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[2010] ZAGPJHC 9
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Hickman v Oban Infrastructure (Pty) Ltd and Others (2008/18332) [2010] ZAGPJHC 9 (3 March 2010)
IN THE SOUTH GAUTENG HIGH COURT
(JOHANNESBURG) CASE NO.
2008/18332
In the matter between:
HICKMAN, MARC HAROLD
Applicant
and
OBAN INFRASTRUCTURE (PTY) LTD
First Respondent
ROCKE, DAVID
Second
Respondent
WISON, GREORY MICHAEL
Third
Respondent
OOSTHUIZEN, RENE
Fourth
Respondent
JACOBS, FRANCOIS
Fifth
Respondent
REASONS FOR JUDGMENT
_____________________________________________
NATURE OF APPLICATION
The Applicant
is a minority shareholder in Oban Infrastructure (Pty) Ltd. He
claims that as a result of minority oppression, he is entitled
to an
order for the winding up of the company on just and equitable
grounds under Section 344(h) of the Companies Act 61 of 1973,
alternatively, that he is entitled to the purchase of his
shareholding by its other members under Section 252(3) of that Act.
Unless otherwise stated, a reference in this judgment to a section
will be a reference to a section in the Companies Act.
GROUNDS FOR RELIEF SOUGHT
The Applicant
contends that
he
has been excluded from the management of the company, that the
relationship between the Applicant and one of the other
shareholders,
Mr Wilson, has broken down by reason of his conduct
and that the other shareholders have allied themselves with Mr
Wilson.
The Applicant
sought
to rely on the just and equitable ground for winding up under
Section 344(h) by contending that the affairs of the company
were
run effectively as a partnership (i.e. a domestic type company) and
that there was a justifiable loss of confidence in the
way the other
shareholders were managing the company through their majority
control of the board of directors.
The complaint
against the other shareholders and directors
related
to the Applicant being excluded from the operations of the company’s
subsidiary, Oban Consulting (Pty) Ltd, a failure
to properly attend
to the business operations resulting in customer complaints,
unauthorised renovations, financial irregularities,
lack of
supervision of staff as well as trumped up charges levelled against
the Applicant, which he alleges, wrongly claimed
that he had failed
to perform his contractual obligations as an employee and had lost
interest in the affairs of the business.
There is also a broad
complaint made by the Applicant that the direction taken by the
company was detrimental to its client base
and not in accordance
with the underlying philosophy and ethos of the company.
The grounds for
claiming a buy-out of shares under Section 252
were
based on similar considerations.
Much of the
Applicant’s case as originally presented by
Mr
Willis
on the Applicant’s behalf focused on demonstrating that Oban
Infrastructure was a domestic company and that it was unlikely
that
the Applicant would obtain an equitable price for his shares if a
buy-out was ordered because of what was contended to be
a
manipulation of the books. Reliance was also placed on a report by
the company’s auditors which valued Oban Infrastructure
at
R1,46 million. This, the auditors said, was based on the following
factors; that the company was only able to survive another
three
years because it had lost key personnel, that the company has been
unable to replace lost revenue, that a senior member
would probably
retire in the near future and that the remaining shareholders do not
have the technical expertise to service any
new business. The
auditors also pointed to a large tax liability.
The Applicant
argued that no reliance could be placed on the audit. Not only was
it inaccurate, but was used to justify what was
contended to be a
ridiculously low value for the company’s shares of some R1,284
million in January 2008
.
On the basis that the Applicant was a 24.5% shareholder, he would
therefore be entitled to be paid out not more than some
R314 600,00.
In my view, no
point would be served in debating whether or not the nature of the
relationship
between
the parties was sufficient to establish a basis to bring the company
within the ambit of a domestic company for the purposes
of
triggering a Section 344(h) winding up. The reason is that the
company is clearly viable and has employees who may be affected
by
a winding up and their interests in continued employment outweigh
the Applicant’s concerns that he will not be able
to have a
fair price determined for the value of his shares. The view I take
is that there is a satisfactory alternative remedy
to a winding up
because the Applicant has made out a case for the purchase of his
shares under the provisions of Section 252
and that an order can be
properly framed to ensure that he will receive a fair price for his
shares. My reasons are set out
in the following paragraphs.
