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[2012] ZAGPJHC 82
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Ravinsky and Another v Gossel and Another (10/20152) [2012] ZAGPJHC 82 (13 April 2012)
REPORTABLE
IN THE SOUTH GAUTENG HIGH
COURT, JOHANNESBURG
(REPUBLIC OF SOUTH
AFRICA)
APPEAL CASE NO.:
A5040/2011
CASE NO.: 10/20152
DATE:13/04/2012
In the matter of:
RAVINSKY,
SHARLENE
.....................................................................
First
Appellant
JANKELOWITZ, LEON
SELWYN
…................................................
Second
Appellant
and
GOSSEL, ROBERT
DAVID
...............................................................
First
Respondent
GOSSEL’S RECORD
CLUB (PTY) LTD
t/a GRC
PROPERTIES
......................................................................
Second
Respondent
JUDGMENT
SATCHWELL J:
INTRODUCTION
This is an appeal
against an order of Masipa J dismissing appellants’
application for a final winding up order of second
respondent (‘the
company’). We are required to determine whether or not it is
“just and equitable”
that the company should be wound
up in terms of Section 344(h) of the Companies Act, 61 of 1973.
The company was
incorporated in 1968. In 1973 the company purchased a stand and a
shopping centre was built. This was done with
the purpose of
providing accommodation for the Gossel furnishing business. The
company continues to carry on business as a property
owning company
collecting rentals from tenants in those buildings on that property.
This is the sole source of income for the
company.
The first respondent
(‘Gossel’) was, with his father, one of three founding
shareholders and directors. By 1998, both
Gossel’s father and
mother were deceased and he owned 50% (fifty per centum) of the
issued shares of the company. From
1998 onwards Gossel was the sole
director of the company. In 2002 the third shareholder passed away
and the appellants (‘Ravinsky’
and ‘Jankelowitz’)
each inherited a 25% (twenty five per centum) shareholding.
Ravinsky controls her and her brother’s
combined 50% (fifty
per centum) shareholding. Gossel continued as the sole director of
the company until Ravinsky was appointed
a director in 2004.
Notwithstanding, that
the company remains fully functional and profitable, Ravinsky seeks
to have the company wound up. In summary
she complains that the
lawful management of the company is so compromised that only the
appointment of a liquidator would ensure
resolution of her
unresolvable complaints. She submits that it would be “just
and equitable” to wind up the company
for a number of reasons:
the management of the company is not conducted in accordance with
the Articles of Association; Gossel
acts ultra vires his powers and
excludes Ravinsky from making any contribution towards the
management of the company; Ravinsky
has no confidence in Gossel’s
management of the company and there is deadlock between them on many
issues. Understandably,
some of these complaints overlap with
others or are intertwined with each other. I shall attempt to
distinguish and deal with
them in a coherent manner.
NON COMPLIANCE WITH THE
ARTICLES OF ASSOCIATION
The Articles of
Association provide that there “shall be not less than three”
directors of the company.
1
From 1968 to 1998 there were three directors. For the period 1998
until 2004, there was only one director - viz Gossel. In 2004,
Ravinsky was also appointed a director.
It is Ravinsky’s
view that the failure to ensure the full complement of directors has
enabled a situation to develop where
Gossel has arrogated unto
himself all powers with regard to the management of the company and
where Ravinsky is unable to make
any meaningful interventions since
there is an impasse in the 50% voting powers of the two directors
2
.
There may be issues on
which the two directors have been unable to reach agreement –
ranging from their respective statuss
to the nitty gritty of the
management and finances of the company. In part these difficulties
may emanate from the history of
the incorporation and management of
the company, in part from their different perceptions of the role of
a company director,
in part from mistrust from both sides of either
their competency or trustworthiness. It is certainly possible that
these differences
of opinion would never have even arisen if there
had been the full quorum of directors as provided for by the
Articles of Association.
