THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 187/2016
In the matter between:

RICHARD DU PLESSIS BARRY
APPELLANT

and

CLEARWATER ESTATES NPC (CLEARWATER
ESTATES HOMEOWNERS ASSOCIATION)
FIRST RESPONDENT

KEVIN OLIVIER (CHAIRPERSON)
SECOND RESPONDENT

THE COMMISSIONER OF COMPANIES AND
INTELLECTUAL PROPERTY COMMISSION
THIRD RESPONDENT

Neutral citation:
Richard Du Plessis Barry v Clearwater Estates NPC & others
(187/2016) [2017] ZASCA 11 (16 March 2017)

Coram:
Leach, Willis, Swain and Mbha JJA and Schippers AJA

Heard:
3 March 2017

Delivered:
16 March 2017

Summary: Companies Act 71 of 2008 : s 58(1) : appointment of proxy ‘at any time’ :
s 58(3)(c) : instrument evidencing proxy to be deposited ‘before’ shareholders
meeting : Memorandum of Incorporation of company requiring proxy to be deposited
‘not less than 48 hours before’ meeting : article inconsistent with unalterable
provisions of s 58(1) : article void in terms of s 15(1).

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Van der Westhuizen
AJ sitting as court of first instance.)

The appeal is dismissed with costs.

JUDGMENT

Swain JA (Leach, Willis, Mbha JJA and Schippers AJA concurring)

[1] The appellant, Mr Richard Du Plessis Barry, in his capacity as a director of the
first respondent, Clearwater Estates NPC, a company duly registered in terms of the
company laws and known as the Clearwater Estates Homeowners Association,
launched an application before the Gauteng Division of the High Court (Pretoria). An
order was sought declaring that all the business and resolutions transacted at a
special general meeting held by the first respondent on 27 September 2014, were
unlawful and void.
[2] The second respondent, Mr Kevin Olivier, was cited in his capacity as the
Chairperson of the Board of Directors of the first respondent. The third respondent,
the Commissioner of the Companies and Intellectual Property Commission, was
cited, insofar as it may be necessary, to rectify its register in respect of the first
respondent, in accordance with any order that may be granted.
[3] The special general meeting in question was convened for the purpose of
considering and adopting various resolutions relating to the internal governance of
the first respondent. A resolution that approved an increase in the levy payments by

the residents was the catalyst that ignited the present dispute.
[4] The challenge to the validity of the resolutions passed at the meeting was that
shareholder proxies submitted on the day of the meeting, were in contravention of
articles 13.7.10 and 13.7.11 of the first respondent’s Memorandum of Incorporation
(MOI). These articles provide that a proxy shall not be treated as valid unless it is
deposited at a designated location not less than 48 hours before the time designated
for holding the meeting at which the proxy is to be exercised. Absent these late
proxies, the attendance at the meeting did not meet the requirements contained in
article 13.3.2 of the MOI, which provides for a quorum of not less than 25 per cent of
voting rights being present for the purpose of passing any special resolution at any
meeting.
[5] In order to attain the requisite quorum, the Board of the first respondent
proposed a vote condoning the late filing of these proxies, which was accepted by a
majority decision at the meeting. The contested resolutions were then put to the vote
and passed. The appellant contends that the meeting was not properly constituted
as no special resolutions could be passed in the absence of the requisite quorum.
The board's proposal to condone the late filing of the proxies and the adoption of this
proposal at the meeting according to the appellant, amounted to the amendment of
the first respondent’s MOI which could be effected only by way of a special
resolution as contemplated in s 65(11) of the Companies Act 71 of 2008 (the Act).
This resolution could not be passed because it also lacked the requisite quorum. In
other words, the absence of a quorum for the purposes of passing the intended
resolutions, was sought to be remedied by the invocation of a special vote that
required the same quorum.
[6] The first respondent’s answer to these submissions was that articles 13.7.10
and 13.7.11 of the MOI were contrary to the provisions of s 58(1) of the Act, which
provides that a shareholder may appoint a proxy ‘at any time’. These articles were
accordingly null and void as contemplated in s 15(1)(b) of the Act. On this basis, so it
contended, the requirement in the articles that any proxy be delivered not less than
48 hours before the meeting, was null and void.

