THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 1291/2021

In the matter between:
STRATEGIC PARTNERS GROUP (PTY) LTD
FIRST APPELLANT

NJILO CAPITAL INVESTMENTS (PTY) LTD
SECOND APPELLANT

MZOLISI DILIZA
THIRD APPELLANT

DAVID MOSHAPALO
FOURTH APPELLANT

EPHRAIM SIBANDA
FIFTH APPELLANT

and

THE LIQUIDATORS OF ILIMA
GROUP (PTY) LTD (IN LIQUIDATION)
FIRST RESPONDENT

THE MAGISTRATE, KRUGERSDORP
SECOND RESPONDENT

THE MASTER OF THE HIGH COURT
THIRD RESPONDENT

Neutral citation: Strategic Partners Group (Pty) Ltd and Others v The Liquidators
of Ilima Group (Pty) Ltd (in liquidation) and Others (Case no
1291/2021) [2023] ZASCA 27 (24 March 2023)
Coram:
DAMBUZA AP, GORVEN, WEINER and GOOSEN JJA and
KATHREE-SETILOANE AJA
Heard:
27 February 2023
Delivered: 24 March 2023
Summary: Company Law – shareholder liquidated – rights of liquidators to
information – not limited to rights of shareholder – rights under s 414 and 415 of
Companies Act 61 of 1973 applicable – application to limit rights correctly
dismissed – counter-application for declaration of relevance of documents correctly
upheld – counter-application for declaration in terms of s 163 of Companies Act 71
of 2008 of non-applicability of clause of Memorandum of Incorporation correctly
upheld – appeal dismissed.

__________________________________________________________________
ORDER
______________________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg (Maier-
Frawley J), sitting as court of first instance:
The appeal is dismissed with costs, including those of two counsel where so
employed.

__________________________________________________________________
JUDGMENT
__________________________________________________________________
Gorven JA (Dambuza AP, Weiner and Goosen JJA and Kathree-Setiloane AJA
concurring)

[1] Ilima Group (Pty) Ltd (Ilima) was placed in final liquidation in April 2010.
The first respondents were appointed liquidators (the liquidators). Ilima holds
16 million ordinary shares in Strategic Partners Group (Pty) Ltd (Strategic), the first
appellant. The shareholding is an asset of Ilima (the Ilima shareholding). It
represents 11.784 percent of the shares of Strategic. The liquidators have a statutory
duty to realise the shareholding and to distribute the proceeds. In order to dispose of
the Ilima shareholding to the benefit of its creditors, it is necessary to place a value
on it.

[2] On 5 November 2013, the liquidators requested a valuation of the Ilima
shareholding from Strategic. This developed into something of a war of attrition
between Strategic and the liquidators. It revolved around the market value of the
Ilima shareholding. In particular, it turned on what information liquidators of an
insolvent shareholder in a company are entitled to obtain from that company and the
means which can be used for that purpose.

[3] The upshot was an application (the main application) brought by Strategic
against the liquidators in the Gauteng Division of the High Court, Johannesburg (the
high court). Other respondents in the main application were the Magistrate,
Krugersdorp, who was the second respondent and the Master of the High Court,
Johannesburg, who was the third respondent. They are also respondents in the
appeal. They elected to take no part in the main application, the counter-application
or the appeal. The second applicant was Njilo Capital Investments (Pty) Ltd, a
shareholder in Strategic. The third applicant was Mr Mzolisi Diliza, a director and
executive chairperson of Strategic. The fourth applicant was Mr David Moshapalo,
the deputy executive chairperson of Strategic and the fifth applicant was Mr Ephraim
Sibanda, a representative of the auditors of Strategic. The last three of these had been
subpoenaed to appear in the insolvency enquiry referred to below. The second to
fifth appellants are all associated with Strategic, made common cause with it and
will together be referred to as Strategic, unless it is necessary to distinguish them.