What is immediately
apparent is that none of the shareholders and neither of the
directors have ever sought to secure the appointment
of a third
director in compliance with the relevant clause of the Articles. No
one has attempted to ensure that the provisions
of clause 65
pertaining to the quorum of directors are implemented. We are
referred to no correspondence, minutes of meeting
or discussions on
this issue. It appears to have been entirely unconsidered and
unexplored by anyone.
Ravinsky appears content
to have made the complaint that there has not been and continues not
to be compliance with the Articles
but has, herself, taken no steps
to resolve the situation.
When this complaint was
made by Ravinsky in her founding affidavit, Gossel responded that he
had not “been mindful of the
requirement in the articles”
but that this “has never hampered the company’s
operations” and there had
“never been a deadlock at
board level in the history of the company”.
He then went on to
tender that
“In any event I
have no difficulty if the company takes steps to appoint a neutral,
independent “professional”
third director to the board of
the company. If we cannot reach mutual agreement on who to appoint,
this appointment could be made
by an independent body such as the
South African Institute of Chartered Accountants or the Law Society;
it is appropriate that
the director appointed has business
experience. This will resolve any concerns which Sharlene has in
regard to Board decisions…”
The response of Ravinsky
has been to state that “the appointment of a further director
would not, at this stage, resolve
matters because the conduct of the
first respondent has been such that if what I believe to be the
position is established, action
would have to be instituted against
the first respondent to remove him as a director.”
In the first place, this
court is not in a position to deal with the allegations made by
Ravinsky against Gossel. We cannot, therefore,
pre-empt the
situation once a board is properly constituted. In the second
place, the appointment of a further director would
enable any
investigations or discussions which it may be appropriate to
conduct. Thirdly, if any decisions adverse to Gossel
were required,
then the two other directors would be in a position to make them and
prevail on a majority basis.
Further Ravinsky has
responded that it is hard to imagine any person who would willingly
take on the harrowing task of being
an umpire between Gossel and
herself in managing the Company. There would be expensive and
time-consuming arguments at every
turn. Indeed, at the hearing
of the appeal, it was argued for Ravinsky that the appointment of
the required third director
would result in expenditure of time,
money and energy on resolution of “constant day to day
squabbling about the running
of the company”.
This approach seems to
me to be extremely short sighted. With three directors in place,
there should be no need for any squabbling
about the minutiae of the
company’s affairs. Firstly, the nature of the business of this
company hardly requires the day
to day involvement of each director
– it rents out property to established tenants and maintains
such property. Secondly,
it is difficult to comprehend why it is
anticipated that there will always be squabbling - after all the
company was run for
the benefit of shareholders for many years
without any squabbling and those issues to which Ravinsky has made
reference can
either be resolved by majority vote and by delegation
of daily tasks to an appropriate person. Finally, there will be
three
directors which will ensure that three minds will approach
such issues as would reasonably require the attention of the board
and such issues will be determined by majority vote.
It is further complained
that Gossel has, contrary to the provisions of the Articles,
arrogated to himself the title of Managing
Director and Chairman of
the company as well as the powers which are associated with or flow
from such position. Ravinsky maintains
that Gossel has not been
validly appointed a managing director and, in any event, that this
position cannot continue on a permanent
basis. Gossel maintains that
he has “been Managing Director since 1974” i.e. from the
time that the property was
purchased and the shopping centre built.
The Articles of
Association permit the appointment of “one or more of their
body to the office of managing director or manager
for such term and
at such remuneration (whether by way of salary or commission or
participation in profits or partly in one way
and partly in another)
as they may think fit”.
3
Further, the directors may “entrust to or confer upon a
managing director or manager for the time being such of the powers
and authorities vested in them as they may think fit and ….
For such time and to be exercised for such objects and purposes...as
they may think expedient.”
4
There is nothing to
gainsay that Gossel was appointed the first and only managing
director of the company. Indeed, with the death
of the other initial
shareholders and directors and his sole directorship, it could
hardly have been otherwise.
