Ghersi v Tiber Developments (Pty) Ltd

The Ghersi family (appellants), minority shareholders holding 45% of the shares in Tiber Developments (Pty) Ltd, alleged that the directors of the company (the Rivera family interests and others) had misappropriated company funds and breached their fiduciary duties. Acting under s 266 of the Companies Act 61 of 1973, the appellants served a statutory notice calling on the company to institute proceedings against the directors. After the company declined to do so, the appellants successfully obtained the appointment of a provisional curator ad litem in the Johannesburg High Court. The curator investigated the alleged misappropriation of funds and concluded that the claims for repayment and interest could not be sustained. However, he went further and recommended that proceedings be instituted against the directors for alleged misappropriation of corporate opportunities and secret profits over a period of more than 20 years. On the return day, the High Court discharged the provisional order. The appellants appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel. The discharge of the provisional curator ad litem’s appointment by the High Court was upheld.

The case is significant for clarifying the scope and limits of s 266 of the Companies Act 61 of 1973. It confirms that a provisional curator ad litem’s mandate is confined to the grounds alleged in the shareholder’s application and underscores the importance of a properly focused and thorough curator’s investigation before a court may authorise derivative proceedings. The judgment provides authoritative guidance on the procedural safeguards built into statutory derivative actions in South African company law.