IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE DIVISION, GRAHAMSTOWN)
																				             Case No: 642/2020
In the matter between:					         

HAZEL ALDER TRADING PROPRIATARY LIMITED	          First Applicant

BF VENTURES LIMITED					    Second Applicant
	
And

AFRICAN BUSH INVESTMENTS CC	                         First Respondent

CUSTOCEL PROPRIETARY LIMITED			Second Respondent 

MAKANA MUNICIPALITY		    			    Third Respondent 
	
CM HEUNIS CONSTRUCTION CC				  Fourth Respondent

JUDGMENT

BESHE J:

[1] 	This is an application for an interim interdict pending review proceedings to be instituted by the applicant. At the centre of this application is the impending construction of certain structures by the first and fourth respondents on Farm 673, Makana Municipality, District of Albany, Eastern Cape (The property).
[2] 	The applicants are companies that are registered in terms of the Company Laws of the Republic of South Africa in respect of first applicant and the Bahamas in respect of the second applicant. First respondent is a Close Corporation (African Bush). The second respondent is a private profit company registered in terms of the Laws of the Republic of South Africa.
[3] 	The applicants are currently shareholders of second respondent (Custocel). Custocel is the entity that purchased the property in question and holds same for its benefit.  
[4] 	The third respondent is a municipality established pursuant to the provisions of Section 12 of the Local Government Municipality Structures Act. The fourth respondent is CM Heunis Construction CC, a close corporation with its registered address at 1 Glanville Street, Grahamstown.    
[5] 	In the main application, the applicants will seek the reviewal and setting aside of the grant by third respondent of a special consent to the construction, on the property concerned, of five additional dwelling units and the approval of a zoning scheme departure authorising an increase of the size of the units to be built, as well as the approval by third respondent of building plans in respect of the construction by first respondent of a residential building on the property. The applicants seek an order declaring that all the provisions of the agreements resulting in first respondent acquiring its shareholding in second respondent as well as shareholder’s agreement which purports to grant second respondent’s shareholders exclusive use of portions of the property are void ab initio by virtue of the provisions of the Subdivision of Agricultural Land Act, 1970 (SALA). Also to be sought in the main application will be an order prohibiting first and fourth respondents from commencing with construction of an additional unit on the property until such time that first respondent has obtained consent from the Managing Director of second respondent for the design of the said dwelling as well as the building plans thereof and such plans have been approved by the third respondent.
[6] 	The nature of this application is aptly identified by Mr Roberto Agustoni who is a member of first respondent in the answering affidavit as follows:
“16 The applicants seek, inter alia an urgent interdict against African Bush to prevent it constructing dwelling unit on farmland owned by the second respondent (Custocel), measuring 260 hectares (the farm) in extent, which falls within the jurisdiction of third respondent, namely Makana Municipality.”  
[7] 	According to the applicant, second and third respondents are joined in this application to the extent that they may have an interest in the matter and no substantive relief is sought against them.
[8] 	It appears to be common cause that second respondent is the owner of the farm concerned. The shares in second respondent are divided as follows:
20 are held by first applicant, 80 by second applicant and 20 by first respondent. 
APPLICANTS’ CASE
[9]	The property was purchased from Bayeti Conservancy Proprietary Limited. At the time of purchase of the property, the entire shareholding of Custocel was held by the trustees of Lumiclox Business Trust. In terms of this sale agreement, “the first sale agreement” second respondent also purchased from Bayeti five traverse rights.  This is explained by the applicant to be the right to traverse the Bayeti for non-commercial purposes. This is provided for in stated clauses of the first agreement. The use of the property purchased by second respondent would be limited to that of a game farm. 
[10]	On or about 27 January 2014 a second sale agreement was concluded. In terms of this agreement the share capital was increased from 100 to 120 - a sixth shareholder with rights to build a lodge was allowed. The said shares were issued to first respondent. It was part of the agreement that the traverse rights would only be accorded to first to fifth shareholders and not to sixth shareholder. The second sale agreement also refers to the shareholders / Use Agreement. This agreement contains the rights to traverse the Bayeti Conservancy and Rules and Obligations of shareholders of second respondent and spells out those rights and contains certain definitions and specifications. It also provides that the lodge to be built by a shareholder “shall be subject to the approval of third respondent and the Managing Director of second respondent to whom all claims for approval shall be submitted for approval”.
[11] 	During March 2018, first respondent applied for special consent from third respondent to erect five additional dwelling units and such to be increased from 175 m2 to 500 m2. This application was necessary because since July 2015 the Spatial Planning and Land Use Management Act of 2013 (SPLUMA) has regulated land use within municipal areas. The application for a departure was granted on appeal for a reduced area of 480 m2. The consent use for additional dwelling units was also approved subject to confirmation that all conditions had been complied with including the approval of building plans.  