[4] In the main application, the appellants sought an order:
‘1.
Declaring that the liquidators of Ilima Group (Pty) Ltd (in liquidation), a shareholder in
Strategic Partners Group (Pty) Ltd, are entitled to no more documents from any of the applicants
other than those documents which fit into the categories of documents described in the following
statutes:

(a)
sections 26 and 31 of the Companies Act of 2008 alternatively,
(b)
section 113 of the Companies Act of 1973.
2.
Directing that those respondents who oppose this application pay the costs hereof.’
The liquidators were the only respondents who opposed the main application. They,
in turn, brought a counter-application seeking the following relief:
‘1.1
That the relief sought by the applicants in the main application is dismissed with costs,
such costs to include the costs of two counsel.
1.2
Declaring that in terms of section 163(2)(h) of the Companies Act, 71 of 2008 (“the
Companies Act”), the provisions of clause 27 of the Memorandum of Incorporation of Strategic
Partners Group (Pty) Limited (“SPG”), as approved at the General Meeting of shareholders SPG
held on Tuesday, 30 June 2020, do not apply to the shareholding or sale of such shareholding held
by Ilima Group (Pty) Ltd (in liquidation) (“Ilima”) in SPG.
1.3
Declaring that the documents and records sought by the first respondent at the following
“insolvency enquiry” proceedings, which were held in terms of section 414 and 415 of the
Companies Act, at the Krugersdorp Magistrates Court, namely:
1.3.1 The “insolvency enquiry” proceedings held on 23 March 2018, as ordered by the second
respondent, as confirmed by annexures “A1.1”, “A1.2” and “A1.3” hereto, and
1.3.2 The “insolvency enquiry” proceedings held on 15 June 2018, as ordered by the second
respondent, as confirmed by annexures “B1.1”, “B1.2”, “B1.3” and “B1.4” hereto,
fall within the category of documents to which the first respondent is legally entitled, in terms of
the provisions of sections 414 and 415 of the Companies Act and are to be provided to the first
respondent.
1.4
Ordering the fifth applicant to provide to the first respondent the documents in annexure
“B1.3” hereto.
1.5
Ordering the first to fourth applicants to provide to the first respondent the documents and
records set out in annexure “C” hereto.
1.6
That the first to fifth applicants are ordered to pay the costs of both this application and the
counter-application on an attorney and client scale, such costs to include the costs of two counsel’.

[5] The high court, per Maier-Frawley J, dismissed the main application with
costs, including those of two counsel and granted an order in terms of prayers 2 to 5
inclusive of the counter-application. She also granted an order in the counter-
application that ‘[t]he first to fifth applicants are ordered to pay the costs of the
counter-application on an attorney and client scale, such costs to include the costs of
two counsel’. This appeal is with her leave.

[6] It is necessary to sketch the sequence of events in some detail. After the
liquidators requested that the Ilima shareholding be valued, Strategic appointed
Mazars Corporate Finance (Pty) Ltd (Mazars) to do so. On 27 May 2014, Mazars
completed the valuation. It was performed according to the provisions of a disputed
shareholders’ agreement (the impugned shareholders’ agreement). A copy of the
valuation was furnished to the liquidators only in August 2014. Debate ensued
concerning the valuation. The liquidators were not satisfied and rejected it on
14 November 2014.

[7] On 23 January 2015, the liquidators caused a subpoena to be issued against
Mr Diliza, calling for certain documents. On 5 June 2015, the liquidators prepared
and submitted to Strategic and its shareholders an offer to sell the Ilima shareholding
for an amount of R100 million. This value had been arrived at by Mr Peter Zeelie, a
chartered accountant appointed by the liquidators. Strategic contended that the
valuation was inflated and rejected it. The Mazars valuation which had been
provided by Strategic was based on the impugned shareholders’ agreement. This
purported to set out the manner in which the Ilima shareholding would be calculated
on liquidation. Without the knowledge of the liquidators, one of the directors of
Strategic was appointed to represent Ilima in this exercise. The liquidators viewed

this as an attempt to procure an advantage for Strategic and to disadvantage Ilima
and its creditors.