SECTION 252 AND ITS APPLICATION
The applicable
provisions of
Section
252 read as follows :
“
252
Members remedy in case of oppressive or unfairly prejudicial
conduct. –
(1) Any
member of a company who complains that any particular act or omission
of a company is unfairly prejudicial, unjust or inequitable,
or that
the affairs of the company are being conducted in a manner unfairly
prejudicial, unjust or inequitable to him or to some
part of the
members of the company, may, subject to the provisions of subsection
(2) make an application to the court for an order
under this section.
(3) If
on any such application it appears to the court that the particular
act or omission is unfairly prejudicial, unjust or inequitable,
or
that the company’s affairs are being conducted as aforesaid and
if the court considers it just and equitable, the court
may, with a
view to bringing to an end the matters complained of, make such order
as it thinks fit, whether for regulating the
future conduct of the
company’s affairs or for the purchase of the shares of any
members of the company by other members
thereof or by the company
and, in the case of a purchase by the company, for the reduction
accordingly of the company’s capital,
or otherwise.”
Mr
Bam
,
on behalf of the Respondents, contended firstly that the application
under Section 252 was misconceived because its provisions
could only
be triggered if the Applicant could demonstrate that the affairs of
the company were being conducted in an unfairly
prejudicial, unjust
or inequitable manner in relation to the Applicant. He argued that
this essential element was lacking because
the Respondents had not
admitted any of the averments relied upon by the Applicant, and that
in any event the acts complained
of related to the operating
company, Oban Consulting, and not Oban Infrastructure, being the
company in which the Applicant held
his shares.
Mr Bam also
argued
that all the complaints were either denied or related to matters
that were subject to majority decision and that the Applicant
cannot
be heard to complain if he elected to be bound by majority rule
through the corporate structure. This was linked to the
argument
that all the complaints related to the Applicant’s
dissatisfaction with the direction the company was taking since
Mr
Wilson became a shareholder and director and not to the oppression
of the Applicant as a minority shareholder.
It is necessary to
first deal with a
proper
interpretation of Section 252. It struck me that both parties
appeared to be guided by a case history check list of what
does and
does not fall within the purview of oppressive or unfairly
prejudicial conduct for the purposes of triggering Section
252.
It is clear that
the exclusion of a shareholder from the management of the company is
a recognised ground for invoking a Section
252 buy-out.
The
question is when the section can be legitimately applied. In my view
it is evident that where an active shareholder invests
a significant
amount of capital in a company (whether in cash, invention, labour
or expertise) in a company in return for shares
and where his
portion of the share capital (and any loans he may provide as a
shareholder or dividend sacrifices he makes) is
used to build up the
capital base (infrastructure) of the company or to create profit
(such as the purchase of stock and materials
for resale or
manufacture), then unless there are indications to the contrary, it
is unlikely that he will allow the other shareholders,
if they are
few in number, to manage the affairs of the company and place his
investment at risk without retaining a say with
regard the
management of the company.
This is the only
effective way of obtaining
some
protection for his investment in the company, namely through the
ability to persuade his fellow directors at board level.
More so
where there are restrictions on his ability to dispose of his shares
to others. It is illustrated by asking whether
the shareholder,
having regard to the number and nature of the other shareholdings,
intended to allow his investment to be left
entirely at the mercy of
management decisions made by the other shareholders without being
able to extract his investment when
he was removed from having the
power of persuasion in the management of its affairs. It is also
illustrated by asking whether
the shareholders contemplated that if
one of them was precluded from the company’s management or if
effectively thrown
out of the company as employee and director the
other shareholders could compel him to retain his capital investment
in the company.
In the present case the applicant was thrown out of
the company and offered a pittance for his shares failing which he
would
effectively forfeit his investment for their benefit as the
penalty.
Section 994(1) of
the
English
Companies Act 2006 allows a shareholder to
petition a Court
for relief if
:
“
(a) ...
the company’s affairs are being or have been conducted in a
manner which is unfairly prejudicial to the interest of
its members
generally or some part of the members (including at least himself) or
(b) that
any actual or proposed act or omission of the company (including any
act or omission on its behalf) is or would be so prejudicial.”
There is a common
thread running through both our and the English enactment
s.
It is the inclusion of the term “
unfairly
prejudicial
”,
a term which has a far more elastic content than simply oppressive
conduct against a minority shareholder.