Not only the Articles of
Association but also common business sense dictates that any
appointment as “manager” or
“managing director”
is an appointment which may be revisited from time to time –
either upon expiry of the
term initially determined or as and when
the situation is believed to require it. There can certainly be
nothing irrevocable
about Gossel’s appointment.
We have not been
referred to any attempt to convene a meeting of directors to change
the situation nor to any attempt to convene
a general meeting of
shareholders to terminate his occupation this office. One can
appreciate that Ravinsky’s response
would have been that such
an exercise would have been purposeless since Gossel’s vote
would have cancelled out her vote.
This is a potential impasse
which has not happened and which will not arise as and when a third
director is appointed in compliance
with the Articles.
Again it is notable that
this is yet another issue which has not been properly raised at any
meeting – either of directors
or shareholders. Ravinsky has
made many complaints concerning both Gossel’s attitude towards
her and his proprietorial
attitude towards the management of the
company. Yet Ravinsky has not proposed herself as managing director,
she has not indicated
that she could or should occupy this position,
she has not responded favourably to the appointment of a further
director who
might well be a suitable person for appointment to this
office.
Again, one returns to
the purpose of the Articles of Association. The aggrieved
shareholders and the aggrieved director are perfectly
entitled to
ensure that both they and Gossel ensure that the Articles are
implemented. Such implementation includes the appointment
of a
further director so that the board of directors will be quorate and
there will not be a stalemate in voting at board meetings.
This is
a responsibility of all shareholders and directors – not only
Gossel. Once this is done, then meetings can be
convened and
resolutions properly tabled and discussed and voted upon. To date
this has not happened.
EXCLUSION OF THE SECOND
DIRECTOR
A further complaint is
that Gossel, in abrogating to himself all decision-making powers
concerning the company and assuming
the title and role of managing
director, has excluded Ravinsky from any management role in the
affairs of the company. .
It is trite that the
every director stands in a fiduciary relationship towards the
company and that he or she must exercise their
powers in good faith
and do what they can to serve the best interests of the company and
not their own. Quite obviously, Ravinsky
must be in possession of
all information pertaining to the affairs of the company so that she
can apply her mind to the affairs
of the company. She has direct
online access to the company’s banking account. There is
nothing in the papers before
us to suggest that Gossel has ignored
Ravinsky’s position as director, denied her access to
information, concealed decisions
from her. Indeed, the many emails
emanating from Ravinsky demanding or requesting information all seem
to have been answered
in some detail – some would say too much
detail. The minutes of meetings indicate Ravinsky has been present
and voted
thereat. The financial statements (and the emails between
the parties) indicate Ravinsky has been furnished with all financial
information and has approved of same by her signature.
However, the crux of
Ravinsky’s dissatisfaction is that Gossel’s “high-
handed approach ” and “unilateral”
behaviour has
resulted in an unlawful denial of her right to participate in the
management of the company. Ravinsky asserts
that she is entitled
equally with Gossel to run the company. She relies upon the
Articles of Association which provide
that “the business of
the company shall be managed by the directors”.
5
However, that Ravinsky
is a director of the company does not necessarily involve her
involvement in the nitty gritty of the
day -to -day running of
company. That the “business of the company is to be managed
by the directors” is a fundamental
statement of obligations
of all directors but this is not a statement that each director of
each company shall fill out receipts,
type letters, post the
letters, negotiate the terms of each contract, draft and sign same
and generally be involved in the
daily affairs of the company –
which are primarily administration functions. It is a statement
as to the overall policy
and fiduciary oversight required of each
director in relation to the affairs of the company.
In the present case, as
already discussed the Articles of Association permit the
appointment of a “ managing director
or manager”
6
7
.
Furthermore, the Articles permit the directors to entrust
certain powers and authorities vested in them upon such managing
director or manager
8
.
