief if-

3 Wightman t/a JW Construction v Headfour (Pty) Ltd 2008 (3) SA 371 (SCA) para 16.

(a)
any act or omission of the company, or a related person, has had a result that is
oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, the
applicant;
(b)
the business of the company, or a related person, is being or has been carried on
or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly
disregards the interests of, the applicant; or
(c)
the powers of a director or prescribed officer of the company, or a person related
to the company, are being or have been exercised in a manner that is oppressive or
unfairly prejudicial to, or that unfairly disregards the interests of, the applicant.
(2)
Upon considering an application in terms of subsection (1), the court may make
any interim or final order it considers fit, including-
(a)
an order restraining the conduct complained of;
. . .
(f)
an order-
(i)
appointing directors in place of or in addition to all or any of the directors then in
office; or
(ii)
declaring any person delinquent or under probation, as contemplated in section
162;
. . .
(l)
an order for the trial of any issue as determined by the court.‟ (My emphasis.)

[22] There is a substantial body of case law on the import of s 252 of the
Companies Act 61 of 1973, which, in material respects, is the previous equivalent
of s 163 of the Act. In my view there is a benefit to be derived from considering
the jurisprudence developed over the years as to what constitutes oppressive or
unfairly prejudicial conduct. To determine the meaning of the concept of
„oppressive‟ in s 163 it is apposite to refer to Aspek Pipe Co (Pty) Ltd v
Mauerberger 1968 (1) SA 517 (C) which held (at 525H-526E):
„I turn next to a consideration of what is meant by conduct which is “oppressive”, as that
word is used in sec. 111 bis or sec. 210 of the English Act. Many definitions of the word
in the context of the section have been laid down in decisions both of our Courts and in
England and Scotland and as I feel that a proper appreciation of what was intended by
the Legislature in affording relief to shareholders who complain that the affairs of a

company are being conducted in a manner “oppressive” to them is basic to the issue
which presently lies for decision by me, it is necessary to attempt to extract from such
definitions a formulation of such intention. “Oppressive” conduct has been defined as
“unjust or harsh or tyrannical” . . . or “burdensome, harsh and wrongful” . . . or which
“involves at least an element of lack of probity or fair dealing” . . . or “a visible departure
from the standards of fair dealing and a violation of the conditions of fair play on which
every shareholder who entrusts his money to a company is entitled to rely” . . . It will be
readily appreciated that these various definitions represent widely divergent concepts of
“oppressive” conduct. Conduct which is “tyrannical” is obviously notionally completely
different from conduct which is “a violation of the conditions of fair play”.
. . .
“[T]yrannical” conduct represents a higher degree of oppression than conduct which is
“harsh” or “unjust”. The Shorter Oxford Dictionary defines “tyrannical” as “severely
oppressive; despotically harsh or cruel”. For reasons which I shall now set out I do not
think it is necessary for an applicant to have to go to the lengths of establishing conduct
of such a nature before he is entitled to relief under sec. 111 bis.‟ (Citations omitted.)

[23] There is also the decision of the House of Lords in Scottish Co-operative
Wholesale Society Ltd v Meyer [1959] A 324 HL at 342 which is to the effect that
the concept of „oppressive‟ denotes conduct that is „burdensome, harsh and
wrongful‟ and that such conduct would include lack of probity or good faith and
fair dealing in the affairs of a company to the prejudice of some portion of its
members.

[24] The next case to which I wish to refer is Garden Province Investment v
Aleph (Pty) Ltd 1979 (2) SA 525 (D) at 531 where Friedman J said:
„It seems to me that a minority shareholder seeking to invoke the provisions of s 252(1)
of the Companies Act must establish not only that a particular act or omission of a
company results in a state of affairs which is unfairly prejudicial, unjust or inequitable to
him, but that the particular act or omission itself was one which was unfair or unjust or
inequitable. Similarly, looking at the second part of the section, where the complaint
relates to the manner of conduct of the business, it is the manner in which the affairs
have been conducted as well as the result of the conduct of the business in that manner