In
Donaldson
Investments (Pty) Ltd v Anglo-Transvaal Collieries Ltd
1980 (4) SA 204
(T) at 209, the Court considered that the phrase
“
unfairly
prejudicial, unjust or inequitable
”
is intended to be interpreted purposively so as to advance the
remedy provided for under the section. It also is to be
contrasted
with the term “
oppressive
”
that was expressly removed from the body of that section.
Accordingly, whil
e
majority rule is a natural consequence of becoming a shareholder in
a company and does not of itself found a basis to trigger
Section
252 if the shareholder finds himself always in the minority (see
Sammel
v President Brand Gold Mining Co Ltd
1969 (3) SA 629
(AD) at 678) and while a loss of confidence in the
way in which the company’s affairs are being conducted does
not constitute
prejudice, injustice or inequity, nonetheless having
regard to whether the purpose of the conduct complained of is to
exclude
a shareholder from continuing to be involved in the
management of the company remains a significant basis for
considering the
invocation Section 252 relief.
I proceed to apply
these principles to the issues raised by the Respondents.
In
doing so, it is necessary to deal with the shareholding relationship
and structure adopted by the parties. It is also necessary
to
consider whether or not the facts which I am entitled to take into
account, where final relief is sought in motion proceedings,
demonstrate that the Applicant was excluded from the management of
the affairs of the company. I refer to the application of
Plascon-Evans
Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at pp 634E to 635B.
STRUCTURE OF SHAREHOLDING
Oban
Infrastructure is a holding company. It
was
established as a vehicle to hold the shares of two companies for the
benefit of the Applicant and his co-shareholders. Accordingly,
Oban
Infrastructure was not an operating company nor was it a company
administering the affairs of its two subsidiaries. It
was devised
solely to facilitate the holding of shares of two operating
subsidiaries for the benefit of the ultimate shareholders
of the
holding company by reference to the respective pro-rated value of
the operating subsidiary each had previously “owned”
and
to enable the shareholder to extract dividend income at the agreed
percentages.
The
two
operating companies were Oban Consulting, which was a 100%
subsidiary of Oban Infrastructure, and Reflex which was either
a 40%
or 30% held subsidiary.
At the time
relevant
to this case, the shareholders of Oban Infrastructure were the
Applicant, David Rocke, Gregory Wilson, Rene Oosthuizen
as to 24.5%
each and Francois Jacobs as to 2%. The position of Francois Jacobs
is not relevant to the determination of this
matter because his
nominal shareholding was acquired solely pursuant to an employee
share incentive arrangement.
THE RELATIONSHIP
BETWEEN SHAREHOLDERS
INTER SE
AND WITH THE COMPANY
Oban Infrastructure has a memorandum
and articles of association.
At the outset, I
am required to only have regard to the evidence presented by the
Respondents, including admissions made by them,
unless
the
circumstances identified in
Plascon-Evans
(supra)
are present.
Prior to Mr Wilson
becoming a shareholder
,
and the introduction of Reflex (a company which he had claimed was
effectively owned by him), the other shareholders all held
their
shares in Oban Consulting.
There were
extended negotiations regarding the introduction of Mr Wilson and
his company
.
Both were regarded by the shareholders of Oban Consulting to be
necessary for the future of Oban Consulting’s business.
Difficulties
arose when it appeared that Mr Wilson was not the sole beneficial
shareholder of Reflex. However, negotiations were advanced
and Oban
Consulting still wished to amalgamate Reflex’s business with
its own because of their synergies.
Various documents
were presented in
the
Court papers reflecting the arrangement between the parties which
resulted in the acquisition of the Reflex business through
the
creation of Oban Infrastructure as the holding company for both
Reflex and Oban Consulting. The relative value of the two
businesses was determined. It resulted in only some 30% of Reflex
being acquired by the holding company since this equated with
the
entire value of the Oban Consulting business.
The documents I
mentioned are effectively memoranda of understanding that passed
between the parties
in relation to the creation of the holding company and the
individual shareholdings. At that time, the parties were
considering
the introduction of yet another company. However this
did not materialise.
APPLICANT
’S
EXCLUSION FROM MANAGEMENT AND ITS EFFECT
It is common cause
that
on
25 January 2008, the Applicant received two formal notices of a
board meeting to be held on Friday, 8 February 2008, one in
respect
of Oban Infrastructure (Pty) Ltd (then known as Oban Services (Pty)
Ltd) and the other for Oban Consulting.