[8] On 11 November 2015, the liquidators brought an application to have the
impugned shareholders’ agreement set aside. On 17 August 2018, Unterhalter J
granted a declaration that:
‘[N]o valid or binding shareholders agreement (including but not limited to annexure FA3 to the
applicant’s founding affidavit in this application) has been validly concluded between the
shareholders of the first respondent’.
The basis of the judgment was that there was no proof that all the shareholders had
consented to the impugned shareholders’ agreement.

[9] This brought into sharp focus the question of how to arrive at the value of the
Ilima shareholding. The liquidators criticised the valuation of Mazars based on a
report by Mr Zeelie. Some criticisms were that, in the first place, the valuation
differed markedly from the one by Mazars of 18 June 2013 for purposes of acquiring
shares of one Mr Manana (the Manana agreement). In addition, the nett asset value
of Strategic of R207 million reported in June 2013 had been restated as R550 million
in June 2014. This was accepted by both the directors and auditors of Strategic as
being accurate. Mr Zeelie’s valuation for the Ilima shareholding was between
R119 million and R147 million. His criticisms of the valuation of Mazars prompted
Strategic to appoint PricewaterhouseCoopers (PWC) to provide a valuation. The
valuation was completed in 2016. However, it, too, was done on the basis of the
impugned shareholders’ agreement. It concluded that the value of the 11.784 percent
Ilima shareholding was R8.1 million. In contrast, the value of Mr Manana’s
2.3 percent shareholding had been assessed in June 2013, prior to the restatement of
the nett asset value of Strategic, as R7.52 million.

[10] Strategic has a shareholding in Bombela Concession Company (Pty) Ltd
(BCC). BCC has an agreement with the Gauteng Provincial Government relating to
the operation of the Gautrain project. Bombela Civils Joint Venture (Pty) Ltd
(BCJV), a subsidiary of BCC, was involved in the construction of the Gautrain
project. PWC was told of a dispute in which BCJV claimed a contribution of
R746 million from Strategic. Strategic opposed this claim. The approach of PWC
was to ‘initially deduct the maximum exposure to which [Strategic] is exposed,
followed by a subsequent price adjustment to the amount paid to Ilima for their
shareholding, once the outcome of the anticipated arbitration process in connection
with the BCJV claim is known’. That information and the outcome of the dispute
was clearly germane to the valuation.

[11] PWC also confirmed that it had not been informed of the involvement of
Strategic in the Gautrain project. PWC accepted that those facts would have
materially affected the value of Strategic and, as a result, the Ilima shareholding.
This was complicated by a dispute between BCJV and the Gauteng Province. In
November 2016, newspapers reported a settlement of that dispute. On
9 January 2017, the liquidators enquired whether an amended valuation, taking
account of the settlement, had been obtained from PWC. This request was repeated
on a number of occasions between 21 February 2017 and 13 February 2018, but to
no avail. When it appeared that no response would be forthcoming, the liquidators
instructed Mr Zeelie to produce an updated valuation. He, in turn, indicated that he
required additional information and documentation in order to do so. A series of
requests for this was sent between 15 February 2018 and 15 March 2018, also
without result.

[12] The liquidators decided to hold an insolvency enquiry to obtain the necessary
information and documentation. Subpoenas were issued to attend a meeting of
creditors to be held on 23 March 2018. The third and fourth appellants attended.
There they agreed, and were ordered, to provide the documents and information
contained in the subpoenas by 13 April 2018. The liquidators stated that two files
containing some, but not all, of the required documents were handed to them during
April, albeit after the deadline. On 4 June 2018, further subpoenas were issued to the
fourth and fifth appellants and a representative of the auditors of Strategic to attend
an enquiry on 15 June 2018. Those persons sought and obtained an adjournment of
the enquiry to 3 August 2018. They undertook to hand over the documentation by
13 July 2018, failing which they would attend the enquiry. They failed both to
provide the documents and information then or thereafter.

[13]  The enquiry was postponed to 9 November 2018 in an attempt to reach
agreement regarding the value of the Ilima shareholding. It was agreed that the fourth
appellant and the auditors would hand over the documents requested. A meeting with
a view to reach a settlement was held on 14 September 2018 to no avail. The
promised documents were also not furnished. On that date, Strategic launched the
main application with the Notice of Motion having been signed and the founding
affidavit deposed to the day before.

