THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 330/2011
Reportable

In the matter between:

MOHAMMED AZEEM GAFFOOR NO
First Appellant
AYESHA-BI PARKER NO
(In their capacities as Executors of the Deceased
Estate late Cassiem Ebrahim Gaffoor)
Second Appellant

and

VANGATES INVESTMENTS (PTY) LTD
First Respondent
ABDUL AZIZ BANDERKER
Second Respondent
GOOLAM MUSTAPHA BREY
Third Respondent
MOHAMMED ALLIE DHANSAY
Fourth Respondent
ABDULLAH ESHACK GANGRAKER
Fifth Respondent
ABDUL WAHAB BARDAY NO (in his capacity
as Executor together with Eighteenth and
Nineteenth Respondents in the same capacity)
Sixth Respondent
MOHAMED YOUSIF MOHAMED
Seventh Respondent
NISHAAD MURUDKER
Eighth Respondent
LAIKAT ALI SONDAY
Ninth Respondent
MAHMOOD KHATIB NO
Tenth Respondent
UTHMAN BREY NO
Eleventh Respondent
MOHAMED ALLIE DHANSAY NO
Twelfth Respondent
AMINA DHANSAY NO
Thirteenth Respondent
AZGARI BEGUM HOOSAIN NO
Fourteenth Respondent
ABDULLAH ESHACK GANGRAKER NO
Fifteenth Respondent
FATIMA GANGRAKER NO
Sixteenth Respondent
RAUF KHAN NO
Seventeenth Respondent
HASEENA BEGUM KHAN NO
Eighteenth Respondent
AKBAR ALLIE LOGDAY NO (Eighteenth
and Nineteenth Respondents also NO in
their capacities as Trustees of the Deceased
Estate late Rauf Khan)
Nineteenth Respondent
MOHAMED YOUSIF MOHAMED NO
Twentieth Respondent
ZOHRA MOHAMED NO
Twenty First Respondent
MOOSA MOHAMED NO
Twenty Second Respondent

NAZEEM MOHAMED NO
Twenty Third Respondent
EBRAHIM ALLIE ENOS MURUDKER

NO
Twenty Fourth Respondent
GOOLAM MUSTAPHA BREY NO
Twenty Fifth Respondent
UTHMAN BREY NO
Twenty Sixth Respondent
MAHMOOD KHATIB NO
Twenty Seventh Respondent
VANGATE PROPERTY (PTY) LTD
Twenty Eighth Respondent
ONE VISION INVESTMENTS 52 (PTY)
LTD

Twenty Ninth Respondent
MAHMOOD KHATIB
Thirtieth Respondent

Neutral Citation:
Gaffoor NO v Vangates Investments (Pty) Ltd (330/2011)
[2012] ZASCA 52 (30 March 2012)

Coram:
Mthiyane DP, Van Heerden, Leach and Tshiqi JJA and
Ndita AJA

Heard:
9 March 2012

Delivered:
30 March 2012

Summary:
Section 115 of Companies Act 61 of 1973 – rectification of
register of members – purported transfers of shares
unlawful and invalid – court’s discretion in terms of s 115 a
discretion in the broad sense – exercise of discretion to
order rectification.

ORDER

On appeal from: Western Cape High Court, Cape Town (Koen AJ sitting as
court of first instance):
1.
The appeal succeeds with costs, including the costs of two
counsel.
2.
The order of the high court is set aside and substituted with the
following:
‘(a) The first respondent is directed to rectify its register of members –

(i) by deleting the transfers of shares registered on 16 August 2004 from
Cassiem Ebrahim Gaffoor to the second to fifth respondents, the seventh to
ninth respondents and Mr Rauf Khan, and all subsequent transfers of those
shares to other persons or entities; and

(ii) by registering the deceased estate of the late Cassiem Ebrahim
Gaffoor, as represented by the applicants in their capacity as executors, as
shareholder in respect of 444 and one-ninth of four shares in the first
respondent with effect from 16 August 2004.
(b)
The first to fifth respondents, the seventh to ninth respondents, the sixth,
eighteenth and nineteenth respondents in their capacity as executors of the
estate late Rauf Khan and the thirtieth respondent are ordered to pay the costs
of the application, including the costs of two counsel, jointly and severally, the
one paying the other to be absolved.’

JUDGMENT

VAN HEERDEN JA (MTHIYANE DP, LEACH & TSHIQI JJA & NDITA AJA
concurring):

Introduction
[1] The question in this appeal is whether, in the circumstances of this
case, an alteration to the register of members 1  by the shareholders of a
company, appropriating the shares of a deceased co-shareholder, without
notice to his deceased estate and without an approach to court, should be
allowed to stand in the company’s register of members. The Western Cape
High Court (Koen AJ) refused an application by the executors of the deceased
estate for rectification of the register of members so as to record the
shareholding of the deceased estate. The present appeal by the executors
against that decision comes before us with the leave of the high court.
Background
[2] It is necessary to set out the facts, which are largely common cause, in
some detail. During the 1990s a group of persons, consisting of the second to
fifth, the seventh to ninth respondents, Mr Rauf Khan 2 and the deceased,
identified the potential for the development of a shopping mall on what was then
the Athlone Golf Course. This group came to be known as the Athlone Business
Syndicate (the ABS). Some while after this idea was conceived by the ABS, the
City of Cape Town invited proposals for the development of the land. The
closing date for submissions was 25 February 2000. The successful bidder
would have to purchase the land and then develop it according to its
development scheme.
[3] The ABS decided to submit a proposal and to form a company for this
purpose. The nine members of the ABS were the founding members of the
company which was initially incorporated as a public company under the name
Vangates Investments Limited. However, as the City of Cape Town made it
clear that it wished to deal with a private company, the public company was
converted to a private company, Vangates Investments (Pty) Ltd (the company),

1 Followed by a shareholders’ and then by a directors’ resolution.
2 Mr Khan is now deceased and his estate is represented in these proceedings by the sixth, eighteenth and
nineteenth respondents.