[7] The motivation of the parties is readily apparent. On the one hand, the
appellant seeks to uphold and enforce the articles in question with the object of
defeating the resolutions passed at the special general meeting. On the other hand,
the first respondent seeks the annulment of articles 13.7.10 and 13.7.11 with the
object of preserving the validity of the resolutions. It has to be questioned whether
the present dispute with its attendant legal costs, is in the interest of the residents.
The undisputed evidence is that the proposed increase in the levies from R451.50
per month to R724 per month, carries the recommendation of an investigative team
whose report was provided to members prior to the meeting. The increase was
apparently necessary to ensure that the first respondent has sufficient funds to pay
its debts and comply with its obligations in terms of the MOI.
[8] The court a quo (Van der Westhuizen AJ) held that the articles in question were
inconsistent with the provisions of s 58(1) of the Act, which was held to be an
unalterable provision conferring an unqualified right on a shareholder, to appoint a
proxy ‘at any time’. It held that the articles impermissibly sought to alter the time
stipulated in s 58(1) by adding a limitation to the time within which the proxy had to
be delivered to the company, or other person on behalf of the company. The court a
quo reasoned that the articles were void to this extent, with the result that the proxies
in dispute were properly considered and taken into account and the resolutions
validly passed at the meeting. The application was accordingly dismissed with costs,
with leave to appeal to this Court being granted at a later stage.
[9] A resolution of the dispute requires a consideration of ss 58(1) and 58(3)(c) of
the Act, together with the provisions of articles 13.7.10 in 13.7.11 of the MOI of the
first respondent. The sections provide as follows:
‘58. Shareholder right to be represented by proxy –
(1) At any time, a shareholder of a company may appoint any individual, including an
individual who is not a shareholder of that company, as a proxy to –
(a) participate in, and speak and vote at, a shareholders meeting on behalf of the
shareholder; or
(b) . . .
(2) . . .

(3) Except to the extent that the Memorandum of Incorporation of a company provides
otherwise –
(a) . . .
(b) . . .
(c) a copy of the instrument appointing a proxy must be delivered to the company, or to any
other person on behalf of the company, before the proxy exercises any rights of the
shareholder at a shareholders meeting.’
[10] Articles 13.7.10 and 13.7.11 of the first respondent’s MOI read as follows:
‘13.7.10 Any power of attorney and any instrument appointing a proxy and the power of
attorney or other authority (if any) under which it is signed, or a notarially certified copy of
such power of attorney shall be deposited at the office or at such other place in South Africa
as is specified for that purpose in the notice convening the meeting, not less than 48
(FORTY EIGHT) hours (excluding Saturdays, Sundays and public holidays) before the time
appointed for holding the meeting or adjourned meeting at which the person named in such
instrument proposes to vote, or a poll where a poll is to be held after a meeting or adjourned
meeting;
13.7.11 If the power of attorney or other instrument or proxy is not deposited timeously, it
shall not be treated as valid.’
[11] These sections must be considered in the context of the definition in s 1 of the
Act of ‘alterable provisions’ and ‘unalterable provisions’. An ‘alterable provision’ is:
‘. . . a provision of this Act in which it is expressly contemplated that its effect on a particular
company may be negated, restricted, limited, qualified, extended or otherwise altered in
substance or effect by that company's Memorandum of Incorporation.’
An ‘unalterable provision’ is:
‘. . . a provision of this Act that does not expressly contemplate that its effect on any
particular company may be negated, restricted, limited, qualified, extended or otherwise
altered in substance or effect by a company's Memorandum of Incorporation or rules.’
[12] The importance of the distinction is apparent from the provisions of s 15(2)(d)
which provides that, subject to the provisions of s 15(2)(a)(iii), the MOI of a company
may not contain a provision that negates, restricts, limits, qualifies, extends or
otherwise alters the substance or effect of an unalterable provision of the Act. In

addition, s 15(1) of the Act provides that:
‘(1) Each provision of a company's Memorandum of Incorporation –
(a) must be consistent with this Act; and
(b) is void to the extent that it contravenes, or is inconsistent with, this Act, subject to section
6(15).’
[13] I agree with the conclusion of the court a quo that the provisions of s 58(1) are
unalterable. The right of a shareholder to appoint a proxy ‘at any time’ is a provision
that does not expressly contemplate its alteration in any way by a company's MOI.
The provisions of s 58(3)(c) are however alterable, because the section expressly
contemplates that its effects may be altered. Consequently if the articles in question
contravene or are inconsistent with the provisions of s 58(1), they are void in terms
of s 15(1) of the Act.
[14] Central to the appellant's argument is the proposition that on a proper
interpretation of these sections, a clear distinction is drawn between the concept of
the appointment of a proxy in terms of s 58(1), and the exercise of the proxy in terms
of s 58(3)(c). The latter section deals, conceptually, with the administration of
proxies. The proviso qualifies an individual's right to exercise a proxy by stipulating
that a proxy may be exercised only if the instrument appointing the proxy is delivered
to the company (or an authorised agent) before the proxy exercises any rights at a
meeting. According to the appellant, the place of delivery, the person to whom the
instrument is to be delivered and the time for delivery, are dealt with in this
subsection. Any amendment of the time period from ‘before’ (as in the subsection),
to ‘not less than 48 (FORTY EIGHT) hours . . . before’ (as in the first respondent's
MOI), relates solely to the exercise of the appointment and not to the appointment
itself, and is authorised by s 58(3)(c). It was submitted on behalf of the appellant that
this interpretation does not give rise to any conflict between ss 58(1) and 58(3)(c), as
an individual could hold a valid appointment but be unable to exercise that
appointment at a particular meeting. The appellant contended that the legislature
therefore intended that there could be a lawful variation through a company MOI of
the provisions in the Act relating to the stipulation of a time period, within which
proxies must be submitted for the purpose of exercising the rights contained therein,
at a particular meeting of the company.