[14] The declaratory relief sought in the main application was to the effect that the
documents to which the liquidators were entitled were limited to those described in
ss 26 and 31 of the Companies Act, 71 of 2008 (the new Act) and s 113 of the
Companies Act 61 of 1973 (the old Act). Strategic complained that the provisions
of ss 414 and 415 of the old Act did not apply. The sections relied upon by Strategic
were limited to shareholder rights. In essence the contention of Strategic was that

the liquidators of a shareholder have no greater right to documents than would a
shareholder itself. As such the inference seems inescapable that the launch of the
main application signalled the end of any prospect that Strategic would provide any
further documents.

[15] Significantly, neither Strategic nor any of those subpoenaed ever sought to set
aside the subpoenas on these or any other grounds. These had been issued by the
Magistrate, Krugersdorp who was presiding over the enquiry. The relevant
provisions of s 414(2) of the old Act are:
‘The Master or officer who is to preside or presides at any meeting of creditors, may subpoena any
person–
(a)   . . . who in the opinion of the Master or such other officer may be able to give material
information concerning the company or its affairs, in respect of any time before or after the
commencement of the winding-up, to appear at such meeting, including any such meeting which
has been adjourned, for the purpose of being interrogated; or
(b)   who is known or on reasonable grounds believed to have in his possession or custody or
under his control any book or document containing any such information as is referred to in
paragraph (a), to produce that book or document or an extract therefrom at any such meeting or
adjourned meeting.’
And those of s 415(1) are:
‘The Master or officer presiding at any meeting of creditors of a company which is being wound-
up and is unable to pay its debts, may call and administer an oath to or accept an affirmation from
any director of the company or any other person present at the meeting who was or might have
been subpoenaed in terms of section 414(2)(a), and the Master or such officer and any liquidator
of the company and any creditor thereof who has proved a claim against the company, or the agent
of such liquidator or creditor, may interrogate the director or person so called and sworn
concerning all matters relating to the company or its business or affairs in respect of any time,
either before or after the commencement of the winding-up, and concerning any property
belonging to the company’.

[16] At the inception of the hearing, counsel for Strategic expressly disavowed the
contention that the liquidators are limited to no more documents than those referred
to in ss 26 and 31 of the new Act and s 113 of the old Act. It was also conceded that
the provisions of ss 414 and 415 of the old Act did apply. That put paid to the appeal
against the dismissal of the main application since those were the contentions on
which it was founded.

[17] This then brings into focus the counter-application, which involves the
following issues:
(a)
Whether the high court correctly found that the provisions introduced by
clause 27 of the amended MOI amounted to conduct contemplated in s 163(1) of the
new Act as regards its application to the Ilima shareholding.
(b)
If so, whether the high court correctly exercised its remedial jurisdiction in
terms of s 163(2) of the new Act.
(c)
Whether the orders of the high court enforcing the various subpoenas were
justified and/or capable of execution.
(d)
Whether the high court’s punitive costs order against the appellants in the
counter-application should be set aside.

[18] A number of matters concerning the response of Strategic to the main and
counter-applications, bear mention. First, its constant refrain was that the date of
valuation which applied was that of the PWC report in 2016. This contention was
persisted in, right up to the penultimate paragraph of its replying affidavit. It was
correctly retreated from in argument before us and it became common cause that a
current valuation is required. There is no such valuation.

[19] Secondly, and allied to the first matter, it has been consistently contended by
Strategic that the valuation of the Ilima shareholding which applied, was that of
PWC. Apart from this dating back to 2016, it is common cause that it did not take
account of the settlement of the Gauteng Province dispute. It was for this reason that
Strategic requested Prof Wainer to update that valuation. He performed a calculation
using the valuation of PWC and in some way applied the settlement, arriving at a
value of some R59 million. This does not resolve the dispute whether the valuation
of PWC, prepared in terms of the impugned shareholders’ agreement, should apply.
That issue lies at the heart of the dispute.