the first respondent in this appeal. The total share capital of the company was
R4000, divided into 4000 ordinary par value shares of R1 each. Each of the
nine founding members held 444 shares and one-ninth of four shares, the latter
four shares being held by the ninth respondent as nominee.
[4] The preparation of the bid by the ABS involved the expenditure of fairly
large sums of money. The process leading to the acquisition of the land was a
long and expensive one. Members of the company invested R1,4 million in the
preparation of the bid. For some reason, unexplained on the papers and by
counsel, the deceased’s financial contribution at that time appears to have been
a smallish one, which was after his death calculated by the company’s auditors
to be only R18 990.
[5] The bid was successful. In terms of the bid proposal, the company was
required to purchase the land from the City of Cape Town for a purchase price
of R6,7 million. The company had to pay an initial deposit of R670 000 and the
members of the company had to finance that amount which was paid on 21 May
2002. The respondents allege that, together with the technical team (later
becoming a shareholder and represented by the twenty-ninth respondent), a
contribution of R67 000 was required from each member towards the payment
of the deposit. Despite being called upon to do so, the deceased did not make
any contribution.
[6] From the outset, problems beset the proposed development. The
technical team had put together a defective scheme which had to be discarded
and, by the second half of 2002, the company was technically insolvent. By the
time the deceased passed away on 21 October 2002, the project appeared to
be ‘dead in the water’.
[7] The first set of executors of the deceased estate (the wife and brother
of the deceased) was appointed on 14 February 2003. The winding-up of the
estate did not progress smoothly. There were problems between the executors
and the other family members of the deceased, eventually giving rise to what
the attorneys for the executors described as ‘warfare’. The scale of these
difficulties is evident from various letters addressed by the attorneys to the
executors and to the Master of the High Court in late 2003 and early 2004, the

relevant attorney describing himself as being ‘completely at [his] wits end in
connection with this estate’.
[8] In the meantime, the company had not abandoned its plans to pursue
the development and soldiered on. It employed new people to devise a new
scheme and a new technical team was put together to execute it. The new
scheme finally came to fruition at the end of July 2004, when the company
found a financier in the Zenprop group which had expertise in property
development and management.
[9] On 7 April 2004, a meeting was held between Mr Mustapha Murudker
(the father of the eighth respondent) and the ninth respondent (Mr Sonday), on
the one hand, and one of the executors of the deceased estate and the second
appellant (Ms Parker), on the other. The respondents knew that the second
appellant was at that time not an executor of the estate, although she allegedly
held herself out as representing the estate.3 The purpose of the meeting was to
discuss the involvement of the estate in the new project and to invite further
contributions from the estate relating to the development, particularly towards
payment of the purchase price of the land.
[10] On 6 May 2004, before the financier became involved, Ms Parker
received a letter from ABS requesting urgent payment of an amount of
R760 000 for the purchase of the land, as well as ‘the loan account deficit of
R216 000 . . . due by your late father’. How the amount of R760 000 was made
up, or why a deficit of R216 000 existed, is not explained. In fact, the letter went
on to say that, if these amounts were not paid by 11 May 2004, ABS would
‘immediately refund the loan account of R19 000 . . . due to the estate by
Vangates Investments (Pty) Ltd’. As Koen AJ in the high court pointed out, why
there should be a loan account credit balance of R19 000, and at the same time
a deficit of R216 000, was not explained and is difficult to understand.

3 The appellants in fact alleged in their replying affidavit that Ms Parker had been specifically authorised
by the executors to represent them in meeting with Messrs Murudker and Sonday.

[11] On 2 June 2004, the Master removed the first set of executors of the
deceased estate from office. Later that month, on 23 June 2004, the attorneys
acting for the company4 addressed a further letter to Ms Parker who at this point
– to the knowledge of the respondents – definitely had no authority to make any
decisions on behalf of the deceased estate. In terms of this letter, Ms Parker
was given until 29 June 2004 to indicate whether the estate would retain its
shareholding in the company, in which event it was expected to contribute ‘its
portion of the purchase price and other amounts due and owing’, or whether it
wished to be ‘paid out its share’ in the company. The clear implication of this
letter was that, in the latter event, the deceased estate would forgo any claim to
the shares. By means of a further letter dated 25 June 2004, the deadline by
which a decision was to be taken by Ms Parker was extended to 2 July 2004.
There was no response from Ms Parker to either of the two letters.
[12] As stated earlier, at the end of July 2004, Zenprop became involved in
providing bridging finance for the development. However, the final financing of
the entire development project, including the payment of the purchase price of
the land, was done by Barclays Bank at the end of 2004. All the members of the
company were then required to bind themselves in favour of Barclays Bank as
sureties, each for an amount of R2 million. It would therefore appear that the
other members of the company did not in fact make monetary contributions
towards the payment of the balance of the purchase price of the land, as had
earlier been envisaged. Unlike the other members of the company, the
deceased estate was never called upon to stand surety in favour of Barclays
Bank, the ultimate financier of the development.
[13] According to the respondents, however, Zenprop had insisted that
every member of the company be involved in the payment of the purchase price
– ‘we had to sign suretyships in favour of Barclays Bank for the ultimate loan
and Zenprop was unwilling to carry a deceased estate as a member, especially
with the family members at war with one another’. Meanwhile, the Master had

4 MK Attorneys, the sole proprietor of which is the thirtieth respondent.

not yet appointed a second set of executors. The company received legal
advice to the effect that the impasse created by the non-participation of the
deceased estate could be resolved by recourse to a draft (unsigned)
shareholders’ agreement which had earlier been agreed to by the members of
the company, including the deceased, and which (according to the respondents)
allowed members to ‘take up’ the shares of a deceased member. It appears
from the register of members that, on 16 August 2004, the deceased’s shares
were transferred out of his name and into the names of the second to fifth
respondents, the seventh to ninth respondents, and Mr Rauf Khan. 5  The
thirtieth respondent, in his capacity as company secretary, signed the share
transfer forms on behalf of the deceased estate. It was this purported transfer of
shares which the appellants contend was invalid and in respect of which they
seek rectification of the register of members. On the same day, there were
further transfers of these shares to the family trusts of the second to fifth, the
seventh to ninth respondents and Mr Khan and to the thirtieth respondent ‘in
trust’. Finally, the thirtieth respondent transferred the shares held by him in trust
to two family trusts.6
[14] On 16 September 2004, ostensibly after the register of members had
already been altered, the shareholders of the company passed a resolution
purporting to ‘take up’ the deceased’s shares in terms of clause 18.4 of the
abovementioned shareholders’ agreement at a total valuation of R19 434,7 as
determined by the auditors of the company with reference to the date of death
of the deceased.  This was followed by a directors’ resolution on 20 September
2004, ‘approving’ and confirming’ the transfers of shares set out in the
preceding paragraph and authorising the thirtieth respondent to sign all the
share transfer forms on behalf of the deceased estate.