Our law well knows the distinction between executive or managing
director and non-executive director. The nomenclature
is not
important: delegation to an executive or managing director is
“
merely for the more convenient discharge of the business of the
company
”
9
.
This
was discussed in
Fisheries Development
Corporation of SA Ltd v Jorgensen and Another
1980 (4) SA 156
(W):
“
The
director’s duty is to observe the utmost good faith towards the
company, and in discharging that duty he is required to
exercise an
independent judgment and to take decisions according to the best
interests of the company as his principal.”
10
“it is necessary to have regard to relevant aspects of a
director’s duty of care and skill. In England certain
principles
have emerged from the decided cases on that duty....The
extent of a director’s duty of care and skill depends to a
considerable
degree to the nature of the company’s business and
on any particular obligations assumed by or assigned to him. See
In
re City Equitable Fire Insurance Co 1925 407 at 427. Compare Wolpert
v Uitzigt Properties (Pty) Ltd and others
1961 (2) SA 257
(W) at
267D-F. I
n that regard there is a
difference between the so-called full-time or executive directors,
who participates in the day to day management
of the company’s
affairs of a portion thereof, and the non executive director who has
not undertaken any special obligations.
The latter is not bound to
give continuous attention to the affairs of his company. His duties
are of an intermittent nature to
be performed at periodical board
meetings, and at any other meetings which may require his attention.
He is not, however, bound
to attend all meetings, though he ought to
whenever he is reasonable able to do so.
In
re City Equitable Fire case supra at 429
.
Of course if he has reasonable grounds for believing such to be
necessary, he ought to call for further meetings. Nowhere are
his
duties and qualifications listed as being equal to those of an
auditor or accountant. Nor is he required to have special acumen
or
expertise, or singular ability or intelligence, or even experience in
the business of the company.
In re
Brazilian Rubber Plantations and Estates Ltd
(1911) 1 Ch 425
at 437.
He is nevertheless expected to exercise the care which can reasonably
be expected of a person with his knowledge and experience
.
City Equitable Fire case supra at 428-9; and Brazilian Rubber case
supra at 427.”
11
In present instance,
Gossel has certainly been the de facto managing director for a
number of years when he was the only
appointed director
12
.
There is nothing to gainsay his contention that he was appointed to
this position as long ago as 1974. Ravinsky was initially,
upon
inheritance of her shareholding, content to leave the day to day
running and management of the company in the hands of
Gossel. When
she was appointed a director in 2004, Ravinsky continued to allow de
facto control to remain vested in Gossel. In
2006 Ravinsky signed an
authorisation for Gossel to “single handedly” conduct “
any other financial activities
that might be required for the
operation” of the company. Once the board of directors is
quorate, then his appointment
could be reconsidered.
Where there has been no
delegation by the board of directors then the powers of management
are “exercised by means of
resolutions adopted at meetings of
directors or by a written decision signed by all directors”
13
or by each director involving him or herself in the daily
administration of the company. Ravinsky may certainly have the
time to devote to the business and may wish to do so - she would
not be excluded from so doing - “in the absence of clear
language to this effect”
14
– and “clear language” is where a “managing
director or manager” can be and has been appointed.
In argument Ravinsky
relied upon authorities which, with respect, correctly state that a
director has a right to complain if “
if he
is prevented from carrying out his duties and exercising his rights
as a director”
15
but reading of those judgments discloses very different facts from
the present case: unilateral sacking of a managing director
by
another director and not the board; the board resolving that a
director vacate his office on grounds of conflict of interests;
exclusion of a director from meetings of the board and removal of
his name from the company’s letterhead; obstacles
placed in
the way of a director when he wished to obtain information as to the
affairs of the company.
Where reliance is placed upon
other English and South African authorities to argue that Ravinsky
cannot be prevented from participation
in the management of the
company, it should be noted that those authorities were concerned
with exclusion of directors in very
different and not analogous
circumstances
16
.
