Grancy Property Limited and Another v Dines Chandra Manilal Gihwala and Others

Grancy Property Limited, through Montague Goldsmith AG, made two BEE-related investments with the respondents: one in Spearhead Property Holdings Ltd and another in Scharrig Mining Ltd. Mr Dines Gihwala and entities associated with him stood in a fiduciary relationship to Grancy, akin to a partnership, and were responsible for managing the investments and accounting to Grancy. Over many years, Grancy alleged that Mr Gihwala, the Dines Gihwala Family Trust, and Mr Manala breached their fiduciary and contractual duties by misappropriating funds, failing to acquire and allocate shares to which Grancy was entitled (particularly additional Scharrig option shares), diverting funds into unauthorised investments, failing to pay dividends and interest, and making secret profits. Following a two-stage accounting and debatement process ordered by the SCA in earlier litigation, the High Court partly upheld Grancy’s claims. Grancy appealed against the refusal of further monetary relief and contempt findings, while the respondents cross-appealed.

The appeal succeeded in part. The High Court order was set aside and replaced to declare the first defendant, the Dines Gihwala Family Trust, and the second defendant jointly and severally liable to pay Grancy R3 million plus interest for secret profits. The order relating to the Scharrig investment was amended to award Grancy the full economic benefit of half of the additional option shares (3 679 754 shares) with interest. The remainder of the appeal was dismissed. All cross-appeals were dismissed. Costs were awarded largely against the respondents, including costs of two counsel.

The judgment reinforces the strict enforcement of fiduciary duties in complex investment and BEE partnership structures and confirms that courts will look to the substance of empowerment transactions rather than opportunistic ex post facto defences. It clarifies the entitlement of an undisclosed co-investor to the economic benefit of shares under a fiduciary arrangement and affirms the availability of disgorgement as a remedy for secret profits. The case is also significant for its treatment of damages quantification in share-related breaches and for bringing long-running accounting and debatement litigation to finality.