5 According to the respondents, the date of the transfers was incorrectly reflected in the register of
members and that the transfers actually took place only on 20 September 2004. As will be seen below, the
relevant directors’ resolution was only taken on 20 September.
6 There is some uncertainty as to the date on which the last-mentioned transfers took place, but this is not
relevant for the purposes of this appeal.
7 R18 990 in respect of the deceased’s loan account and R444 in respect of his shares.

[15] Also on 20 September 2004, the company’s attorneys wrote to the
attorneys representing Ms Parker who, as stated earlier, had no authority to
represent the estate. The attorneys confirmed that they ‘held in trust’ the sum of
R19 434 in respect of the loan account owing to the deceased and the value of
his shares. They asked whether an executor had been appointed and for details
of the estate banking account so that this amount could be paid to the estate.
[16] About a week later, on 28 September 2004, a second set of executors
was appointed by the Master. The new executors were Messrs Holt and Kajee.
On the same day, Mr Holt wrote to the attorneys acting for the company,
advising them of this appointment and requesting that a meeting be held.
Sometime before 20 October 2004, a meeting was held between Mr Holt and
members of the company, at which Mr Holt was advised of the content of the
shareholders’ resolution taken on 16 September and of the directors’ resolution
taken on 20 September. Mr Holt was informed that the deceased estate had
been divested of its shareholding in the company and that those shares had
been transferred to the other shareholders. According to the respondents, it was
explained to him that the reasons for the resolutions were the failure of the
deceased estate to make a contribution to the purchase price of the land and to
‘up its loan account above the meagre outlay of just more than R19 000’. Holt’s
reaction was that the executors would convey this to the heirs and take
instructions from them.
[17] On 20 October 2004, Mr Holt wrote to the attorneys acting for the
company, stating that ‘the heirs want to retain the shares in’ the company and
asking to be provided with copies of the deceased’s share certificates. The
response to Mr Holt’s letter, dated 25 October 2004, was that the deceased was
not a shareholder of the company.
[18] Despite this initial flurry of activity on the part of Mr Holt, the second set
of executors did little more to pursue the issue of the deceased’s shareholding,
despite the fact that the heirs, including Ms Parker, had apparently instructed
them to take steps in this regard. A bank guaranteed cheque in respect of the
deceased’s loan account and the value of his shares, with interest, was sent to
the second set of executors on 4 March 2005. It was returned on 22 April 2005

under cover of a letter stating that the executors had received ‘instructions to
pursue this matter’.
[19] In the meantime, the property development was completed and the
Vangate Mall shopping centre was opened on 29 September 2005. According
to the respondents, Vangate Mall operated at a loss for the years 2005 to 2008.
[20] Messrs Holt and Kajee submitted a liquidation and distribution account
in the deceased estate in July 2007. This account did not reflect the deceased’s
shares in the company. On 22 January 2008, the deceased’s heirs, including
the present appellants in their personal capacities, wrote to the Master objecting
to the account, inter alia, because of the lack of progress made by the
executors in recovering the shares. The letter records that the heirs had ‘been
advised that the estate’s claim for the shares in [the company] may have
prescribed’ and that ‘[t]his may represent a loss of millions of rands to the
estate’. According to the heirs, the executors had failed in their duty to
administer the estate properly.
[21] Mr Holt and Mr Kajee then resigned as executors in June 2008 and
November 2008, respectively. On 12 December 2008, the appellants were
appointed as executors. On 18 December 2008, they addressed a letter to the
company’s auditors relying on s 113 of the Act and requesting inspection and
copying of the register of members of the company and the transfer register. A
similar letter dated 22 January 2009 was addressed by the appellants to the
thirtieth respondent in his capacity as company secretary. There was no reply to
these letters and, on 28 January, yet another letter was addressed to the
thirtieth respondent by the appellants’ attorneys, referring to the previous
requests and reiterating that the appellants wanted to inspect and copy the
company’s register of members and transfer register as a matter of urgency.
This letter evoked a response from the thirtieth respondent to the effect that he
did not have the share register and was trying to locate it.
[22] In the meantime, on 22 January 2009, the appellants wrote to the
attorneys acting for the company and the remaining shareholders, stating that –
‘It has become apparent that the deceased was a shareholder in Vangate Investments
(Pty) Ltd (“Vangate”) and that such shareholding is listed as a claim in favour of the

Estate. Our instructions from the heirs of the Estate are to pursue this matter of the
Late Mr Gaffoor’s shareholding so that we may finalise the Estate accordingly. We
have further become aware that Vangate was in the process of selling its investments
to a third party and have been advised that your goodselves are acting on behalf of the
seller herein. Should this sale have already been finalised we remind your goodselves
of the Estate’s shareholding in Vangate and trust that the Estate, as shareholder of the
company, will also benefit accordingly from this sale.’
The sale referred to by the appellants was a sale concluded by the company in
February 2009, in terms of which the company sold Vangate Mall to the Public
Investment Corporation. Transfer took place in June 2009 and 50 per cent of
the profit was shared among the members of the company. In the words of the
respondents, ‘[t]his sale saw the fruition of the investment which the members
of the ABS [had] made over a decade and a half’.
[23] In July 2009, the appellants’ present attorneys were instructed in this
matter and, on 6 October 2009, they addressed a letter to the company and its
shareholders, demanding that the shares previously registered in the
deceased’s name be forthwith registered in the name of the deceased estate;
that all dividends and amounts paid in terms of resolutions taken by the
company through its board or its members in general meeting be accounted for,
and that the company and its members pay to the deceased estate all sums to
which the deceased became entitled ‘during the period from when the shares
were invalidly transferred (on the 18th [sic: 16th] August 2004) to date hereof’.
The respondents’ attorneys replied on 29 October 2009, ‘confirming receipt . . .
and . . . that our client’s instructions are that it notes the contents thereof’.
[24] On 11 November 2009, the appellants launched an application in which
they claimed, inter alia, the following relief –
‘2. That the Applicants are declared to be entitled to be registered as the shareholders
of 444 shares in the First Respondent [the company] and one-ninth of 4 shares in the
First Respondent and are the shareholders of the First Respondent in respect of one-
ninth of the issued share capital of the First Respondent . . . .
3. That the First to Ninth and Thirtieth Respondents are directed to rectify the First
Respondent’s register of shares by deleting the transfer of shares previously registered
in the name of Cassiem Ebrahim Gaffoor [the deceased] to the Second to Ninth
Respondents reflected in the Register of Members’ Share Transfers to have been