One exchange of
communication between Ravinsky and Gossel suffices to contextualise
her complaint. During April 2010 Ravinsky
emailed Gossel several
times demanding:
an explanation for a
list of expenses appearing on the company bank account – to
which Ravinsky has internet access; an
explanation for expenses in
the Profit and Loss statement prepared from files then in the
possession of the company auditor;
copies of Telkom and Vodacom
statements “to verify every call made”; copy of a slip
from Shoprite Checkers in
the amount of R 92.16 incurred to purchase
four lever arch files; details of charges for R 168.00 on a credit
card; explanations
for two payments made to Gossel – one
for R 8,955.29 and one for R 34,54; explanations for a list of
payments appearing
on the bank account;
These demands for
information were accompanied by statements such as “As we are
50% shareholders of this company and I am
a Director you have a
fiduciary obligation to let us know what you are spending the money
on – as half the money is ours”.
Each and every one of
these queries received a response with details. It was pointed out
that some of the information was with
the auditors and that other
of the information would be dealt with by the auditors in the
forthcoming audit.
There is no complaint
that any request or demand has gone unanswered or that there has
been any lack of probity on the part of
Gossel in incurring any one
of the expenses in respect of which detail was demanded.
It is then hardly
surprising that in one email, Gossel remonstrates with Ravinsky that
her demands of reports on specific amounts
with proof thereof “while
not waiting for the normal process of auditing to take place, it
means that you consider that
there is a clear case of suspected
misconduct by me as Managing Director, as well as a lack of
confidence in the company auditor.”
He goes on to say that
“
I will not waste
my time carrying out a forensic analysis on your behalf to satisfy
your totally unfounded mistrust. I will only
respond to queries that
are within reason and provide reports on information I believe is
salient. As the Managing Director I have
the right to discharge my
duties without interference from co-directors, thus by you demanding
details about each and every small
payment made, you are clearly
trying to make a nuisance of yourself, which is adversely affecting
the running of the company.”
Gossel again invited
Ravinsky to page through all the documentation at the auditor’s
office and even to have a forensic audit
carried out by a qualified
forensic auditor at her own expense.
Ravinsky claims that
Gossel has improperly “enriched himself” or his
daughter and that there are “suspicious
transactions falling
outside the scope of operations of the company”.
The first issue
concerns Gossels remuneration which comprises both fees and
commissions. It is complained that Gossel has
appropriated monies
without prior consultation with Ravinsky and without any resolution
authorising same. The complaint continues
that “the only
skill required” in running this business is the ability to
organise tenants and that the quantum
of remuneration received in
unjustified.
The Articles provide
that “the remuneration of directors shall from time to time be
determined by the company in general
meeting” and that
directors’ remuneration, tenure of office and otherwise must
be “as may be arranged by
the directors”.
17
One can only note, yet again, that this issue has not been
raised in a general meeting, that this issue has not been tabled
at
a meeting of the board of directors, that no steps have been taken
to ensure that there are not less than three directors
and that a
majority vote can prevail. It is also noteworthy that Ravinsky has
accepted the audited financial statements of the
company and
signified her acceptance by signing of same.
The second issue
concerns Gossel’s employment of his daughter Liesa to
negotiate with the City Council of Johannesburg
for reduction of
claims levied by the Council against the company. Again it is
complained that Gossel was never authorised
to enter into any
arrangement with Liesa. It is submitted that her engagement and
payment is not authorised by the Articles
but this is incorrect –
employment is authorised. Ravinsky goes further to assert that the
more appropriate means to
resolve the alleged indebtedness of the
company to the Council would have been to retain attorneys and
litigate.
This court cannot
comment on the advisability of litigation as opposed to negotiation.
Further this court cannot comment on the
success or otherwise of
the services rendered by Liesa. One is constrained to remark
yet again on the absence of meetings
at which there is any
deadlock, the signature and therefore acceptance by Ravinsky of
the audited financial statements of
the company, the failure to
initiate any steps to appoint one or even three additional directors
to the board ( as permitted
in the Articles).