Each notice is in
identical terms and is signed by David Rocke as managing director.
The body of the notice
in respect of Oban Services reads :
“
The
purpose of the meeting is :
To
d
ecide
on whether to proceed with disciplinary action against Marc Hickman
for gross misconduct;
To
determine whether Marc Hickman should be suspended from work on full
pay, without loss of benefits pending the outcome of the
disciplinary
enquiry;
To
agree on whether Marc Hickman should be removed as a director from
Oban Services (Pty) Ltd”
In the case of
the Oban Consulting Board meeting notice, its name was substituted
for Oban Services in the last paragraph.
The evidence
before me
reveals
that the removal of the Applicant as a director was
a
fait accompli
before
the board meeting. This appears from the minute of a meeting held on
25 January 2008 by all the other shareholders, after
the Applicant
had been excused, which shows that in their capacity as directors
they had already decided to remove the Applicant
as a director.
Furthermore, the minute which attempts to set up non-performance as
the basis for the pre-determined decision
to dismiss the Applicant
is at odds with the tenor of the notice and, perhaps more
significantly, the records of the company
which demonstrate that the
Applicant was in fact producing revenue that accounted for some 50 %
of Oban Consulting’s turnover.
The Respondents
contend that all their actions were legitimate
and that by becoming a shareholder in the company, the Applicant
undertook by his contract to be bound by the majority decision
even
if they adversely affected his own rights as a shareholder or
otherwise prejudiced his interests. Reliance was placed on
Blackman,
Jooste and Everingham’s “
Commentary
on the Companies’ Act”
vol
2 at p 9-21 to that effect and which cites
Sammel
(supra) at p678.
Furthermore, the
Respondents
argue
that there was no agreement reached that any member had an automatic
right to participate in the management of either the
holding company
or the operating company.
I deal with each
in turn
.
I am satisfied
that the facts
which cannot be disputed by a bare denial reveal that fundamental to
the relationship of Applicant and the other shareholders
participating with their capital and business enterprises in the
affairs of the vehicles used to conduct the business of Oban
Consulting (and its predecessors) and Oban Infrastructure was that
they could not be excluded from a say in the management of
the
company by being removed as a director. Indeed the conduct of Mr
Wilson demonstrates an implicit requirement that his shareholding
gave him a say in the management of the business enterprises through
holding a directorship at both holding and operating company
level.
So too for the other main shareholders. Again Mr Jacobs’
nominal shareholding by reason of his employment is irrelevant
in
considering the position regarding the basis of the implicit
relationship between the other shareholders, since the basis
of his
acquisition of shares is far different.
By way of
illustration,
directors’
remuneration of all four investing shareholders was the same and
not insignificant, moreover shareholders intended
to restrict the
transfer of shares by acquiring a right of first refusal to obtain a
divesting shareholder’s interests.
Moreover the minutes of the
meeting of 25 January 2008, both while the Applicant was present and
also in his absence, was premised
on his continued shareholding
being inimical if he was required to resign. Historically the basis
of the relationship between
shareholders in Oban Consulting (and its
predecessor) was based on personal relationships with a shared
purpose and with each
investing shareholder participating in the
management of the business.
The housing of the
shareholders
’
respective businesses in a holding company and the structure adopted
which pro-rated their holding and maintained the
level of
participation and control without the acquisition of Reflex’
assets or shares by Oban Consulting or conversely
by Reflex, further
demonstrates the intention of the respective shareholders to
maintain an individual say in the control of
the operating and
holding companies.
It is significant
that the Respondents introduced and relied on a draft shareholders
agreement, which Mr Wilson claims met with
approval (including from
the Applicant) although not every shareholder signed it. Despite not
being signed by all shareholders
it expresses unequivocally the
nature of the business relationship between the parties within the
corporate vehicle chosen. No
document was produced suggesting that
another form of relationship was considered or that the parties had
reconsidered the basis
of their relationship within the company.
The provisions of the draft agreement are consistent with
the
investing shareholders enjoying a continued right to be involved in
the management of the company. This is illustrated by
the following
clauses:
“
2. SHARE
CAPITAL
2.2 Save as otherwise
provided in this agreement, unless the Shareholders shall agree in
writing to the contrary, the existing authorized
share capital of the
Company shall not be increased, nor shall any un-issued share capital
be allotted to any person or entity,
nor shall the rights attaching
to any of the shares in the Company be varied.