transferred on the 16th of August 2004 and reinstating the deceased estate as
represented by the Applicants, as members in their capacity as Executors of the estate
late C E Gaffoor, in respect of 444 and one-ninth of 4 shares with effect from 16 August
2004.
4. That the First to Ninth and Thirtieth Respondents are ordered to account to the
Applicants herein and to furnish the Applicants herein with all documentation and
source documents relating to the transactions so accounted in respect of:
4.1 The loan accounts of all members and directors during the period February
2004 until date of furnishing such account herein and payments and repayments
made in respect of such loan accounts.
4.2 The declaration of all and any dividends made between February 2004 and
date hereof and the payment of any such dividends effected whether in species
or in cash or otherwise and the identity of each payee in each instance or
recipients of such dividend.
4.3 All payments including, but not limited to any distribution in kind made by or
on behalf of the First Respondent to each shareholder and each director during
the period February 2004 to date whether made by First Respondent or on its
behalf and whether out of any bank account or the trust account of attorneys or
otherwise.
5. That the First to Fifth, Seventh to Ninth and Thirtieth Respondents are ordered and
directed to furnish the documentation referred to above and account as aforesaid within
30 days of the order of the above Honourable Court in terms of paragraphs 1 to 3
above, whereupon the Respondents who have received dividends, payments or
distribution of whatever nature are ordered to effect payment or restoration of one-ninth
of dividends, payments or distribution of whatever nature paid to Respondents (be it
the value of all dividends paid in specie to members or cash) to the Applicants herein
forthwith.
6. First Respondent is ordered to pay the proceeds of 5 above to the Applicants.
Applicants are given leave to apply for further relief consequent upon the accounting
referred to in 5 above.
7. That the First Respondent be ordered to pay the costs of the application, including
the costs of two counsel and that any other Respondents opposing the application be
ordered to pay the cost of the application jointly and severally with First Respondent.’
[25] No relief was sought against the various family trusts, cited through
their trustees as the tenth to the twenty-seventh respondents, nor against the
twenty-eighth and the twenty-ninth respondents. All these respondents abided
the decision of the high court.

The judgment in the high court
[26] The respondents opposed the application on two grounds: first, they
contended that the applicant’s right to claim rectification of the register in terms
of s 115 of the Act had prescribed, and second (and in any event) that the delay
in bringing the application was such that, in the exercise of the discretion vested
in it by s 115, the court would be justified in refusing the relief sought.
[27] The relevant part of s 115 of the Act provides as follows –
‘Rectification of register of members – (1) If –
(a) the name of any person is, without sufficient cause, entered into or omitted
from the register of members of a company . . .
the person concerned or the company or any member of the company, may apply to
the Court for rectification of the register.
(2) The application may be made in accordance with the rules of Court or in such other
manner as the Court may direct, and the Court may either refuse it or may order
rectification of the register and payment by the company, or by any director or officer of
the company, of any damages sustained by any person concerned.
(3) On any application under this section the Court may decide any question relating to
the title of any person who is a party to the application to have his name entered in or
omitted from the register, whether the question arises between members or alleged
members or between members or alleged members on the one hand and the company
on the other hand, and generally may decide any question necessary or expedient to
be decided for the rectification of the register.’
[28] In response to the prescription point, the high court expressed the view
that s 115 of the Act creates a statutory right which is not a ‘debt’ within the
meaning of that expression in Chapter III of the Prescription Act 68 of 1969 and
that there can be no extinction of such right by prescription.8 As regards s 115,
the high court held that this section vested in the court a wide discretion which
is to be exercised according to the circumstances of each case. It followed that

8 J A Kunst, P Delport & Q Vorster (eds) Henochsberg on the Companies Act 5ed (1994, with loose-leaf
updates) Volume 1 Service Issue 25 at 222-222(1). As the high court did not regard this issue as being
decisive of the matter, it did not deal with it any further.

the illegality of the share transfers in this case did not automatically lead to an
order in terms of s 115 in the appellants’ favour. Undue delay is one of the
factors which a court will take into account in the exercise of its discretion under
s 115. In this case, before the removal of the first set of executors, there had
been discussions with other members of the company about the role the estate
would play in the development. While it was so that the papers do not make it
clear why they were requested to make the financial contribution required of
them at that stage, there is no evidence that any active steps were taken to
obtain clarity in this regard.
[29] The high court pointed out that the second set of executors knew, by 20
October 2004 at the latest, that the deceased’s shares in the company had
been transferred to the remaining shareholders and how this had come to pass.
However, after an initial flurry of activity in October 2004, the second set of
executors did nothing until April 2005 when, in response to the tender of a
cheque in respect of the deceased’s loan account and shares, they indicated
that they intended to ‘pursue the matter’. This was not done: no effective steps
were taken by the executors to seek rectification of the register of members, nor
to obtain advice about this for approximately four years. In fact, it was only after
the appointment of the third set of executors in December 2008 that requests
were made to inspect and copy the company’s register of members and transfer
register. These requests coincided with the sale (at a profit) of the property to
the Public Investment Corporation in early 2009. Even then, it took a further
nine months for the application to be launched in November 2009.
[30] In dismissing the application with costs, including the costs of two
counsel, the high court stated that –
‘During this time the remaining members conceived a new development, obtained a
financier, incurred liabilities on behalf of the company, entered into suretyships and
brought the development to fruition. They did so without any contribution, financial or
otherwise, from the deceased’s estate. They had invited the estate to participate
without receiving any answer; they had disclosed to the executors what they had done
with the deceased’s shares; and had been threatened that matters would be pursued.
More than five years passed without any steps being taken to alter the membership of
the company by the deceased estate. The development was initially not a financial
success, and only after the sale to the Public Interest Corporation, when a return on

