Surmon Fishing (Pty) Ltd v Compass Trawling (Pty) Ltd

The Minister granted long-term hake fishing rights under the Marine Living Resources Act 18 of 1998. Various rights holders formed a joint venture (the Compass Fishing Hake Joint Venture) governed by General Terms and Conditions (GTC) to pool fishing rights. The joint venture later assigned its rights and obligations to Compass Trawling (Pty) Ltd, a company owned by the joint venture participants, while the joint venture became dormant. In August 2007, Foodcorp made an offer to purchase Surmon Fishing’s hake rights. Under clause 9.3 of the GTC, Compass Trawling had a right of first refusal to purchase those rights on the same terms. The board of Compass Trawling resolved, by four votes out of six, to exercise this right and purchase Surmon’s hake rights. Surmon contended that the resolution was invalid because clause 7.10 of the GTC allegedly required a special majority of more than 66.6%, and that this threshold was not met or was inapplicable. Surmon accepted Foodcorp’s offer and litigation followed.

The appeal was dismissed with costs. The order of the Cape High Court declaring the board resolution valid and enforcing the sale and transfer of Surmon’s hake rights to Compass Trawling was upheld.

The case clarifies the distinction between the governance of a joint venture and that of a company incorporated under the Companies Act. It affirms that directors’ powers are derived from the company’s constitutional documents and cannot be constrained by joint venture management provisions unless properly incorporated. The judgment reinforces principles of corporate autonomy, contractual hierarchy, and conflict clauses in assignment agreements.