2.3 No shareholder
shall dispose of its shares in the Company save with the prior
written consent of the other Shareholder or in
accordance with any of
the express terms of this agreement.
3. SURETYSHIP AND
RECIPROCAL INDEMNITY
3.2 In the event of
any Shareholder being called upon by reason of its having furnished
any security, to remit on the Company’s
behalf an amount in
excess of its pro rata share of the relevant liability, in respect of
which:
3.2.1 all
Shareholders have bound themselves jointly and
severally
in writing; or
any one of the
Shareholders has bound itself with prior written consent of the
other Shareholders.
the other
Shareholders do hereby indemnify the Shareholder concerned to the
extent of its proportionate share of the relevant
liability, pro
rata to their respective shareholding in the Company and they
respectively undertake to make payment of their
share for which
they are responsible on request, and irrespective of whether the
Shareholder has yet paid the excess amount
claimed from it by the
creditor concerned. The parties renounce the benefits of exclusion
and division in respect of any
claim made under the clause.
4. SHAREHOLDER’S
LOAN ACCOUNT
4.1 No shareholder
will be obliged to lend or otherwise provide any funds to the company
unless that shareholder previously agreed
to in writing.
4.3 Loan
Accounts shall as far as possible be:
4.3.1 Pro rata to the
Shareholder’s respective shareholdings as existing from time to
time;
All subject to the
same terms as to payment of interest, repayment and otherwise;
Advanced by all
Shareholders simultaneously
4.7 No Shareholder
shall dispose of its Loan Account save with prior written consent of
the other shareholders or in accordance
with any of the express terms
of this Agreement.
6. DIRECTORS
6.5 Save as otherwise
contemplated elsewhere in this agreement resolutions must be approved
by one Director nominated by each shareholder,
in order to be of
force and effect.
6.7 Should a deadlock
arise at any Board meeting, the issue shall immediately be referred
for determination to a Shareholder’s
Meeting of the Company
which shall be convened immediately and the resolution of the
Shareholders regarding the matter so referred,
shall be the decision
of the Company regarding that matter and be binding on the Board.
6.8 If the
Shareholders cannot resolve the deadlock, the resolution shall fail
but such failure shall not constitute a ground for
the winding up of
the Company.
6.10 The Directors
shall consult each other on all matters affecting the conduct of the
company’s business and formal Board
meetings shall be held at
such frequencies as decided by the Board at such times and places as
the Board may determine. Any Director
shall by written notice to the
others, be entitled to convene a meeting of the Board.
6.12 Employment.
Directors agree to work full-time and exclusively for the Company.
Neither party shall be permitted to own an interest
in, operate,
join, control, participate directly or indirectly, or be connected as
an officer, employee, agent, independent contractor,
partner,
stockholder or principle of or in any company, partnership,
association, person or other entity soliciting orders for,
selling,
distributing or otherwise marketing products, goods, equipment and/or
services which directly or indirectly compete with
the business of
the Company, without the express written consent of the other, which
consent shall not be unreasonably withheld.
7. TRANSFERS OF SHARES
7.1 Unless otherwise
agreed in writing by all Shareholders, a Shareholder may sell or
otherwise dispose of the shares held by it
in the Company only if it
does so in items of this clause 7 and then only if, in one and the
same transaction, it disposes of all
its shares and its entire Loan
Account. The directors shall not approve or permit to be registered
the transfer of any shares by
a Shareholder unless transferred
together with the Loan Account and as provided in this clause.
10. DIVIDENDS
10.1 No dividend shall
be declared or paid by the Company unless the Company is solvent at
the date of the declaration of the dividend.
10.2 After providing
for fixed capital and working capital requirements dividends of not
less than 50% (fifty percent) of the after-tax
profits of the Company
shall be declared and paid on an annual basis, unless otherwise
agreed by the shareholders.”
Accordingly the
attempt to remove the Applicant as a director of Oban Infrastructure
and of Oban Consulting in terms of each of
the notices as read with
the
pre-determined decision apparent from the minutes of the meeting of
25 January 2008 constituted conduct that is unfairly prejudicial,
unjust and inequitable to him as contemplated under section 252(3)
of the Act.