[12] 	During November 2019 Mr Van Zyl, who is described as second respondent’s sole director, wrote to the third respondent stating that the land use application submitted in March 2018 is thereby withdrawn by second respondent irrespective of what stage it has reached as to its approval or otherwise. In a letter addressed to the third respondent during December 2019, the authority of Van Zyl was challenged namely his position as director of second respondent. 
[13] 	After back and forth communication between the parties, on 25 February 2020 a member of first respondent advised Mr Gradwell per email that its construction site shall be handed over to the builders on 7 March 2020. Third respondent on the other hand called on Mr Val Zyl to produce evidence of his authority to withdraw the land use application on behalf of second respondent, which he did.
[14] 	Applicants’ grounds for seeking the reviewal and setting aside of third respondent’s decision to grant special consent to the construction on the property of five additional dwelling units and the approval of a zoning scheme departure authorising the increase of size of the units to be constructed, appears to be the following:
The building plans if approved, were not lawfully so approved inter alia because, no building plans endorsed as having been approved have been provided to the applicants or provided in court. Clause 32 of the Agreement requires the consent of second respondent’s managing director to the design of the proposed “homestead” and the approval by him of the plans. That even if the first respondent is relying on plans submitted in 2017, the managing director at the time did not consent to the design, approve the plans or sign the application form and plans on behalf of the owner.         
[15] 	Applicants’ other complaint is that the special consent and the departure were unlawfully granted by the third respondent. This, because in response to a question whether the provision of the Subdivision of Agricultural Land Act were applicable to the application, on the application form, the answer was “no”. Yet, according to the applicants they are. A copy of the second sale agreement was not provided with the application. The municipality was also not informed that in terms of this agreement (the second sale agreement) shareholders would be entitled to the exclusive use in perpetuity of their respective residential areas and dwelling units to the exclusion of other shareholders. Applicants submit that as a result of the misleading response as to whether the provisions of SALA apply, as well as the failure to inform the municipality of the provisions of the sale agreements, third respondent’s decision was influenced by an error of law and that relevant considerations were not considered by the municipality.  
[16]	It was submitted on behalf of the applicants that should interim relief not be granted and relief granted in their favour on review, they will suffer irreparable harm. In that, irreparable damage will be caused to the natural state the property and the environment – particularly in view of the fact that the property is utilized as a game reserve. This will come about as a result of the clearing of the site which will include the destruction of the natural vegetation, delivery of building materials, digging and laying of foundations and the commencement of the construction. In the event that the construction will have been completed, even if the applicants succeeded on review, the court may deem it not to be fair and equitable to order the demolition of the structures. 
FIRST RESPONDENT’S CASE    
[17] 	Respondent sets out the timeline of the application to third respondent for a “consent use” and dealings in relation thereto with applicants’ representatives. The application was lodged in March 2018. They (applicants) became aware that the commencement of the proposed construction was imminent on 4 February 2020. It is pointed out that the shareholders’ agreement was entered into before November 2018. Namely the shareholders’ agreement that is assailed as being void ab initio, due to the fact that if falls foul of SALA. It is contended that there has been an unreasonable and undue delay on the part of the applicants in initiating these proceedings. 
[18] 	First respondent contends that the applicants lack the locus standi to institute these proceedings. Through these proceedings, they are litigating on behalf of second respondent’s juristic personality. And that second respondent would be the appropriate applicant. First respondent contends that applicants have not made out a case of how the impugned decisions will have an impact on them. They have only established an impact on second respondent. In support of the argument in this regard, first respondent referred to a number of decided cases relating to legal standing of a party. It is trite that for a litigant to acquire legal standing, it must show how the impugned decision will have effect on the parties’ interests or potential interests.     	
[19] 	First respondent denies that second respondent did not grant authorisation for both the “consent use” and “departure” applications. According to the respondent, there is no contravention of the SALA as a result of the town planning and building permit approval. But most importantly, it is submitted, applicants have not provided any evidence or facts to support the conclusion that their use and traversal rights will be harmed by the proposed construction. Appoint is made that it is inconceivable that a single structure on an expansive land parcel as the property, may have a negative impact or damage the property.
[20] 	As to whether the main application bears any prospects of success, first respondent denies that the application has any prospects of success. Arguing that the authority of the different functionaries are not dependant on each other. This as regards the provisions of and sphere of the SPLUMA and SALA legislation respectively.   