which must be shown to be unfairly prejudicial, unjust or inequitable. In the Afrikaans
version the word "unfairly" is translated as "onredelike" and in point of fact it was the
Afrikaans version of the Act which was signed. The word "unfairly", therefore, whether it
qualifies only the word "prejudicial" or whether it qualifies the words "prejudicial, unjust or
inequitable" means therefore "unfairly" in the sense of "unreasonably", and it seems to
me that the use of the word "unfairly" in this sense in the section fortifies my belief that
the section relates both to the manner and nature of the conduct as well as to the results
or effect of that conduct. When one looks at the second part of the section it is stated
explicitly that the manner in which the affairs of the company are being conducted must
be shown to be unfairly prejudicial, unjust or inequitable. This conclusion seems to me
also to be consistent with what has been said on a number of occasions with regard to
the predecessor of this section, namely the previous s 111 bis.‟

[25] In Louw v Nel 2011 (2) SA 172 (SCA) this court said the following (para
23):
„The combined effect of ss (1) and (3) is to empower the court to make such order as it
thinks fit for the giving of relief, if it is satisfied that the affairs of the company are being
conducted in a manner that is unfairly prejudicial to the interests of a dissident minority.
The conduct of the minority may thus become material in at least the following two
obvious ways. First, it may render the conduct of the majority, even though prejudicial to
the minority, not unfair. Second, even though the conduct of the majority may be both
prejudicial and unfair, the conduct of the minority may nevertheless affect the relief that a
court thinks fit to grant under ss 3. An applicant for relief under s 252 cannot content
himself or herself with a number of vague and rather general allegations, but must
establish the following: that the particular act or omission has  been committed, or that
the affairs of the company are being conducted in the manner alleged, and that such act
or omission or conduct of the company's affairs is unfairly prejudicial, unjust or
inequitable to him or some part of the members of the company; the nature of the relief
that must be granted to bring to an end the matters complained of; and that it is just and
equitable that such relief be granted. Thus, the court's jurisdiction to make an order does
not arise until the specified statutory criteria have been satisfied.‟ (Citations omitted.)

[26] According to Professor FHI Cassim et al4 the extensive nature of the
remedy for which s 163 provides is underscored by the inclusion of the element
of unfair disregard of the applicant‟s interests. I agree with this view for it derives
support from a judgment of this court in Utopia Vakansie-Oorde Bpk v Du Plessis
1974 (3) SA 148 (A) at 170H-171D where it was stated that the concept of
„interests‟ (in the context of s 62 quat (4) of the 1926 Companies Act) is much
wider than the concept of „rights‟. Accordingly there is much to be said for the
proposition that s 163 must be construed in a manner that will advance the
remedy that it provides rather than limit it.

[27] In concluding on this particular aspect of the case it bears mention that in
determining whether the conduct complained of is oppressive, unfairly prejudicial
or unfairly disregards the interests of Grancy it is not the motive for the conduct
complained of that the court must look at but the conduct itself and the effect
which it has on the other members of the company (see eg Livanos v Swartzberg
& others 1962 (4) SA 395 (W) at 399).

[28] Against that backdrop I return to the facts of this case. It was submitted on
behalf of Grancy that the court below, in coming to the conclusion that Grancy
had not established that Manala and Gihwala had, by their conduct, unfairly
disregarded its interests, glossed over and failed to have regard to several
factors which are manifestly prejudicial to the respondents‟ case. These factors
were: (a) the report made by SMI‟s auditors to the Independent Regulatory Board
for Auditors detailing some of the respondents‟ unlawful and prejudicial conduct;
(b) the admission by Manala and Gihwala that they paid themselves R5,5 million
supposedly as directors‟ remuneration; (c) the admission by the respondents that
R2 898 145 million was paid to Manala without any lawful basis for such
payment; (d) the admission by the respondents that SMI‟s financial statements
contained errors despite the respondents‟ attempt to downplay the significance of
such errors; and  the respondents‟ failure to proffer any plausible explanation as

4 F H I Cassim Contemporary Company Law 2 ed (2012) at 770-771.

to the basis for paying to Manala and Gihwala substantial amounts in respect of
directors‟ fees, suretyship fees and a payment of R2 898 145 to Manala regard
being had to the fact that SMI‟s sole purpose was to invest in Spearhead.