their investment had been obtained, were the members of the company faced with this
claim.
. . . In exercising the discretion vested in the Court I do not think that fairness and
justice demand that I should grant the order sought by the applicants.’
Conclusions
[31] During the course of the hearing before this court, counsel for the
appellants informed us that he was moving for only para 3 of the relief claimed
in the notice of motion. 9  In other words, the only relief claimed was the
rectification of the company’s register in terms of s 115 of the Act.10 Counsel for
the respondents, on the other hand, contended that the appellants’ ‘right to
recover the shares’ is a ‘debt’ as envisaged in Chapter III of the Prescription
Act; that the three year period of prescription in respect of this right11 had
commenced running before or on 20 October 2004,12 and that the right had
been extinguished by prescription long before the application was launched in
the court below. This being so, it was contended that, as the appellants cannot
establish that they are ‘entitled’ to the shares, there is no basis on which they
can claim rectification of the register of members.
[32] In argument before the high court, the respondents conceded that the
transfer of shares from the deceased estate to the remaining shareholders of
the company was unlawful and invalid, despite their earlier position in their
answering affidavit, where they had relied on the provisions of the draft
shareholders’ agreement to defend the validity of the share transfers. The court
below recorded that it was common cause that the disputed shares were
invalidly transferred from the name of the deceased into the names of the other

9 See para 24 above.
10 The full text of which is set out in para 27 above.
11 Section 11(d) of the Prescription Act.
12 By which date, at the latest, the appellants had knowledge of the identity of the debtor and the facts
from which the debt arose, or could have acquired such knowledge by the exercise of reasonable care, as
required by s 12(3) of the Prescription Act.

shareholders ‘at least on the basis that the share transfer documents were not
signed in the manner prescribed in the articles of the company’.
[33] In my view, the reason for the invalidity of the purported share transfers
goes much further than this. A share is a collection of personal rights which is
transferred by cession. In the words of Howie JA in Botha v Fick in respect of
the transfer of shares: 13
‘1. Blote consensus is voldoende om sessie daar te stel.
2. Sessie geskied deur middel van ’n oordragsooreenskoms wat sal saamval met, of
voorafgegaan word deur, ’n justa causa. Die justa causa kan ’n verbintenisskeppende
ooreenkoms wees.’14
In this case, the purported transfer of the shares did not comply with either of
these requirements.  There was no contractual or other basis (justa causa) for
the purported transfer. Neither was there any intention on the part of the
executors of the deceased estate to relinquish or pass title to the disputed
shares to the remaining shareholders or to anyone else.
[34] In terms of the Articles of Association of the company, ‘[t]he executor of
the estate of a deceased sole holder of a share shall be the only person
recognised by the company as having any title to the share’. As justification for
the purported share transfers, the respondents initially relied on the
shareholders’ resolution dated 16 September 2004 and the subsequent
resolution adopted by the company’s board of directors on 20 October 2004.
However, at the time of both resolutions, and to the knowledge of the remaining
shareholders, the deceased estate was unrepresented as the position of
executor was temporarily vacant.15 In fact and in law, no notice was given to the
deceased estate. The only other basis on which a transfer of shares could have
been compelled by the respondents would have been by an approach to court

13 Botha v Fick 1995 (2) SA 750 (A) at 778G-779B.
14 ‘1. Mere consensus is sufficient to constitute cession. 2. Cession takes place by mean of a transfer
agreement which will coincide with, or be preceded by, a justa causa. The justa causa can be an
obligationary agreement.’ (My translation.) See also Jeffrey v Pollak and Freemantle 1938 AD 1 at 22.
15 As indicated above, the first set of executors was removed from office on 2 June 2004 and the second
set of executors only appointed on 28 September 2004.

on a basis recognised in law. This is a further reason why the two resolutions
were invalid. Thus, although the purported share transfers had been registered
in the company’s register of members, the court is ‘entitled to go behind the
register to ascertain the identity of the true owner’.16
[35] This puts paid to the respondents’ submission to the effect that the
appellants’ ‘right to recover the shares’ had prescribed. The deceased estate
(or, rather, its executors) had never ceased to be the owner of the disputed
shares. As dominium remained vested in them, there was no need for them to
claim ‘recovery’ of these shares. All that they needed was to have that
ownership reflected in the company’s register of members.
[36] This brings me to the appellants’ claim, under s 115 of the Act, for the
rectification of the company’s register of members so as to reflect the executors
of the deceased estate as the holders of 444 shares and one-ninth of four
shares in the company. I agree with the view of the high court17 that s 115
creates a statutory right to apply to the court for the exercise by it of a statutory
power; such right is not a ‘debt’ within the meaning of that expression in
Chapter III of the Prescription Act and there can be no extinction of such right
by prescription.
[37] Section 115 is set out in para 27 above. It has been said that ‘the
Court’s jurisdiction under this section is unlimited; it has a discretion in the
circumstances of each case’.18 The court is not, however, obliged to rectify the
register whenever it is shown that the name of a person has, without sufficient
cause, been omitted from the register or entered therein:
‘The power given to the Court under the section is a discretionary one: Section 115
provides that the Court may either refuse the application or may order rectification of
the register . . . .

16 See Kalil v Decotex (Pty) Ltd & another 1988 (1) SA 943 (A) at 970H-971A.
17 Based on the views expressed in Henochsberg on the Companies Act above fn 8 at 222-222(1).
18 Henochsberg on the Companies Act above fn 8 Service Issue 33 at 220(1).

