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[2010] ZASCA 161
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Louw and Other v Nel (45/10) [2010] ZASCA 161; 2011 (2) SA 172 (SCA) ; [2011] 2 All SA 495 (SCA) (1 December 2010)
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 45/10
JOHANNES
PETRUS LOUW
...........................................................................
First
Appellant
WILLEM
HOFMEYR DU PREEZ
.................................................................
Second
Appellant
LUCAS
LEJARA MOTHUPI
............................................................................
Third
Appellant
KURT
ANDY LINDOOR
................................................................................
Fourth
Appellant
LEJARA
BUSINESS INTELLIGENCE (PTY) LTD
...........................................
Fifth Appellant
LEJARA
INVESTMENT HOLDINGS
...............................................................
Sixth
Appellant
LEJARA
ERP SOLUTIONS (PTY) LTD
.....................................................
Seventh
Appellant
LEJARA
INFORMATION MANAGEMENT (PTY) LTD
.................................
Eighth
Appellant
LEJARA
ENTERPRISE SOLUTIONS (PTY) LTD
...........................................
Ninth
Appellant
LEJARA
ENTERPRISE OUTSOURCING (PTY) LTD
....................................
Tenth
Appellant
LEJARA
CHANGE MANAGEMENT (PTY) LTD
.......................................
Eleventh
Appellant
and
CHRISTIAAN
HENDRIK NEL
...............................................................................
Respondent
___________________________________________________________________
Neutral
citation:
Louw v Nel
(45/10)
[2010] ZASCA 161
(1 December 2010)
BENCH:
LEWIS, PONNAN, MHLANTLA and SHONGWE JJA,
and
BERTELSMANN AJA
HEARD: 18 NOVEMBER 2010
DELIVERED: 1 DECEMBER 2010
SUMMARY:
Companies Act 61 of 1973 – s 252 – relief from oppression
– disputes of fact – cannot be resolved
on the papers.
__________________________________________________________________
___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from
: North Gauteng High Court (Pretoria) (Mavundla
J sitting as court
of first instance).
1 Both the appeal and cross appeal are dismissed, in each instance
with costs, such costs, to include, where applicable, those
consequent upon the employment of two counsel.
2 Paragraph 2 of the order of the court below is set aside and in its
stead is substituted:
‘
The applicant is ordered to pay the costs
of the application’.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
PONNAN
JA (LEWIS, MHLANTLA and SHONGWE JJA and BERTELSMANN AJA concurring):
[1] This is a case that is by no means easy for an appellate court
satisfactorily to deal with, not least because of the rather
voluminous and sometimes conflicting affidavits, but also, as
importantly, because events intervened as the matter progressed,
rendering the principal relief that was originally sought obsolete.
Much of the difficulty in this matter arises as well from the
manner
in which the founding papers were cast and the paucity of the
information that they contained in respect of certain crucial
aspects
of the case. Whether those should prove to be an insuperable obstacle
to a decision in the matter is what calls for consideration.
[2] The respondent, Christiaan Nel (Nel), the first appellant,
Johannes Louw (Louw) and the second appellant, Willem du Preez (Du
Preez), formed a partnership known as EPI-USE Financials Partnership
(the partnership), which commenced business on 1 November
2002. The
partnership conducted business in the implementation and continuous
operation, including training and problem-solving,
of a computer
programme used by big business known as SAP. During early 2003 the
partnership became involved in certain projects
together with the
third appellant, Lukas Lejara Mothupi (Mothupi).
[3] By that stage the appreciation had dawned on the three partners
that if the partnership was to secure state contracts it was
necessary for it to implement a black economic empowerment policy.
