POINT YACHT CLUB
 
IMPORTANT NOTICE REGARDING FUTURE OF BEACH CLUB FACILITY
 
 PYC Report on the “PWC meeting” held at 14h00 on 14 August 2017
 

1. The two PYC members appointed to the board of the PWC attended a PWC meeting today at 2pm. There are many reasons why this meeting should not have been called however it is clear that despite the overwhelming number of compelling fiduciary and legal reasons not to hold the meeting, the DUC and DSBC continue to drive towards their goal of signing the “temporary and Permanent leases”. 
    
2. We arrived at the DSBC in the boardroom and were joined by the “members of the board’. Before the meeting took place, the boardroom was filled by protestors holding placards protesting against the “unconstitutional vote process” that took place at the DSBC and pointing out that the yes vote would signal the end of the DSBC. Cuane Hall and Hilton Kidger tried to get the protestors out but then took the decision to move the meeting to the DUC. We were ushered through the kitchen of the DUC where the protestors were kept out by security.
    
3. Cuane Hall had arranged for an employee of Barkers attorneys to “take the minutes” of the meeting. We objected citing the obvious conflict of interest considering that Barkers are the attorneys of record for both DUC and DSBC. We were told that we had no choice in this matter and that the employee would stay and take the minutes. Before we had an opportunity to discuss our use of recording devices at the meeting we were told by Hall to turn them off. We refused based on the fact that in previous meetings Hall had told us that Minutes were not important and that what is written in minutes cannot be believed.
      
4. Hall read the agenda which is to vote on the resolutions to sign the “temporary” and “permanent leases”. At this point we tried to raise the many concerns that we have regarding the signing of the leases. Hall shouted us down and told us that we cannot speak and that we were only there to vote. We tried to remind that meeting that we as directors have a fiduciary responsibility to uphold the rights contained in the 2008 agreement. We tabled a letter from DSBC members that stated that the result of the DSBC meeting vote was in question as the constitution had not been followed. Hall became very agitated and shouted us down every time we tried to speak telling us that he was not interested in what we had to say. We handed out copies of a letter from Cox Yeats to the PWC setting out why the PWC cannot hold any meetings without their participation and pointing out that this is the subject of the arbitration to be held in September. Hall took the letter and tore it into pieces and threw it at Dave Cuthbert, the Honorary Life President of the PYC.   At one point Hall called Dave Cuthbert “a Dick”. We continued to try to raise the issues with signing the leases however Hall was abusive and the meeting was out of control. Lavery suggested that Hall should simply go ahead and take the vote and ignore our concerns. Philips suggested that they have a caucus meeting. The DUC and DSBC “representatives” then left together for approximately fifteen minutes.
      
5. When they returned, Kidger took over the running of the meeting as chairman. He told us that they would allow us to have our say and then that were going to hold the vote. I was allowed to speak and raised the following concerns:

1. We called upon all directors to disclose any interest (financial or otherwise) which they, or members of the family, hold either directly or through a corporate entity in the matters to be discussed at the meeting, as required by section 75(5) of the Companies Act 71 of 2008.
2. We request all directors present to table all and any communications which they have had, written or oral with the DPDC regarding the leases, as required by section 76(2)(b) of the Companies Act. We drew to the attention of the meeting that failure to comply with these sections has extremely serious consequences. Directors who fail to do so can be liable both civilly and criminally. See sections 77, 214, 215 and 218 of the Companies Act.
3. (a)              We pointed out that the matter is not urgent inasmuch as in terms of paragraph 4.7 of the 2008 MOA the DPDC can only require the clubs to move when the new clubhouse is ready for occupation. At present not even the temporary clubhouse is ready for occupation.
   1. Furthermore the DPDC is bound by the conditions of the Environmental Authorisation granted to it. In terms of condition 3.40 thereof the development can only go ahead if and when the DPDC accommodates the water sport clubs “as per the agreement signed to date”. It follows, therefore, that the DPDC has to comply with the terms of the MOA and cannot evict the clubs from the present clubhouses without doing so.
4. In the circumstances any consideration of the proposed leases can and should be deferred pending the following.
5. The outcome of the arbitration proceedings:
   1. The DPSC has not been invited to the meeting notwithstanding that what is to be discussed significantly effects their rights;
   2. Whilst the DUC and the DSBC dispute the DPSC’s rights to become a member of the PWC, they have agreed to this issue being determined by the arbitrator;
   3. By excluding the DPSC from the meeting the DUC and DPSC will be pre-empting the decision of the arbitrator, notwithstanding that they have agreed to the issue of DPDC’s membership being determined by the arbitrator;
   4. If the arbitrator should subsequently rule that the DPSC should be a member, then clearly they will be able to apply to have the leases set aside. Therefore by determining the issue of the leases in their absence is simply going to invite further litigation;
   5. Furthermore, one of the issues before the arbitrator is whether the MOI of the PWC should contain a provision that the PWC enters into a lease agreement (as opposed to a sale agreement) with the DPDC;
   6. By passing a resolution to conclude lease agreements with the DPDC, the directors who vote in favour of that resolution would, again, be pre-empting the decision of the arbitrator notwithstanding the agreement that this issue would be determined by the arbitrator.
   7. In the circumstances the consideration of whether or not to conclude the leases should be held over pending the outcome of the arbitration.
6. We requested that the PWC obtain completely independent legal advice.
   1. The PWC needs to obtain independent legal advice on whether the directors have the power to pass a resolution to conclude the lease agreements other than by unanimous consent. This concern arises from what is set out hereunder.
   2. The PWC was set up in terms of the MOA. Its mandate is informed by the terms of the MOA.
   3. The MOA is still binding on all the parties including the DPDC.
   4. The MOA can only be varied by the unanimous consent of all the parties.
   5. If the directors of the PWC elect to conclude the leases, they would be causing the PWC to act contrary to the terms of the MOA.
   6. We raised that the PYC has been informed that since the MOA can only be amended by unanimous consent, then likewise the PWC can only conclude an agreement contrary to the terms of the MOA with the unanimous consent of all the parties concerned.
   7. We advised that the PYC does not consent to the conclusion of the lease agreements and therefore if the directors of the PWC purport to conclude the lease agreements, they would be acting beyond their powers and beyond the powers of the PWC.
   8. We advised that the PYC accepts that the DUC and DSBC have probably obtained legal advice which is contrary to the advice which the PYC has obtained. It is therefore vitally important that the PWC obtains completely independent advice on this matter. Therefore the consideration of the leases should be adjourned until such legal advice has been obtained.
7. (a)              We asked that the PWC take independent legal advice regarding the mandate of the DSBC’s nominee directors. In this regard reference is made to the letter from the DSBC members already tabled. If the contents thereof are correct then clearly the DSBC nominee directors do not have a mandate to vote in favour of a resolution to conclude the leases.
   1. We raised that this is not simply a matter which affects the DSBC. If the DSBC directors act contrary to their mandate it effects the validity of the resolution as a whole and will certainly result in further litigation involving the PWC.
   2. This matter accordingly needs to be resolved before any voting on the resolution takes place.
8. (a)              We explained that if notwithstanding all the foregoing a resolution is taken to conclude the lease agreements then the PYC will be obliged to approach the High Court to seek an interdict to protect its rights. The PYC accordingly seeks an undertaking that the signed lease agreements will not be forwarded to the DPDC for a period of two weeks to enable the papers to be drawn and the High Court to be approached. This is not only an indulgence which the PYC seeks for itself but also out of respect for the fact that the High Court has a heavy court load and a date for the hearing would have to be arranged to suit the Court.
   1. And that should this request not be acceded to then the PYC will draw to the attention of the Court that the request was made but rejected. PYC will then seek a punitive order for costs against the directors who refused to agree thereto.
9. We also drew attention to the fact that the issues raised are extremely serious. Large sums of money are involved. If wrong decisions are made directors can be held civilly and criminally liable. In this regard reference should again be made to paragraphs 75(5), 76(2)(b), 77, 214, 215 and 218 of the Companies Act.