“When the Court entertains the application it is bound to go into all the circumstances
of the case, and to consider what equity the applicant has to call for its interposition.’’
Halsbury [Laws of England 4 ed vol 7 art 308].’19
[38] On behalf of the respondents, it was contended that the discretion
vested in the court by s 115 is a ‘discretion in the narrow or strict sense’ and
that an appellate court can only interfere in the exercise of such discretion in
limited circumstances; for example, if it is shown that the court a quo has
misdirected itself by taking irrelevant considerations into account; that it has
exercised its discretion for no substantial reason; that the discretion was not
exercised judicially or was exercised based on a wrong appreciation of the facts
or wrong principles of law.20 Counsel for the appellants disagreed, submitting
that the discretion is one in ‘the broad sense’ and that this court’s powers of
interference are not limited in this way.
[39] The distinction between the two categories of discretionary power was
drawn by EM Grosskopf JA in Media Workers Association of South Africa &
others v Press Corporation of South Africa (‘Perskor’)21 and Knox D’Arcy Ltd &
others v Jamieson & others.22 The essence of ‘a discretion in the narrow or
strict sense’ involves a choice between two or more different, but equally
permissible alternatives, while ‘a discretion in the broad sense’ means no more
than a power to have regard to a number  of disparate and incommensurable
features in arriving at a conclusion. It is only when the court exercises a
discretion in the narrow or strict sense that an appeal court’s powers of
interference are said to be limited. With regard to the exercise of a discretion in
the broad sense, there is no reason why the powers of an appeal court should
be so restricted. Since these matters can be determined equally appropriately

19 Bauermeister v CC Bauermeister (Pty) Ltd 1981 (1) SA 274 (W) at 277F-H.
20 Giddey NO v JC Barnard and Partners 2007 (5) SA 525 (CC) para 19; MTN Service Provider (Pty) Ltd
v Afro Call (Pty) Ltd 2007 (6) SA 620 (SCA) paras 9-10. See also Ex Parte Neethling & others 1951 (4)
SA 331 (A) at 335D-E.
21 Media Workers Association of South Africa & others v Press Corporation of South Africa (‘Perskor’)
1992 (4) SA 791 (A) at 796H-I and 800C-J.
22 Knox D’Arcy Ltd & others v Jamieson & others 1996 (4) SA 348 (A) at 361G-I.

by an appeal court, the latter may substitute its own discretion for that of the trial
court if it differs from such court on the merits and may make the order which it
deems just.23
[40] As indicated above,24 the court’s jurisdiction under s 115 of the Act has
been described as unlimited and the exercise of its discretion based on what
equity requires. So too, in Botha v Fick,25 Howie JA stated that –
‘Die Hof het ’n wye diskresie by ’n aansoek ingevolge hierdie artikel [s 115] om toe te
sien dat billikheid en geregtigheid geskied. 26 En dit is “to make it reflect the state of
affairs which the appellant is entitled to claim that it ought to reflect” (Orr NO and
Others v Hill 1929 TPD 885 te 892) en, soos dit in die saak van In re The
Contributories of the Rosemount Gold Mining Syndicate in Liquidation 1905 TH 169 te
188 gestel is,
“to fix with the obligations of membership those persons and those persons only upon
whom such obligations should justly and equitably rest”.’
[41] In determining whether to grant or refuse an application for rectification,
the court makes a judgment in the light of all the relevant considerations. As
with s 344(h) of the Act, which provides that ‘[a] company may be wound up by
the Court if – (h) it appears to the Court that it is just and equitable that the
company should be wound up’, there is nothing about the power conferred by
s 115 of the Act which results in the court of first instance having any special
advantage that would enable it to exercise the power any more appropriately
than a court of appeal. The power is one that the court of appeal is in as good a
position as the court of first instance to exercise.27 That being so, and bearing in
mind the equitable nature of the court’s discretion in terms of s 115, this
discretion can rightfully be described as a discretion in the broad sense. This

23 See also Bezuidenhout v Bezuidenhout 2005 (2) SA 187 (SCA) paras 16-17.
24 Para 37.
25 Footnote 13, at 780C-D.
26 ‘The Court has a wide discretion in an application in terms of this section to ensure that fairness and
justice prevail.’ (My translation.)
27 Mahomed v Kazi’s Agencies (Pty) Ltd & others 1949 (1) SA 1162 (N) at 1167-1169; Tjospomie
Boerdery (Pty) Ltd v Drakensberg Botteliers (Pty) Ltd 1989 (4) SA 31 (T) at 40A-41B and 44D-45B. See
also mv Achilleus v Thai United Insurance Co Ltd & others 1992 (1) SA 324 (N) at 335C-D.

court is therefore empowered to re-examine all the relevant material and, if
satisfied that the discretion has not been appropriately exercised, to substitute
its own opinion for that of the court of first instance. It is not necessary to show
that the exercise of its discretion by the court below was flawed in one of the
respects mentioned in para 38 above.
[42] In declining to rectify the company’s register of members, Koen AJ
relied almost exclusively on what he perceived to be the undue delay by the
appellants in bringing the application in terms of s 115.28 He relied in this regard
on Verrin Trust & Finance Corporation (Pty) Ltd v Zeeland House (Pty) Ltd &
others,29 in which Corbett J stated the following –
‘The jurisdiction which the court exercises under sec 36 [the equivalent of s 115] is a
discretionary one and an applicant under the section is not entitled to an order ex
debito justitiae . . . [T]he English Courts have held that an application for rectification
must be made promptly and that undue delay may deprive an applicant of his remedy
.  . . This rule was adopted by Vieyra, J in Pretorius and Another v Natal South Sea
Investment Trust Ltd (under judicial management), 1965 (3) SA 410 (W) at pp. 420-2).’
[43] While delay is of course one of the factors to be taken into
consideration, there are other aspects of this case that bear emphasis. The
respondents’ complaint was that the remaining shareholders had carried the
risk of total failure of the Vangate Mall project whilst neither the deceased nor
the executors of his estate carried any risk by making a contribution towards the
deposit which was payable by the company to the Cape Town City Council for
the acquisition of the development land, or to the later amounts required to be
raised from the shareholders. It is clear from the ‘auditor’s valuation’ that the
deposit was indeed funded by shareholders’ loans. Although it is common
cause that the deceased did not contribute towards this deposit, there was
nothing in the papers to indicate what had been done to call for this deposit (eg
a shareholders’ resolution or the like). Nor was there any clarity about the basis

28 See paras 28-29 above.
29 Verrin Trust & Finance Corporation (Pty) Ltd v Zeeland House (Pty) Ltd & others 1973 (4) SA 1 (C)
at 10C-H.