[29] In giving consideration to these contentions it is convenient to commence
by referring to the case of Bader v Weston 1967 (1) SA 134 (C). There Corbett J
dealt with an analogous situation under s 111 bis of the Companies Act of 1926
which provided a remedy to a minority shareholder who is unfairly prejudiced as
a result of the conduct of the majority shareholders. The learned judge found (at
147E) that:
„The words “such order as it thinks fit” are of wide import.‟

[30] In dealing with s 252 of the Companies Act 61 of 1973 in Louw v Nel 2011
(2) SA 172 (SCA) this court recognised that its [s 252] objective was „to empower
the court to make such order as it thinks fit for the giving of the relief, if it is
satisfied that the affairs of the company are being conducted in a manner that is
unfairly prejudicial to the interests of a dissident minority‟.

[31] Professor FHI Cassim et al in Contemporary Company Law 2 ed (2012) at
769-775 have expressed the view that the provisions of s 163 of the Act are of
wide import and constitute a flexible mechanism for the protection of a minority
shareholder from oppressive or prejudicial conduct. The authors also consider
that the list of orders that a court may make under s 163(2) is non-exhaustive
and open-ended. The latter is of course clear from subsection (2) itself which
provides that a court may make any interim or final order it considers fit including
a variety of orders listed in (a) to (l) thereof such as, in the context of this case,
„an order for the trial of any issue as determined by the court‟.

[32] But MS Blackman in Commentary on the Companies Act vol 2 (2002) at 9-
4 cautioned that:
„The very wide jurisdiction and discretion [s 252] confers on the court must, however, be
carefully controlled in order to prevent the section from itself being used as a means of
oppression.‟
Dealing with the wide ambit of s 163 of the Act, Cassim et al make the telling
point that (p771-772):
„Despite the wide ambit of s 163, it must be borne in mind that the conduct of the
majority shareholders must be evaluated in light of the fundamental corporate law
principle that, by becoming a shareholder, one undertakes to be bound by the decisions
of the majority shareholders.5 . . . Thus not all acts which prejudicially affect
shareholders or directors, or which disregard their interests, will entitle them to relief ─ it
must be shown that the “conduct” is not only prejudicial or disregardful but also that it is
unfairly so.‟

[33] The principal argument advanced by the respondents in resisting the
appeal is four-fold. First, the respondents submitted that although the relief
sought by Grancy was intended to be of limited duration its effect would be final.
Consequently Grancy was required to satisfy the requisite threshold of proof for
final relief on motion which it failed to meet. Second, that s 163(2)(f)(i)
contemplates that it is the court itself which should appoint directors and not third
parties to whom the court has delegated that power. Third, the application was
not urgent and that in any event Grancy did not meet the requirements for
urgency. Fourth, the application was entirely unnecessary as Grancy had other
satisfactory alternative remedies available to it.

[34] I do not find it necessary to traverse all of the contentions advanced by the
respondents. Suffice it to say that as I have already mentioned in para 16 above,
as I see it the real issue is whether Grancy has made out a case for the relief it
sought in the court below. As far as the nature of the relief sought by Grancy is

5 See eg: Sammel v President Brand Gold Mining Co Ltd 1969 (3) SA 629 (A) at 678G-H; Garden
Province Investment v Aleph (Pty) Ltd 1979 (2) SA 525 (D) at 534A-535C.

concerned, even accepting that the order is final in effect, the undisputed facts
alleged by Grancy, together with the facts alleged by the respondents, which is
the test to be applied in such cases as laid down by Plascon-Evans, Grancy is
entitled to such relief. As to the lack of urgency contended for, it must be said
that there is nothing to be made of that fact in this court as the court below chose
to deal with the merits of the application and thereafter dismissed it.6 Thus the
real question before us now is whether the application should have been
dismissed.

[35] This then brings me to the questions whether Grancy has established
conduct of the nature contemplated in s 163 of the Act and whether the relief that
it seeks has been properly formulated on the papers.7 I have already dealt above
with the allegations made by Grancy against the respondents. Both Manala and
Gihwala dispute Grancy‟s entitlement to any relief. It is, however, manifest from
the record that neither the payments made by them to themselves which Grancy
claims constituted a diversion of moneys destined for SMI (and thus the ultimate
benefit of all its shareholders) nor the irregularities reported on by SMI‟s internal
auditors are in dispute. Accordingly in the circumstances of this case Grancy‟s
assertions against Manala and Gihwala have to be accepted as correct. To my
mind not only is the respondents‟ evidence on this score untenable but its
shortcomings are exacerbated by the absence of a cogent explanation as to why
such payments were made in the first place.