[20] In the third place, Strategic submitted that the liquidators had ‘sufficient’
documents by which to arrive at a valuation. This begs at least two questions. Why,
if that was the case, were the requested documents promised and who should
determine what is sufficient? No answer was given to the first of these. As to the
second, Strategic arrogated to itself that determination. In argument, it could provide
no legal basis for that submission. On the contrary, having been pressed by the
liquidators on its undertakings to provide additional documents and in the light of
the looming insolvency enquiry, it launched the main application. As has been noted,
this contended that the liquidators were entitled to no more documents than those
described in ss 26 and 31 of the new Act and s 113 of the old Act. During the hearing,
it conceded that this contention was untenable.

[21] Against that general backdrop, the issue of clause 27 of the amended MOI
must be considered. Here, the sequence of events sets matters in stark relief.
Subpoenas were issued between March 2018 and June 2018 requiring documents to
be produced for the insolvency enquiry set down for 15 June 2018. This was
adjourned to 3 August 2018 at the instance of those subpoenaed. They undertook to

provide the documents by 13 July 2018. It was agreed that the enquiry on
3 August 2018 would be postponed to 9 November 2018 so as to attempt settlement.
It was agreed that Mr Moshapalo and the auditors would hand over the documents
requested. On 17 August 2018, the impugned shareholders agreement was declared
invalid by Unterhalter J. It was on the basis of this document that the Mazars and
PWC valuations had been performed. On 7 September 2018, the liquidators sent a
letter recording that the documents had not been provided. This was repeated on
13 September 2018, in the light of the settlement meeting scheduled for
14 September 2018. That meeting bore no fruit. This is hardly surprising since that
day Strategic launched the main application, claiming that the liquidators were
entitled to only those documents referred to in ss 26 and 31 of the New Act and s 113
of the Old Act. As already indicated, this amounted to an unequivocal repudiation
of its earlier undertakings to provide further documents.

[22] After the launch of the main application, Strategic rejected the suggestion of
the liquidators that its shareholders should offer R125 million for the Ilima
shareholding. On 29 April 2019, Mr Zeelie, having poured over the documents
provided, sent a list containing 35 issues which he thought merited discussion at the
forthcoming Annual General Meeting of Strategic. A further communication from
Mr Zeelie to Strategic on 18 February 2020 raised a number of issues, many of them
repetitions of those raised the previous year. Two such issues bear mention. First,
that it appeared that the Manana agreement had resulted in Strategic itself purchasing
the shareholding of Mr Manana. Instead of cancelling the shares as ought to have
been done, it was alleged that the board had transferred them to the Share Incentive
Scheme at no value despite their having material value at the time. Secondly, that
dividends of R55 million had been declared at a time when Strategic had only
R35 Million available. This dividend, he contended, had caused retained losses

which was not permissible. There were further allegations of dubious corporate
governance on the part of the board. Four persons representing Strategic hotly
contested these allegations, and provoked retorts, but failed to provide any
substantive responses. It is neither possible nor advisable to make findings on any
of these contentions. However, it is clear that the outcome one way or the other could
well affect the value of the Ilima shareholding.

[23] It was this latter exchange which was followed soon after by the calling of the
Special General Meeting of shareholders of Strategic. It was called on 8 June for
30 June 2020. At the meeting, the majority passed a resolution substituting an
entirely new MOI for the existing one. The material terms of clause 27 thereof were:
‘27.1    A shareholder shall be deemed to have committed an act of insolvency, winding-up or
business rescue if:
27.1.1   save for solvent re-organisation or reconstruction, it is wound-up, provisionally or
finally, or is placed under provisional or final judicial management; or
. . .
27.2    If a shareholder commits an act of insolvency, winding-up or business rescue, then:
27.2.1   Upon receipt by the Defaulting Shareholder, (or its statutory representative), of
written notice from those Aggrieved Shareholders whose aggregate Equity Proportion Inter
Se is not less than 50%, a Right to Call in respect of the Equity of the Defaulting Shareholder
shall be deemed to have arisen on the Business Day immediately preceding the date of the
event giving rise to the act of insolvency; and
27.2.2   the purchase consideration for the Forced Sale in this clause shall be the Forced Sale
Price.’
The forced sale price is defined in paragraph 1.2.24 of the MOI as:
‘[T]he price at which a Shareholder may become obliged to sell its Equity to the other Shareholders
after a Forced Sale Event has occurred as expressed in this Agreement, which price shall mean a
value determined, in the first instance by written agreement between the Shareholders or their
representative, and failing such agreement being reached within 5 (five) Business Days after