of calculation of each shareholder’s initial monetary contribution, more
particularly why the deceased’s asserted contribution appeared to be
significantly smaller than that of the other shareholders.
[44] As regards the later amounts called for from the deceased estate, it has
already been stated 30  that, because of the intervention of Zenprop and
thereafter Barclays Bank, it would appear that the other shareholders did not in
fact make monetary contributions towards the payment of the balance of the
purchase price of the land. And, while the other shareholders apparently stood
surety in favour of Barclays Bank to the tune of R2 million each, there is nothing
to show that the deceased estate (even if it was represented by executors at the
relevant time) was ever called upon to furnish a suretyship. This
notwithstanding, in an attempt to justify the ‘taking up’ of the deceased’s shares
by the remaining shareholders (and the two resolutions passed in this regard),31
the respondents alleged that –
‘It was necessary to take these steps to give effect to the terms of the deed of sale
which the first respondent had with the City of Cape Town. The estate could not co-
operate because there was at that time no executor . . . at any rate the estate was not
in a position to make any contribution at all; and the beneficiaries in terms of the will of
the deceased could not make the required contribution to the purchase price of the
land which had to be paid to the City of Cape Town at that time. As shown previously,
they were in a state of war with one another. The fact that the deceased estate could
not co-operate to keep the project on track, surely also meant that it would and could
not stand surety in favour of Barclays Bank which financed the development. It was
therefore crucial that the remaining members had to take up the shares of the
deceased in terms of the shareholders’ agreement.’
[45] It was never the respondents’ case that some form of sanction existed
whereby a shareholder could be forced to forfeit his shares or involuntarily
transfer them if he or she failed to contribute loan account capital or was unable

30 See para 12 above.
31 See para 14 above.

to stand surety for the company. In any event, self-help is not countenanced in
our law. As pointed out above, the reliance on the draft shareholders’
agreement as a valid and binding document was later abandoned by the
respondents. In view hereof, both the shareholders’ resolution of 16 September
2004, which relied on the shareholders’ agreement, and the directors’ resolution
of 20 September 2004, which purportedly gave effect to the shareholders’
resolution, were invalid and ineffective.
[46] Another important point is that the ‘valuation’ at which the remaining
shareholders purported to acquire the disputed shares was (even on the basis
of the unsigned shareholders’ agreement) not a proper valuation. Although
dated 10 September 2004, it valued the shares at the date of death of the
deceased (21 October 2002), viz at a time when the company was technically
insolvent and the development project ‘was to all intents and purposes dead in
the water’. Because the cheque in respect of the deceased’s loan account and
the value of his shares, with interest, was returned to the company’s attorneys,
the ‘expropriation’ of the deceased shares took place without any
compensation.
[47] The deceased was one of the founding members of the company and
was described as the ‘pioneer’ of the development at the ‘turning of the soil’
ceremony in 2004. Apart from the letters to Ms Parker dated 6 May 2004 and 23
June 2004, 32  the deceased estate was not given any prior notice of the
purported transfer of shares from the deceased estate to the remaining
shareholders. In fact, at the time of passing of the two resolutions in September
2004, the deceased estate was unrepresented as the position of executor was
vacant, and hence no notice of the relevant meetings could have been given to
the deceased estate.
[48] The remaining shareholders thereafter received various indications that
the executors of the deceased estate wished to retain the estate’s shareholding

32 See paras 10-11 above.

in the company. When Messrs Holt and Kajee were appointed as executors on
28 September 2004, they were confronted with a fait accompli, namely the
deprivation of the shareholding of the estate. However, on 20 October 2004, Mr
Holt wrote to the attorneys acting for the company, stating that ‘the heirs want to
retain their shares in’ the company. Instead of this alerting the remaining
shareholders to potential problems with the purported share transfer, their
attorney responded by stating simply that the deceased was not a shareholder
in the company. The same applies to the return of the abovementioned cheque
by the executors to the company’s attorneys.33 If the remaining members had
taken the trouble to properly investigate the position of the second set of
executors, they would have had ample opportunity to reverse the 2004
decisions, taken in the absence of representation on the part of the estate,
before the end of 2004. This was when the balance of the purchase price was
apparently due, some three months after the appointment of the second set of
executors.
[49] It is true that the executors of the deceased estate took no further action
in respect of the share transfers until the appointment of the third set of
executors on 12 December 2008. This delay was the main reason why the high
court refused the application for rectification. However, when weighed up
against the manner in which the remaining shareholders purported to transfer
the deceased’s shares to themselves and the other considerations set out
above, I am of the view that justice and equity demand that the register of
members be rectified in the manner required by the appellants. What the
deceased’s true entitlement is in respect of his restored shareholding is not a
matter which we have to decide. So too, we do not have to deal with questions
such as whether there were other company liabilities that had been borne by
shareholders and the effect of accumulated losses over a sustained period vis-
à-vis final profits.

33 See paras 18 and 46 above.

[50] The relief claimed in para 3 of the notice of motion seeks to direct the
‘First to Ninth and Thirtieth Respondents’ to rectify the company’s register of
members with effect from 16 August 2004. Even though the respondents
indicated that this date was a mistake as the relevant directors’ resolution was
taken only on 20 September 2004, the date of the transfers as reflected in the
register of members is 16 August 2004 and it is these and subsequent entries
which need to be rectified. It is therefore the latter date which should appear in
the order made by this court. Moreover, it should be the company (the first
respondent) that is directed to rectify the register, not also the second to ninth
and thirtieth respondents who, it would seem, are themselves no longer
registered as members.
[51] As regards costs, counsel for the respondents contended that, as the
appellants had limited the relief sought by them only during the hearing before
this court, this should, were the appellants to succeed, have an effect on the
costs order. Counsel pointed out that the relief originally sought was very far-
reaching and also involved the question of title to the disputed shares as well as
comprehensive consequential relief. This may well be so, but the respondents’
arguments were based on the premise that ‘ownership’ of the shares passed
when the deceased’s shares were ‘taken up’ by the remaining shareholders and
that the appellants’ right to recover the shares had prescribed. Counsel for the
respondents submitted in their heads of argument that the question of title to the
shares is interlinked with the question of whether the register should be rectified
and that this court should find that the claim for rectification had fallen away as
the claim for the shares had clearly prescribed. Both these aspects have been
dealt with in this judgment. This being so, I see no virtue in making only a partial
costs order in favour of the appellants.
[52] The following order is therefore made:
1.
The appeal succeeds with costs, including the costs of two
counsel.
2.
The order of the high court is set aside and substituted with the
following:
‘(a) The first respondent is directed to rectify its register of members –

(i) by deleting the transfers of shares registered on 16 August 2004 from
Cassiem Ebrahim Gaffoor to the second to fifth respondents, the seventh to
ninth respondents and Mr Rauf Khan, and all subsequent transfers of those
shares to other persons or entities; and

(ii) by registering the deceased estate of the late Cassiem Ebrahim
Gaffoor, as represented by the applicants in their capacity as executors, as
shareholder in respect of 444 and one-ninth of four shares in the first
respondent with effect from 16 August 2004.
(b)
The first to fifth respondents, the seventh to ninth respondents, the sixth,
eighteenth and nineteenth respondents in their capacity as executors of the
estate late Rauf Khan and the thirtieth respondent are ordered to pay the costs
of the application, including the costs of two counsel, jointly and severally, the
one paying the other to be absolved.’