[15] The respondent’s answer to these contentions was that the wording of
s 58(1)(a) is clear and unambiguous and permits no interpretation other than that a
shareholder has the right to appoint any individual as a proxy ‘at any time.’ The
respondent argued that this subsection was an unalterable provision in the Act
whose purpose was to protect the right of shareholders to participate in, speak and
vote at a shareholders meeting and to do so through a proxy of their choice. The
respondent submitted that the appointment of a proxy may accordingly take place at
any time, including during the meeting. The time clause in the first respondent's MOI
accordingly negates, restricts, limits or qualifies this fundamental right of a
shareholder contrary to the provisions of s 15(2)(d) of the Act. The time clause
contained in the first respondent's MOI therefore contravenes and is inconsistent
with s 58(1) of the Act and is void to that extent.
[16] In my view, the distinction which the appellant seeks to draw between the
appointment of a proxy and the exercise of a proxy in terms of s 58(1) and s 58(3)(c)
of the Act, is artificial. On the appellant's interpretation the appointment of a proxy by
a shareholder to act for and behalf of the shareholder at a particular meeting, less
than 48 hours before the meeting is to take place, does not affect the validity of the
appointment but simply means that the proxy cannot be exercised at that meeting.
However, the appointment contemplated by s 58(1) is not made in vacuo. Although it
may take place at ‘any time’, it has a defined purpose in terms of the Act. That
purpose in terms of s 58(1)(a), is to ‘participate in, and speak and vote at, a
shareholders meeting on behalf of the shareholder’. The appointment of a proxy in
respect of a particular meeting seeks to achieve this statutorily defined purpose. If
that purpose is thwarted by a time bar imposed in terms of s 58(3)(c) for the delivery
of the instrument appointing the proxy, then the validity of the appointment of the
proxy itself is impugned. The appointment of a proxy who is unable to perform any of
these statutorily defined functions at a particular meeting has no purpose and is no
appointment at all.
[17] The erroneous interpretation placed upon these sections by the appellant
results from a failure to pay due regard to the language used, ‘. . . the context in
which the provision appears’, and ‘the apparent purpose to which it is directed . . .’.
(Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13;

2012 (4) SA 593 (SCA) para 18). That the validity of the appointment of the proxy
and not simply the exercise by the proxy of his or her statutory rights in terms of
s 58(1)(a) is the object of the articles in question, is clear from the wording of Article
13.7.11. This article provides that if the proxy is not deposited timeously ‘. . . it shall
not be treated as valid’. If the object was only to prohibit the exercise by the proxy of
the rights conferred upon him or her at the meeting in question, and not affect the
validity of the appointment of the proxy, the article need only have provided that the
proxy was prohibited from participating in and exercising any rights at the meeting.
[18] The plain wording of ss 58(1)(a) and 58(3)(c) of the Act read together and in
context with due regard to their purpose, is that a shareholder of a company may
appoint at any time, anyone who is not a shareholder of the company as a proxy to
participate in, and speak and vote at a shareholders meeting on behalf of the
shareholder, provided that the proxy delivers a copy of the instrument appointing the
proxy, to the company or to any other person on behalf of the company, before the
proxy may exercise any of the rights of the shareholder at the meeting.
[19] I am fortified in this conclusion by an examination of the comparable provisions
contained in the repealed Companies Act 61 of 1973 (the 1973 Act), with ss 58(1)
and 58(3)(c) of the Act. Section 189 of the 1973 Act provided as follows:
‘(1)
Any member of a company entitled to attend and vote at a meeting of the company,
or where the articles of a company limited by guarantee so provide, any member of such
company, shall be entitled to appoint another person (whether a member or not) as his proxy
to attend, speak, and vote in his stead at any meeting of the company . . .’
‘(3)(a) Any provision contained in a company's articles shall be void insofar as it would have
the effect of requiring the instrument appointing a proxy, or any other document necessary to
show the validity of or otherwise relating to the appointment of a proxy, to be received by the
company at its registered office or by any other person more than forty-eight hours before a
meeting in order that the appointment may be effective thereat.’
[20] In terms of the 1973 Act, a provision in a company's articles that the instrument
appointing a proxy had to be received by the company more than 48 hours before
the meeting, would be void and the proxy would not be ‘effective’ at the meeting.
However, a provision (as provided for in article 13.7.10), requiring the instrument to
be presented not less than 48 hours before the meeting would be valid. Although no