The third issue is
Gossel’s use of the nomenclature of ‘managing director’
and ‘chairman’. I
have already discussed his de facto
occupation of the position of managing director which position is
authorised in the Articles
and to which he claims he was appointed.
The title ‘chairman’ is of no relevance to this
litigation since we have
not been referred to any instance where any
chairperson has ever cast an additional vote to resolve any
impasse.
It is noted that none
of Ravinsky’s attorneys or accountants to whom statements,
reports, accounts, records were provided
ever raised any
allegations of impropriety on the part of Gossel.
Again, the exercise of
management functions by Gossel clearly have their origins in the
history and development of the company
and its operations. Such
status and such functions and such exercise can be revisited at the
appropriate meeting of the board
of directors – when properly
constituted.
Where reliance is placed
by Ravinsky upon a series of English and some South African
authorities dealing with “domestic”
companies
18
,
I shall later deal with such companies - suffice to say that this
company does not fall within that genus.
DEADLOCK
Ravinsky maintains that
there is now a “deadlock” within the company. This
deadlock appears be based on two premises:
the first is the
impossibility of either agreement or majority rule; the second is
the complete lack of confidence and trust
between herself and
Gossel.
The first contention is
expressed thus: On the one hand majority rule is impossible because
the shareholdings are equally split
between herself and Gossel, and
there are only two directors whose votes would cancel each other
out. On the other hand unanimous
agreement between Gossel and
Ravinsky is impossible because of their mutual distrust and
animosity. The result, claims Ravinsky,
is that the company as a
whole can in reality never make a legally valid decision or pass a
valid resolution.
The difficulty with
these submissions is the absence of any evidence or any instance
where the company has been unable to function
by reason of inability
to reach agreement – at either shareholder or board level.
Annual financial statements have been
approved by both directors,
dividends have been declared and paid, the business is running
profitably.
The second contention
sees Ravinsky take the argument further: Gossel’s modus
operandi is always to take decisions first
and then subsequently
inform Ravinsky thereof. This high handed attitude has done much to
engender the lack of confidence experienced
by Ravinsky in Gossel.
She believes that some of his business decisions have been
questionable but even if they were not, his
mode of operation
inspires a loss of confidence in his running of the company.
These submissions rely
upon an appreciation that the company is what is known as a
“domestic company” which would
entitle this court to go
behind the legal entity of the company itself to examine the
expectations, rights and obligations of
the members inter se
arising from the basic agreement or understanding between them.
19
.
In the present case I am in agreement with the learned judge in
the court a quo - this is not a domestic company. There
is no
continuing “personal relationship” underlying this
company. The members inter se have no “shared
purposes,
co-operation and mutual confidence” which removes this
company from the ranks of all other commercial investments.
We
are not here dealing with an association or partnership of
doctors or pharmacists or other collegial businesspeople
who “shall
participate in the conduct of the business” in the sense
that they offer expertise or skills which
comprise the very nature
of the business itself. Save for the right of pre-emption there
is no “restriction on the members
rights to transfer their
shares”.
20
The particular
considerations relevant to a ‘domestic company’ in
deadlock are therefore not applicable in the
present case.
DEADLOCK ON SALE
Ravinsky complains that
neither she nor her brother have “received market related or
real benefits” from their respective
or combined
shareholdings. Clearly, this indicates that they wish, as Gossel
maintains, to unlock the value in that shareholding(s)
by disposal
of the assets of the company – either to Gossel or to a third
party on the open market.
It is common cause on
the papers that there have been a series of offers to sell
Ravinsky and Jankelowitz shareholdings to Gossel
- apparently
commencing in May 2006 until April 2010.
21
Ravinsky and her brother have also proposed that attempts should
be made to obtain a third party purchaser - no details of
any such
exercise have been given save that Gossel says that he furnished
Ravinsky with certain information as to tenants and
rentals
specifically for such purpose. Ravinsky and her brother have also
demanded that the property should be disposed
of at public auction
which proposal Gossel felt would be financially unwise.