Since a notice was
issue
d
and a decision was taken regarding the Applicant’s removal as
a director in both companies, the point raised by Mr Bam
that the
offending act only occurred in the operating company is incorrect.
Even if it had only occurred in the subsidiary company,
then by
reason of it being an operating company whose board decisions
materially affected the Applicant’s interests at
holding
company level, I would still have found that the affairs of the
holding company were being conducted in a manner unfairly
prejudicial to him by reason of the other shareholder’s use of
the operating company as a means of preventing the Applicant
from
having an effective say in the management of that company. On the
facts of this case, that would directly have prejudiced
the affairs
of the holding company in relation to the Applicant, since the
holding company was effectively concerned with the
distribution of
dividend income from that operating subsidiary to the ultimate
shareholders. See
Rackind
v Gross
[2005] EWCA Civ 655
;
[2005] 1 WLR 3505.
The reasons I have
given preclude the Respondents from relying on what amounts to an
implied compact that on becoming a shareholder
the Applicant
undertook by his contract to be bound by the majority decision even
if they adversely affected his own rights as
a shareholder or
otherwise prejudiced his interests. I have already mentioned that
Section 252 uses the phrase “
unfairly
prejudicial
”
which has regard more to what may be termed the legitimate
expectations, or implied terms of the relationship that the
parties
actually established, and which the court will recognise despite the
adoption of a standardised memorandum and articles
of association.
See generally
Gower
and Davies’ Principles of Modern Company Law (8
th
ed) para 20-8 to 20-9
referring
to Hoffmann LJ in
Saul
D Harrison & Sons Plc. Re
[1995] 1 BCLC 14
at p19 and the later change of terminology in
O’Neill
v Phillips
[1999] UKHL 24
;
[1999] 2 BCLC 1
HL.
The same reasons
dispose of t
he
Respondents further argument that there was no agreement reached
that any member had an automatic right to participate in the
management of either the holding company or the operating company. I
have found that there was a fundamental understanding between
the
parties, evidenced in the manner I have indicated earlier, including
the particular vehicle chosen to synergise their respective
businesses conducted through the utilisation of corporate entities.
There was
also a suggestion that the Applicant had voluntarily resigned. The
facts reveal that his removal as a director was a
fait
accompli
.
Put bluntly, he was pushed. It was their unfairly prejudicial
conduct in making it clear that he would be excluded from any
say in
the management of the company and would no longer be recognised as
holding a directorship which remains the reason for
the Applicant
being unable to participate in the management of the company and his
resignation was as a consequence of that,
not the cause.
I consider it unnecessary to deal
with the other arguments raised by the Applicant as to the
appropriateness of the section 252
remedy.
APPROPRIATE RELIEF
It is necessary
to
determine what relief would be just and equitable in the
circumstances so as to bring an end to the conduct complained of.
The First
Respondent through its subsidiaries is profitable and is a going
concern. I have already indicated that the interests
of employees in
an operational business must be taken into account as I do that none
of the Respondents wish to liquidate a company
that enjoys
substantial goodwill.
Each of the other
registered shareholders was joined and was represented.
None suggested an order in substitution of a buy-out should I find
in the Applicant’s favour.
A buy out by the Respondents of the
Applicant’s shareholding and loan account is the appropriate
remedy that will satisfy
the just and equitable requirements of
section 252(3) of the Act.
The parties
assisted in formulating an appropriate order should I find in favour
of the Applicant, and taking into account certain
considerations
that I considered necessary or advisable. I am satisfied that the
final form of the draft order
as
I amended it accords with what I consider to be appropriate in order
to achieve a fair and proper valuation.
ORDER
I accordingly made
the
following
order on 22 July 2009:
The 2
nd
,
3
rd
,
4
th
and 5
th
Respondent’s are ordered and directed to purchase the
Applicant’s shares and claims in the First Respondent,
including
the amounts owing to the Applicant in respect of his loan
account and shareholders dividends at a price to be determined by
Peter
Goldhawk (“the valuer”) in the proportion that
each of those Respondent’s shares in the 1
st
Respondent bears to the total number of shares that they hold in the
1
st
Respondent.