time period was stipulated in s 58(1) of the 1973 Act for the appointment of a proxy,
a limitation was nevertheless placed upon the ability of a shareholder to appoint a
proxy less than 48 hours before a meeting, where the company's articles contained
this provision. To do so would be an exercise in futility as the proxy could not be
exercised at that meeting. In striking contrast, the Act contains no such limitation and
provides that the appointment of a proxy may take place ‘at any time’ in terms of
s 58(1). In addition, no minimum period is specified in s 58(3)(c) of the Act for the
delivery of the instrument evidencing the proxy. It only has to be delivered ‘before’
the proxy exercises the rights of the shareholder at the meeting.
[21] It is a principle of statutory interpretation that a ‘deliberate change of expression
will prima facie indicate a change of legislative intention. . . but, as indeed the words
prima facie serve to emphasise, a change in wording does not always and inevitably
denote a change of intention. . .’. (R v Shole 1960 (4) SA 781 (A) at 787A). However,
as pointed out in Endumeni supra paras 20-26, it is ‘entirely artificial’ to speak of ‘an
intention of Parliament’ and what has to be considered is ‘the apparent purpose of
the provision’. Viewed in this context a deliberate change of expression will prima
facie indicate a change in the legislative purpose of the provision in question. The
use of the phrase ‘at any time’, is a deliberate change of expression. Considered
together with the omission of a minimum period for the delivery of the instrument
evidencing the proxy and its substitution with the requirement that it is to be
delivered ‘before’ the exercise of any rights at the meeting, a change of legislative
purpose with regard to the former minimum period of 48 hours is clearly indicated.
[22] In reaching this conclusion I do not overlook the practical difficulties which the
appellant alleges will arise from this interpretation of the provisions of ss 58(1) and
58(3)(c) of the Act. It was submitted that should a corporation be unable to regulate
the submission of proxies by the imposition of a deadline before a meeting, general
meetings of corporations, particularly large corporations, will become unworkable.
The situation is postulated of a large company with thousands of shareholders being
hamstrung by the submission of thousands of proxies on the day of a scheduled
meeting. It was argued that because s 63(1)(b) of the Act enjoins the officer
presiding over a general meeting to validate and verify proxies prior to allowing a
proxy to exercise a vote on the instrument, a general meeting would be unable to

proceed on the scheduled day because of the administrative burden imposed on the
presiding officer. If these practical difficulties are real and not simply apparent, their
resolution lies not in a strained interpretation of the Act, but by legislative
intervention.
[23] The provisions of articles 13.7.10 and 13.7.11 of the first respondent’s MOI are
accordingly inconsistent with the provisions of s 58(1) and are void in terms of
s 15(1) of the Act.
[24] The following order is granted:
The appeal is dismissed with costs.

_________________________

K G B Swain

Judge of Appeal

Appearances:

For the Appellant:

S G Gouws (with L W De Beer)

Instructed by:
Jacobs & Moodie (Lit) Inc, c/o Klagsbrun,
Edelstein, Bosman & De Vries, Pretoria

Symington & De Kok, Bloemfontein

For the Respondent:

B C Stoop SC

Instructed by:

Lombard Muller & Partners Inc, Pretoria
Christo Dippenaar Inc, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

16 March 2017

STATUS

Immediate

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

Richard  Du Plessis Barry v Clearwater Estates NPC & others (187/2016)
[2017] ZASCA 11 (16 March 2017)

Media Statement

The SCA dismissed an appeal against an order by the High Court, refusing an
application in which an order was sought declaring that all the business and
resolutions transacted at a special general meeting held by Clearwater Estates NPC,
were unlawful and void. The decision of the High Court was based upon a finding,
which was upheld, that a provision in the Memorandum of Incorporation of
Clearwater Estates NPC, which provided that the instrument appointing a proxy had
to be deposited at the office of the company ‘not less than 48 hours before the time
appointed’ for holding a meeting, (otherwise it would not be treated as valid), was
inconsistent with the provisions of section 58(1) of the Companies act 71 of 2008 and
was accordingly void. The section was an unalterable provision in the Act and
provided that a shareholder of a company may appoint a proxy ‘at any time’. The
Memorandum of Incorporation impermissibly sought to alter the effect of this section,
contrary to the prohibition contained in s 15(2)(d), and was accordingly inconsistent
with the Act and void in terms of s 15(1)(b) of the Act.

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