Gossel agreed that he
would be amenable to sell his shareholding along with Ravinsky and
Jankelowitz so that the entire company
or the entire property
would be placed on the open market – subject to the conditions
that he did not agree to the property/
his shareholding being
marketed at a fixed amount and Ravinsky could not represent a value
for his shares as part of any deal
without his written approval. “In
other words, I was prepared to consider selling my shares, with
theirs, at a market related
price in the normal course”.
The refusal of Gossel to
purchase Ravinsky and Jankelowitz shareholdings at their proposed
prices, the refusal of Gossel to acquiesce
in sale of the property
on public auction and possibly the failure by Ravinsky and
Jankelowitz to secure a third party purchaser
for their shareholding
appears to have triggered a series of responses- queries on the
minutiae of Gossel’s management
of the business, attempts
to curtail Gossel’s banking powers in respect of the company
financial affairs, demands for
dividend distributions as also
“rental distributions” and “matching payments”,
intimations and then
clear warnings of the intention to have the
company wound up.
Clearly the shareholders
and directors are not ad idem on the value to them of their
investment – Ravinsky and Jankelowitz
and her brother wish to
disinvest while Gossel wishes to continue the investment. It is in
the light of this background, that
Ravinsky’s approach
towards both Gossel and the running of the company can be
understood.
I am in agreement with
Gossel that Ravinsky has attempted to “contrive a deadlock”
. There is not one single instance
to which Ravinsky has pointed
in her papers that indicate that Gossel has been disregarding of
her fiduciary duties and obligations
as a director; she has not
referred us to any refusal or failure by Gossel to furnish her with
information; she claims to
disagree with his remuneration yet she
has signed the financial statements once she has perused the
original documentation prior
to and after the audit; similarly she
claims to disapprove of the employment of Liesa yet she has signed
the financials.
The many and detailed
queries and complaints and implicit allegations in the emails of
Ravinsky to Gossel certainly suggest that
Ravinsky has attempted to
engineer an unpleasant state of affairs
22
– to which Gossel seems to have been carefully invulnerable.
No decision is made on this point and nothing need be referred
to
oral evidence.
Insofar as Ravinsky
holds the view that Gossel has made business and other decisions
which are not in the best interests of the
company – for
example that the company should pursue litigation against the City
Council - this court can make no finding
on that situation –
save to comment that negotiation does not necessarily appear to be
an unwise or unprofitable business
decision when compared with
litigation.
OTHER REMEDY
It is only if Ravinsky
has satisfied the court that she is entitled to some relief and that
it is ”just and equitable”
that the company should be
wound up that this court would look to Gossel to prove on a
balance of probabilities that Ravinsky
has some other remedy and
that she is acting unreasonably in not preferring it.”
23
It is my view that Ravinsky has failed to discharge the onus
resting upon her that she is entitled to relief.
However, even if
Ravinsky had shown that the court should come to her aid, I am
not satisfied that there are not other remedies
available to her and
Jankelowitz.
Ravinsky states that
various avenues of action were attempted so as to resolve the
situation of deadlock prior to institution
of litigation. She names
only the offer by Ravinsky and Jankelowitz of their combined
shareholding for sale to Gossel. This
came to nothing because
Gossel was not prepared to purchased their shares – Gossel
says he did not want to incur indebtedness
so to do while Ravinsky
says he was looking only to obtain the shares at a knock-down price.
Thereafter Ravinsky
states that consideration was given to other possible options –
ranging from seeking relief in terms
of section 252 of the Companies
Act to selling her and her brother’s shareholding on the open
market. She believed that
the first option would not resolve the
conflict between Ravinsky and Gossel and within the company whilst
the second option would
not result in fair market value.