The valuer is to make the
determination in respect of the said purchase price within a period
of forty-five (45) days from the
date of this order and shall
deliver to all parties a written notice indicating the fair market
value of the shares in the 1
st
Respondent.
The costs of the valuer are to be
borne by the Applicant, 1
st,
2
nd
,
3
rd
,
4
th
and 5
th
Respondent’s jointly and severally.
In determining the aforesaid purchase
price the valuer shall act as an expert and not an arbitrator and:
The purchase price of the
Applicant’s shares is to be determined at fair market value
as at 28 January 2008, being the
value at which the shares would
have exchanged between a willing buyer and a willing seller,
neither being under compulsion,
each having full knowledge of the
relevant facts and with equity to both;;
The price must not be adjusted by
any discount for the reason that the Applicant has a minority
interest in the First Respondent;
The value of the shares shall be
determined on the basis that the 1
st
Respondent owns 100% of the issued ordinary shares in Oban
Consulting (Pty) and 33% of the ordinary shares in Reflex (Pty)
Ltd;
Each of the parties to this
Application shall fully and timeously co-operate with the valuer
and furnish all documentation,
information and explanations as the
valuer may require in the course of his determination;
The valuer shall have the following
further powers:
the right to make all
investigations necessary and in particular to obtain from the
parties or any third party or entity all
information and
documentation considered by the valuer reasonably necessary for
the valuer’s determination;
the right to obtain information
regarding the financial affairs from any bank, financial
institution or other entity where
monies may have been invested or
to which/whom monies may be owed by any of the entities relevant
to the determination;
the right to obtain and call for
balance sheets in respect of any entity or business relevant to
the determination, including
but not limited to Oban Consulting
(Pty) and Reflex (Pty) Ltd;
the right to inspect books of
account in respect of any company or entity, including but not
limited to bank statements, paid
cheques, deposit books and
personal statements of affairs and liabilities which the valuer
considers relevant for the determination;
the right to make physical
inspection of assets and take inventories;
the right to question any person or
party and obtain explanations deemed necessary for the purpose of
making the determination;
to do anything or take any such
steps as may reasonably be considered by the valuer to be relevant
to the valuer’s determination;
to be entitled to apply to this
Court for any further directions that the valuer shall or may
consider necessary in order
to perform his determination;
to take into account any matter
which the valuer considers relevant to determining what the valuer
considers to be a fair
price as at 28 January 2008 (“the
strike date”).
All of the parties hereto shall be
entitled to forward any documents or representations to the valuer
and shall be entitled to
copies of any documents or representations
made by any other party in respect of which other parties are
entitled to comment
in writing to the valuer.
The determination of the valuer shall
be final and binding on the parties.
Payment of the price so determined
shall be made within 7 days of such determination being made.
Upon a full discharge by the 2
nd
,
3
rd
,
4
th
and 5
th
Respondents of the Applicant’s claim referred to in paragraph
1 above and a full discharge of the 1
st
,
2
nd
,
3
rd
,
4
th
and 5
th
Respondent’s liability in respect of the purchase price
determined by the valuer, the Applicant shall transfer his
shareholding
in the 1
st
Respondent to the 2
nd
,
3
rd
,
4
th
and 5
th
Respondent’s in the proportion that each of these Respondent’s
shares in the 1
st
Respondent bears to the total number of shares that they hold in the
1
st
Respondent.
Any costs borne by any of the 1
st
,
2
nd
,
3
rd
,
4
th
and 5
th
Respondents in respect of this Application (i.e. under case number
2008/18332) shall be excluded in the valuer’s determination,
and the purchase price is accordingly to be determined as if such
costs had not been borne by any of the 1
st
,
2
nd
,
3
rd
,
4
th
and 5
th
Respondents.
The 1
st
,
2
nd
,
3
rd
,
4
th
and 5
th
Respondent’s are directed to pay the costs of this Application
jointly and severally including the costs consequent upon
the
employment of two Counsel.
B
S SPILG AJ
DATES
HEARINGS:
29/06/2009 and 17/07/2009
ORDER:
22/07/2010
LEGAL
REPRESENTATIVES
APPLICANT; ADV
N KADES
ADV
RS WILLIS
ADV
SB ROSE
ADAM
WITKIN-MITCHELL ATTORNEYS
RESPONDENT:
ADV A BHAM
ADV
D LEIBOWITZ
DENEYS
REITZ