Pasiya and Others v Lithemba Mining (Pty) Ltd and Others

The appellants were shareholders in Lithemba Mining (Pty) Ltd (LM), a company formed to pursue a coal mining project. In 2009 LM faced urgent capital calls under joint venture arrangements, failure of which would have resulted in forfeiture of its interests. LM’s board and shareholders unanimously approved a convertible loan from Lithemba Investments (Pty) Ltd (LI), together with an increase in LM’s authorised share capital and the issuance of shares as security if the loan was not repaid. LM failed to repay the loan in full, and LI perfected its security in January 2010 by taking additional shares, resulting in dilution of other shareholders’ interests. Over subsequent years LM declared substantial dividends which were paid in accordance with the post‑dilution shareholding, including to the appellants. In 2020, some 11 years later, the appellants instituted motion proceedings seeking declaratory relief to set aside the loan agreement, the share capital increase, and the resulting dilution.

The appeal was dismissed with costs, including the costs of two counsel where employed. The cross‑appeal against the costs order was also dismissed with costs.

The case clarifies the discretionary nature of declaratory relief under s 21(1)(c) of the Superior Courts Act and confirms that undue delay may justify refusal of declaratory relief even where an applicant has standing. It underscores the importance of finality and certainty in company affairs and affirms that courts are not obliged to determine the merits where discretion is exercised against granting declaratory relief.