[36] Moreover the record reveals that the legitimacy of the payments that
Manala and Gihwala made to themselves has always been contested by Grancy.
Yet there seems to have been no demonstrable attempt by Manala and Gihwala
to meaningfully address Grancy‟s protestations concerning those contested

6 Commissioner, South African Revenue Services v Hawker Air Services (Pty) Ltd;
Commissioner, South African Revenue Services v Hawker Aviation Partnership & others 2006 (4)
SA 292 (SCA) paras 9-11.
7 Compare: Breetveldt v Van Zyl 1972 (1) SA 304 (T) SA 304 (T) at 315A-E; Lourenco v Ferela
(Pty) Ltd (No1) 1998 (3) SA 281 (T) at 295F-296C.

payments.8 This is borne out by the fact that Grancy was compelled, more than
once, to resort to litigation to assert its rights. Consequently, those undisputed
facts as have emerged from the record warrant, in my view, an in-depth
investigation by objective and independent directors9 and depending on the
outcome of such investigation it may be necessary that the trial court in the
pending main action make a final determination on such issues. Put differently,
these contentious payments in themselves justify the grant of the relief sought by
Grancy.

[37] Both in the written heads of argument and their oral submission counsel
for Grancy persisted in their contention that the two independent and objective
directors should constitute SMI‟s Board to the exclusion of any other directors
that SMI‟s shareholders would otherwise be entitled to nominate under clause
105 of SMI‟s articles of association. The foundation for Grancy‟s contention in
this regard was that between them, Manala and the DGFT were entitled to
nominate four directors who would then constitute a majority on the Board. Thus,
concluded the argument, those directors could potentially use their position as
the majority to undermine anything that the two independent and objective
directors might consider best served SMI‟s corporate interests.

[38] To my mind it is only fair that all of SMI‟s shareholders should be allowed
the right to nominate one director who would serve on the Board in collaboration
with the two independent and objective directors appointed by this court. But
given that we are satisfied that Grancy has made out a case under s 163 of the
Act, care must be taken to ensure that the directors appointed by this court are
not hamstrung in their task in determining whether or not there has been any
malfeasance concerning SMI‟s corporate affairs. Thus it will be necessary to put

8 Compare: Re Marco (Ipswich) Ltd [1994] 2 BCLR 354 in which unfairly prejudicial conduct
against minority shareholders was found to have been established where specific acts of
mismanagement which were repeated over a period of time with no attempt by the majority
shareholders to prevent or rectify them.
9 Compare: Parker v National Roads and Motorists’ Association (1993) 11 ACSR 370 CA (NSW)
where it was held that directors must act with fair procedures in regard to complaints and
challenges by minorities or individual members.

measures in place to ensure that the two independent directors are free to
undertake their task without let or hindrance by incorporating an appropriate
provision in this court‟s order.

[39] For all the foregoing reasons I am satisfied that the court below erred in
holding that Grancy failed to make out a case for the relief it sought in its
application. The totality of the allegations made in Grancy‟s affidavits is, despite
denials by Manala and Gihwala, such as to make a compelling call for this court
to come to Grancy‟s assistance by exercising its discretion in Grancy‟s favour
substantially in the terms prayed.

[40] In the result the following order is made:
The appeal is upheld with costs including the costs of two counsel.
The order of the court below is set aside and in its stead is substituted the
following:
„1
It is ordered in terms of s 163(2)(f)(i) of the Companies Act 71 of 2008
that:
1.1
Mr B J Manca SC, a senior advocate practising at the Cape Bar, and
Mr Louis Strydom, a senior Chartered Accountant (SA) of Pricewaterhouse
Coopers Inc, are appointed independent directors of Seena Marena Investments
(Pty) Ltd.
The independent directors appointed in terms of paragraph 1.1 of this
order shall have the sole right, in their absolute discretion, to the exclusion of any
other directors nominated by the shareholders of Seena Marena Investments
(Pty) Ltd, to determine whether an investigation into the affairs of Seena Marena
Investments (Pty) Ltd, in the light of the complaints made on behalf of Grancy
Property Limited, is necessary and if so to conduct such an investigation.
The said independent directors may not be removed as directors save by
a unanimous vote of the shareholders of Seena Marena Investments (Pty) Ltd or
an order of the high court, having jurisdiction.