[21] 	First respondent contends that the applicants do not have a prima facie right to the right which it is sought to be protected in the main application. In the same vein that first respondent asserts that the applicants lack the locus standi to lodge this application, it is argued that the cessation of building on property which belongs to second respondent, is a right which second respondent can seek to protect not the applicants. Irrespective of the fact that they may be aggregate majority shareholders. This also applies to wrongs purportedly committed by first respondent in this regard, the complainant should be second respondent.    
[22] 	According to first respondent, if it were to be restrained from going ahead with the proposed construction, it will suffer irreparable harm because the relief sought by the applicants will not be diminished by the structures sought to be built. Further that the application does not enjoy any prospect of success.  
[23] 	It is trite that an interlocutory interdict such as the one applicants seek in this matter, is designed to protect the rights of an applicant pending proceedings to be instituted by such applicant. Trite also is the principle that an interlocutory interdict does not involve the final determination of the rights of the parties to the litigation concerned. It is meant to make sure that the party who succeeds ultimately receives effective relief. I have already pointed out that first respondent opposes the application on inter alia the basis that the applicants lack the legal standing to institute these proceedings and that they have not provided facts upon which they conclude that if the proposed building goes ahead, they will suffer any harm. How the exercise of their rights as shareholders will be or have been affected by first respondent’s exercise of its rights in respect of the property. Or why the purported wrongful approval by third respondent affects their rights. In my view therefore, these are the two aspects to be considered in order to determine whether the applicants are entitled to the relief that they seek. In my view, the two aspects are intertwined. Locus standi to institute this application and whether the applicants have shown that they will suffer irreparable harm should the construction go ahead and the main application is successful.  
[24] 	I have already pointed out that second respondent (Custocel (Pty) Ltd) is a company that is registered in terms of the laws of the Republic of South Africa. In City Capital SA Holdings Ltd v Chavonnes St Clair Cooper it was stated that:
“It is trite that a company is a legal entity distinct from its shareholders. It has rights and liabilities of its own, separate from those of its shareholders. Its property is its own and not that of its shareholders. This follows from the separate legal existence with which a company is by statute endowed.” 
To bolster the argument that the appropriate applicant is second respondent in this matter, first respondent draws the court’s attention to the relief that will be sought in the review application. Namely an order declaring the agreement to grant shareholders of second respondent exclusive use of portions of the property is contrary to the provisions of the SALA and therefore void ab initio, an order prohibiting the first and fourth respondents from commencing with the construction of an additional dwelling on the property unless and until first respondent has obtained consent of the managing director of second respondent to design the dwelling, his approval of the building plans and such plans have been submitted to third respondent by second respondent.    
[25] 	I am inclined to agree with the first respondent that it is clear from the relief that will be sought in the main application, that second respondent is the aggrieved party. Applicants lay claim to locus standi on having a direct and substantial interest in challenging unlawful approval granted by the municipality as shareholders.
[26] 	I am not persuaded that this is enough for determining whether they have a prima facie right to the right that is sought to be enforced, to determine the irreparable harm that they will suffer. I am inclined to agree with first respondent that the applicants have not shown what harm they will suffer if the interim interdict is not granted. I am in agreement with the first respondent’s submission that the applicants have litigated on behalf of second respondent and ignored the fact that second respondent is a juristic person.  
[27] 	I am not persuaded that this is a matter where I should exercise my discretion in favour of the applicants on the basis that they are interested persons in this regard as provided in Section 21 (1) (c) of the Superior Court Act. Even if I were to be satisfied that the applicants are interested persons in so far as this matter is concerned, more is required – the applicants have not demonstrated how their rights are affected or impacted by the impugned decisions. Or how they will be affected / harmed should the construction go ahead and the review succeeds.
[28] 	The applicants have not made out a case for the relief they are seeking.
[29] 	The application is therefore dismissed with costs, such costs to include the costs associated with the employment of two counsel.

NG BESHE
JUDGE OF THE HIGH COURT

APPEARANCES

For the Applicants		: 	Adv: Ford SC and Adv: Richards
Instructed by			:	RUSHMERE NOACH INC									C/o NETTELTONS ATTORNEYS
118A High Street
					GRAHAMSTOWN
					Ref: Mr Nettelton
 					Tel.: 046 – 622 7149
 
For the 1st Respondent	: 	Adv: Putter and Adv: Ogunronbi
Instructed by 		:	NICOLE ROSS ATTORNEYS
					C/o WHITESIDES ATTORNEYS
53 African Street
					GRAHAMSTOWN
					Ref: Mr Nunn/sw/C12415
					Tel.: 046 – 622 7117
	
Date Heard			:	20 March 2020	
Date Reserved		:	20 March 2020
Date Delivered		:	12 May 2020