La Lucia Sands loses Supreme Court appeal

La Lucia Sands Share Block Limited has been ordered by the Supreme Court of Appeal to allow access to its register of members after refusing to make the information available to potential buyers.

Howard Barkin and Errol Glasser tried to obtain access to the share block company's register of members, intending to send them offers to purchase their shareholding. La Lucia Sands refused, accusing Barkin and Glasser of being involved with Flexi Holiday Club, and were planning a "hostile takeover" of the company. La Lucia Sands took the matter to the Appeal Court after it lost its bid in the KwaZulu-Natal High Court not to make the information available. The appeals court also ordered the company to pay the costs of the litigation.

Responding to a written request for the information, La Lucia Sands's George Wolfe replied that its members did not want their addresses and other private information divulged. The court pointed out that section 113 of the Companies Act 61 of 1973 made provision for access to a register of members. However, the resort's legal counsel questioned the constitutionality of the provision, saying it "offended against the right of privacy of company members enshrined in section 14 of the Constitution".

However, the Act stipulates that should access be denied 14 days after the receipt of a written request, every director or officer of the company who knowingly is a party to the refusal or default, will be guilty of a criminal offence.

Court papers stated that La Lucia Sands's counsel had failed to persuade the court that members of share block schemes needed added protection against disclosure because of the very nature of the company's composition.

Turning to the question of costs, the court said usually when important constitutional issues were raised in a court of law under appropriate circumstances, costs would not normally be awarded against unsuccessful litigants. However, Wolfe, on behalf of La Lucia Sands, had adopted and promoted an inflexible attitude from the outset, supported by the company's directors. In addition, courts would be reluctant to visit a costs order on litigants who were struggling financially and whose personal circumstances were precarious.

"In the present case there is every indication that La Lucia Sands is financially viable and that it authorised litigation fully aware of the costs implications and that it maintained its inflexible attitude throughout, notwithstanding that threat. For all the reasons set out above, the appeal must fail, both in respect of the merits and the costs order," the court papers said.

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