The independent directors shall constitute the Board of Directors of Seena
Marena Investments (Pty) Ltd together with such directors as each of the
shareholders may appoint to the Board save that each shareholder shall be
entitled to appoint only one director.
The directors are to receive such reasonable remuneration as determined
by the Head of the Legal Department at Deloitte & Touche at Woodlands Drive,
Woodmead, South Africa.
This order shall operate pending the finalisation of the action proceedings
pending in the Western Cape High Court under case no 12193/11 in the matter
between Grancy Property Limited & another v Dines Chandra Manilal Gihwala &
others unless the Western Cape High Court determines otherwise.
The first and third to seventh respondents are ordered to pay the costs of
this application jointly and severally, the one paying the others to be absolved,
including the costs of two counsel.‟

_________________
X M PETSE
JUDGE OF APPEAL

Appearances:

Appellant:

P B Hodes SC (with him J P McNally SC)

Instructed by:

Webber Wentzel, Johannesburg

Symington & De Kok, Bloemfontein

For 1st Respondent:
B M Slon

Instructed by:

Edward Nathan Sonnenberg Inc, Sandton

Webbers, Bloemfontein

For 3rd – 7th Respondent: S C Kirk-Cohen SC

Instructed by:

Thompson Wilks Inc, Cape Town

Honey Attorneys Inc, Bloemfontein

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

10 May 2013

STATUS

Immediate

Grancy Property Limited v Manala
(665/12) [2013] ZASCA 57 (10 May 2013)

Media Statement

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal

Today the Supreme Court of Appeal (SCA) delivered judgment upholding the appeal and
setting aside an order of the Western Cape High Court, Cape Town, and ordered the first
and third to seventh respondents to pay the costs of the application jointly and severally, the
one paying the others to be absolved, including the costs of two counsel.

The issue on appeal was whether the appellant had made out a case – on the facts
presented by it in the court below against the respondents – entitling it to relief under
s 163(2)(f)(i) of the Companies Act 71 of 2008 (the Act).

The dispute between the parties arose in 2011, when the appellant brought an urgent
interlocutory application under rules 6(11) and (12) of the Uniform Rules of Court, in the high
court. The appellant sought an order, inter alia, for the appointment of ‘objective and
independent’ directors of Seena Marena Investments (SMI), of which it was a minority
shareholder; arising from its allegations of malfeasance and moral turpitude against the first
respondent (Lancelot Lenono Manala) and the third respondent (Dines Chandra Manilal
Gihwala), who were the directors of SMI. The appellant’s case was further predicated upon
allegations of misconduct against the first and third respondents which, inter alia, entailed
alleged breaches of fiduciary obligations, misappropriation and misuse of assets,

misrepresentations, fraud, unauthorised use of company funds and denying the appellant its
entitlements as a shareholder of SMI.

The litigation in the court below was as a sequel to the decision of the first and third
respondents to resign as directors of SMI, entailing that the latter was left without directors.
This state of affairs prompted the appellant to invite the first respondent and the Dines
Gihwala Family Trust, represented by the third respondent, as shareholders of SMI, to
consent to a mechanism in terms of which the appointment of two independent directors to
the board of SMI could be made. This invitation elicited no response from the first and third
respondents and precipitated the application by the appellant in the court below, which
dismissed the application with costs holding that the appellant had not established
entitlement to the relief sought. It subsequently granted leave to appeal to this court.

The SCA held that it was satisfied upon the evidence adduced by the appellant in the court
below that it had made out a case under s 163 of the Act.

The SCA held further that it was satisfied that the court below erred in holding that the
appellant had failed to make out a case for the relief it sought.

The SCA also held that that it was only fair that all of SMI’s shareholders should be allowed
the right to nominate one director to serve on the Board of Directors, in collaboration with
the two independent and objective directors appointed by the court.

--- ends ---