written request for an agreed determination being delivered by any Shareholder to the others, then
by an independent Merchant Bank division of any of the largest 6 (six) commercial banks in South
Africa to be appointed by agreement between the Shareholders, or failing such agreement by the
Chairman of the South African Institute of Chartered Accountants:
1.2.24.1.1   which shall have reference to the value of the Equity in the open market on a going
concern basis as between a willing purchaser and willing seller;
1.2.24.1.2  which shall give each party an opportunity to make written submissions to him
concerning the manner in which the Forced Sale Price should be determined;
1.2.24.1.3   which shall value the Shareholder’s Loans at their face value;
1.2.24.1.4   whose decision (save for manifest error) shall be final and binding on the Parties; and
1.2.24.1.5   whose costs of valuation shall be borne by the selling Shareholder(s) on the one hand
and the Call Shareholders on the other hand in equal shares, the liability of the Call Shareholders
for their half of such costs portion to their Equity Proportion Inter Se.’
A forced sale event is defined in terms of clause 1.2.25 as:
‘[A]ny event provided for in this MOI pursuant to which a Shareholder may become obliged to
sell its Equity to the other Shareholders, other than a voluntary sale.’

[24] The liquidators viewed this amendment as an attempt by Strategic to have the
valuation performed without furnishing the liquidators with any further information
and documentation. The fact that the liquidators would be entitled to make written
submissions begs the question as to how they could do so without access to
documents which Mr Zeelie considered to be material to the valuation. Once the
valuation was arrived at, the liquidators would be bound by it. They submitted that,
in effect, Strategic would have all of the relevant information on which to base its
submissions, and the liquidators very little. There was accordingly no equality of
arms in this contentious matter. There would be no knowing what had and had not
been taken into account by the valuer. In essence, there would be no possibility of
an informed debate. Part of the relief sought in the counter-application was,

accordingly, relief under s 163 of the new Act. The relevant parts of this section
read:
‘(1) A shareholder or a director of a company may apply to a court for relief if–
(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;
. . .
(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’.

[25] This clearly envisages a two-step procedure. For the purposes of the present
matter, the high court was initially obliged to make a determination on the facts. It
had to consider whether the act of amending the MOI by introducing clause 27 had
a result which operated oppressively or unfairly prejudicially against the liquidators
or which unfairly disregarded their interests. If that was found to be the case, the
high court was vested with the discretion to make an order which it saw fit.

[26] In Grancy Property Ltd and Another v Manala and Others1 (Grancy), this
Court approved a dictum in Aspek Pipe Co (Pty) Ltd and Another v Mauerberger
and Others,2 relating to the predecessor of this section in the old Act:
‘“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”.’3
This Court went on to hold:

1 Grancy Property Ltd v Manala and Others [2013] ZASCA 57; [2013] 3 All SA 111 (SCA) (Grancy) para 22.
2 Aspek Pipe Co (Pty) Ltd and Another v Mauerberger and Others 1968 (1) SA 517 (C).
3 Ibid at 525H-526E.

‘According to Prof FHI Cassim et al 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 62quat(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.’4

[27] The factual background shines with piercing clarity on the question whether
the passing of clause 27 of the amended MOI amounted to conduct covered by
s 163(1) of the new Act. Valuations by Mazars and PWC (as updated by Prof
Wainer) based on forced sale provisions, were the previous basis for refusing further
documents. Once the impugned shareholders’ agreement was declared invalid, there
was no basis for any claim that those valuations should be accepted as is. A rear-
guard action ensued to avoid providing requested documents and information in the
context of the insolvency enquiry. When this loomed, and negotiations failed,
Strategic launched the main application which sought to avoid furnishing documents
subpoenaed and providing information at the enquiry itself. While the main
application was pending, inconvenient questions were asked concerning corporate
governance. The only way to avoid further disclosure was to pass a forced sale
provision which would apply to the Ilima shareholding. If that was invoked, the
shareholding could be sold without any further documents being furnished.