A third option has been
dealt with in some detail by Gossel – that the total
shareholding or the company itself be made
available for sale on the
open market at fair value. The conditions he attaches to this
proposal appear eminently reasonable
- he is certainly entitled to
have some say in the value to be sought and obtained. Such
conditions do not render this option
impossible to implement and it
remains a real one. This solution has apparently not commended
itself to Ravinsky. She would
prefer to have the company wound up
resulting in liquidation costs, a potentially forced sale and
uncertainty for tenants.
A further remedy, to
which Gossel has committed himself is the appointment of a further
director which has been discussed throughout
this judgment.
CONCLUSION
It is my view that the
circumstances are not such that render it “just and equitable”
that the company be wound up.
This application is, at best,
premature. The directors ought first to ensure that the board of
directors is quorate –
that may ameliorate all problems.
Thereafter, the management of the daily business of the company
ought to be delegated to
an executive director or allocated between
all directors or a manager be employed. The roles of the directors
can easily be
clarified and must then be accepted.
The company remains well
managed, profitable and fully functional. The property assets are
assessed to be in good condition;
the tenants are of long standing;
the returns have been consistent throughout the vagaries of the
economy. The company
has substantial cash reserves - in the bank
and invested in interest bearing accounts. Shareholders receive
regular dividends.
Liquidation of such a company is undesirable.
This is not a ‘domestic
company’ where quarrelling and mistrust should be allowed to
terminate the corporate entity.
No “contest of virtue”
24
needs be adjudicated in the present case.
There is nothing before
this court to show that Ravinsky has been deprived of her
opportunity to exercise her duties as a director
(where she is not
an executive director). Her attempts to direct or mange or oversee
the administration of the company have
been misdirected but do not
constitute sufficient reason to consider the winding up of this
company.
In the result :
The appeal is dismissed.
The appellants are to
pay the respondent’s costs including the costs attendant upon
the employment of senior counsel.
DATED AT JOHANNESBURG
THIS 13TH APRIL 2012
-------------------------------
Satchwell J
I agree
_________________
Tsoka J
Date of hearing: 10th
April 2012
Date of Judgement : 13th
April 2012
1
Clause 65.
2
In terms of the Memorandum and Articles each
director and member of the company exercises one vote for each
share.
3
Clause 72
4
Clause 73
5
Clause 71
6
Clause 72
7
The distinction between the two is known to our law
.
8
Clause 73
9
Robinson v Imroth
1917 WLD 178
10
163 D-F.
11
165-166F-B.
12
Gossel states that, while he was the sole director of the company,
“
there was no objection to my sole
directorship by the other shareholders. They were quite content to
leave the day to day management
of the company to me”.
He continued as sole director even after Ravinsky and Jankelowitz
became shareholders.
13
Van Tonder supra
14
Robinson supra
15
Robinson supra
16
For example, implementation of the sale of the
major assets of the company pursuant to the policy of the board
nevertheless
requires reference to the board for implementation of
that policy –
see Novick and
Another v Comair Holdings Ltd and Others 1979(2) SA 116
17
Clause 87.
18
For example a partnership of four practising
doctors as in
Erasmus v Pentamed
Investments (Pty) Ltd
1982 (1) SA 178
W
19
Blackman, Jooste, Everingham,
Commentary on the Companies Act
,
Vol 3, 14-111/14-116
20
See Emphy v Pacer Properties (Pty) Ltd
1979 (3) SA 363
(D);
see
Erasmus
v Pentamed Investments (Pty) Ltd
1982 (1) SA 178 (W), 184
21
The sums proposed range from R 775 000 in May 2006, R 4 000 000 in
September 2009, R 2 900 000 in October 2009, R 2 700 000
in
December 2009.
22
See
Emphy v Pacer Properties (supra), 368-9
23
Moosa, No v Mavjee Bhawan (Pty) Ltd And Another
1967 (3) SA 131
(T)
24
Bayly and Others v Knowles
2010 (4) SA 548
SCA