______________________
B J VAN HEERDEN
JUDGE OF APPEAL

APPEARANCES:
APPELLANTS:
L KUSCHKE SC
Instructed by Shepstone & Wylie Attorneys,
Cape Town
Honey and Partners Inc, Bloemfontein

RESPONDENTS:
Z F JOUBERT SC (with him M VERSTER)

Instructed by M Z Barday & Associates,
Athlone

Hill McHardy & Herbst 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

30 March 2012

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form
part of the judgment.

Gaffoor NO v Vangates Investments (Pty) Ltd
(330/2011) [2012] ZASCA 52 (30 March 2012)

Media Statement

Today the Supreme Court of Appeal (SCA) delivered judgment upholding the appeal against
an order of the Western Cape High Court, Cape Town, refusing an application by the
executors of a deceased estate (the appellants) for rectification of the register of members so
as to reinstate the shareholding of the deceased estate.

The question on appeal was whether, in the given circumstances, an alteration to the register
of members by the shareholders of a company appropriating the shares of a deceased co-
shareholder, without notice to his deceased estate and without an approach to court, is
effective.

The facts and history of this matter can be summarised as follows:
During the 1990s a group of nine people, including the deceased, identified the potential for
the development of what was then the Athlone Golf Course. They became known as the
Athlone Business Syndicate (ABS).  They decided to submit a proposal and formed a
company, Vangates Investments (Pty) Ltd (the first respondent), in order to bid for a tender
from the City of Cape Town for the development of the land.  Each of the nine founding
members held 444 shares and one-ninth of four shares held by the ninth respondent as
nominee. Their bid was successful but, despite having been called upon to do so, the
deceased did not contribute his share of the deposit due on the purchase of the land from the
City of Cape Town. From the outset, the proposed development was beset with problems
and, by the time the deceased passed away, the project appeared to be dead in the water.
The company however decided not to abandon its plans to pursue the development and
ultimately found a financier, Zenprop, which had expertise in property development and
management.

The first set of executors of the deceased estate was appointed but the winding up did not
progress smoothly.  Numerous problems arose between the family members of the deceased
and the executors. The Master ultimately removed the first set of executors. Despite

discussions, the deceased estate did not contribute its share of the balance of the purchase
price of the land.

The Master had in the meanwhile not appointed a new set of executors.  The company
received legal advice to the effect that the impasse created by the non-participation of the
deceased estate could be resolved by recourse to a draft (unsigned) shareholders’ agreement
which had earlier been agreed to by the members of the company, including the deceased,
and which (according to the respondents) allowed members to ‘take up’ the shares of a
deceased member. As a result it would appear that the deceased’s shares were transferred
out of his name and into the names of the eight other shareholders of the company. It was
this purported transfer of shares which the appellants contend was invalid and in respect of
which they seek rectification of the register of members. This was followed by a shareholders’
resolution and a director’s resolution to the same effect.

A second set of executors then was appointed by the Master. At a meeting with members of
the company, the executors were informed that the deceased estate had been divested of its
shareholding in the company and that those shares had been transferred to the other
shareholders. The executors wrote to the attorneys acting for the company, stating that the
heirs wished to retain the shares in the company and asking to be provided with copies of the
deceased’s share certificates. The response to the letter was that the deceased was not a
shareholder of the company.

The second set of executors then resigned as executors and the appellants were appointed
as executors. They addressed a letter to the company’s auditors requesting inspection and
copying of the register of members of the company and the transfer register. They also wrote
to the attorneys acting for the company and the remaining shareholders, stating that the
deceased was a shareholder in the company and that they were going to pursue this matter
of the deceased estate's shareholding.

The SCA held that as, at the time of both resolutions, and to the knowledge of the remaining
shareholders, the deceased estate was unrepresented as the position of executor was
temporarily vacant. In fact and in law, no notice was given to the deceased estate of the
transfer of shares. The only other basis on which a transfer of shares could have been
compelled by the respondents would have been by an approach to court on a basis
recognised in law. The decisions to transfer the shares were thus invalid. Thus, although the
purported share transfers had been registered in the company’s register of members, the
court was entitled to go behind the register to ascertain the identity of the true owner.

The SCA found that the deceased estate had never ceased to be the owner of the disputed
shares. As dominium remained vested in them, there was no need for them to claim recovery
of these shares. All that they needed was to have that ownership reflected in the company’s
register of members.  The court held that its jurisdiction under s 115 of the Companies Act 61
of 1973 to grant an application for rectification of the shareholders' register was unlimited and
the exercise of its discretion based on what equity required.

In determining whether to grant or refuse an application for rectification, the court has to make
a judgment in the light of all the relevant considerations. That being so, and bearing in mind
the equitable nature of the court’s discretion in terms of s 115, this discretion can rightfully be
described as a discretion in the broad sense. This court was therefore empowered to re-
examine all the relevant material and, if satisfied that the discretion has not been
appropriately exercised, to substitute its own opinion for that of the court of first instance.

The SCA was of the view that it had never been the respondents’ case that some form of
sanction existed whereby a shareholder could be forced to forfeit his shares or involuntarily
transfer them if he or she failed to contribute loan account capital or was unable to stand
surety for the company. Reliance on the draft shareholders’ agreement as a valid and binding

document was abandoned by the respondents. In view thereof, the SCA held that the
decisions to transfer the shares were invalid and ineffective.

The appeal was subsequently upheld, the order of the court below set aside and replaced
with an order directing that the register of members be rectified by deleting the transfers of
shares and by registering the deceased estate as shareholder in respect of 444 and one-ninth
of four shares in the Company.
--- ends ---