[28] It is accepted by all, as it must be, that the liquidators are duty bound to obtain
sufficient documents for the purpose of placing a value on the Ilima shareholding.

4 Grancy para 26. References omitted.

Liquidators are required to be diligent in the interests of creditors in recovering and
distributing assets of the company in liquidation. As was accepted by this Court of
the duties of the liquidator in Receiver of Revenue, Port Elizabeth v Jeeva:5
‘It is his duty to the whole body of shareholders, and to the whole body of creditors, and to the
Court, to make himself thoroughly acquainted with the affairs of the company; and to suppress
nothing, and to conceal nothing, which has come to his knowledge in the course of his
investigation, which is material to ascertain the exact truth in every case before the Court. And it
is for the Judge to see that he does his duty in this respect.’6

[29] In response to the contention that the amendment was designed to restrict
access to information and documents and to limit the manner in which the liquidators
can dispose of the shareholding, the replying affidavit simply asserted that this was
irrelevant. That is certainly not the case. It is clear from what I have said above that
the effect of clause 27 of the amended MOI is to undermine the performance by the
liquidators of their duties referred to in Grancy. It operated oppressively or unfairly
prejudicially against the liquidators and unfairly disregarded their interests in
obtaining an accurate valuation. Accordingly, the factual finding of the high court
that the conduct of Strategic implicated s 163(1) of the new Act is unimpeachable.

[30] This vested the high court with a discretion to grant an order which befitted
the situation. The order granted was that the provisions of clause 27 of the amended
MOI would not apply to the Ilima shareholding or its sale. It can hardly be said that
the exercise of this discretion of the high court can be interfered with. It seems to me
to be an entirely appropriate order which goes no further than necessary. It simply
serves to allow the liquidators to properly perform their duty to obtain as accurate a

5 Receiver of Revenue, Port Elizabeth v Jeeva and Others; Klerck and Others NNO v Jeeva and Others 1996 (2) SA
573 (A) at 578F-I.
6 Citing with approval In re Contract Corporation (Gooch's case) (1871-1872) 7 Ch App 207 at 211.

valuation as possible so as to dispose of the Ilima shareholding for the benefit of
creditors of Ilima.

[31] The next issue concerns the declaration by the high court that the liquidators
are entitled to the documents sought in the subpoenas. The submission of Strategic
in its heads of argument that the description of the documents was too vague to give
effect to was not pressed before us. This was appropriate. If undertakings had already
been given, it can hardly be contended that Strategic cannot adequately identify the
documents. That was never its complaint.

[32] I have dealt with the contention of Strategic that the liquidators had sufficient
documents for that purpose. There are a number of answers to that submission. First,
there is no current valuation. Secondly, it does not appear to be genuinely disputed
that, in order to perform an accurate valuation, the documents sought are necessary.
Finally, as has been repeatedly pointed out, Strategic undertook to furnish the
liquidators with the documents sought rather than to set aside the subpoenas on the
basis of lack of relevance or compellability. As such, the order of the high court must
stand.

[33] This leaves the final submission of Strategic that the high court erred in
granting a punitive costs order against it in the counter-application. This was also
not pressed before us in argument. It is clear that, in doing so, the high court
exercised a discretion. The reasons for doing so were clearly set out by Maier-
Frawley J and do not afford a basis on which to interfere on appeal. On the contrary,
it is my view that the punitive order was amply warranted.

[34] In the result, the appeal is dismissed with costs, including those of two counsel
where so employed.

____________________
T R GORVEN
JUDGE OF APPEAL

Appearances

For appellants:
L J Morison SC (with him T Scott)
Instructed by:

Knowles Husain Lindsay Incorporated, Johannesburg
Claude Reid Incorporated, Bloemfontein

For first respondent:
A Subel SC (with him J Hershensohn)
Instructed by:

Lawtons Africa, Johannesburg
Matsepes Incorporated, Bloemfontein.