Mothupi appeared well-suited to achieve that strategic vision
of the
partnership. After negotiations between the three partners and
Mothupi it was decided that the future business of the partnership
should be conducted through a company and to that end a shelf
company, which was registered and incorporated on 10 January 2003,
was acquired. The name of the shelf company was changed first to
Lejara Business Intelligence (Pty) Ltd and thereafter to Lejara
Consulting (Pty) Ltd (the company). Each of Nel, Louw and Du Preez
held 16 per cent of the shares in the company. Mothupi held
52 per
cent of the shares. Of his 52 per cent shareholding Mothupi explains:
'I was, however, only the owner of 16% of the shares and
not 52% because I held the balance of the shares, namely 36%, as
nominee
for previously disadvantaged individuals which we intended to
become shareholders and directors of [the company] in order to comply
with the Black Economic Empowerment legislation. It was the
understanding that if no suitable candidates were available to take
up the 36% shares held by me, the shares would be divided equally
amongst the applicant, the first respondent, the second respondent,
the third respondent and myself.'
He continues:
‘
The four of us were the sole
directors of the company and the four of us each brought the
following skills to the [company]:
[Nel]: SAP management accounting (controlling) skills
and SAP business planning skills;
[Louw]: SAP management accounting (controlling) skills
and SAP business planning skills;
[Du Preez]: SAP financial accounting skills and SAP
business planning skills;
Myself: SAP logistic skills.
. . .
I was not entitled to rely on the additional 36%
shareholding when voting and at meetings of the directors each
director had an
equal vote which was cast by the showing of hands. I
chaired the meeting of directors and had a deciding vote if a
stalemate would
arise.'
[4] On 23 May 2003 what was termed a 'previously disadvantaged
individual', Bhadrakan Chibi, was awarded 16 per cent of the shares
in the company which shareholding was allocated from the 36 per cent
held by Mothupi as nominee. Shortly thereafter Chibi returned
his
shares and resigned as a director. His shares were distributed to the
four remaining directors and shareholders. On 1 April
2004 the fourth
appellant, Kurt Lindoor (Lindoor), purchased 16 per cent of the
Company's shareholding for the sum of R10 000 per
share. This was
made up of four per cent of the shareholding of each of the other
four shareholders. The effect of that transaction
was that Mothupi
held 36 per cent of the shares and each of the others 16 per cent.
[5] In August 2004 it was decided that the company would expand its
business operation. Money had to be borrowed from a financial
institution and security in the form of suretyships was required from
each of the shareholders for that purpose. That marked the
beginning
of discontent and distrust between Nel on the one hand and the other
shareholders on the other.
[6] According to Nel it 'soon became evident to him that there was a
move afoot to sideline him and force him to dispose of his
interest
in the company'. The other directors on the other hand formed the
view that Nel:
'acted in an obstructive and disruptive manner; breached
his fiduciary duty as director of [the company]; caused [the company]
irreparable
harm and damages and strained the relationship with the
other directors and shareholders'.
Things came to a head on 16 September 2005 when a general
shareholders' meeting of the company resolved by a majority vote of
84 per cent for and 16 per cent against (Nel voting against the
motion) that Nel be removed as a director of the company. The
allegations
levelled against him were inter alia that he had breached
his fiduciary duty, stolen the company's intellectual property and
conducted
himself dishonestly and to the general prejudice of the
company.
[7] According to Nel, on 21 November 2005 he attended a shareholders’
meeting of the company where he was informed that the
‘shareholders
loans which were due, could not be paid because that would
effectively place [the company] in an insolvent
position’. Nel
thus formed the view that the company was unable to pay its debts as
contemplated by s 344(f) of the Companies
Act 61 of 1973. He
responded by launching an application on 30 November 2005 to the
North Gauteng High Court (Pretoria). To the
extent here relevant he
sought an order:
'1 Placing the [company] under winding up in the hands
of the Master of the above Honourable Court.
2 Directing that the costs of this Application be costs
in the winding up of the [company];
Alternatively to paragraphs 1 - 2
3 Declaring that the affairs of the [company] is being
conducted in a manner unfairly prejudicial, unjust or inequitable to
the
Applicant as contemplated in Section 252(1) of the Companies Act,
61 of 1973;
4 Directing that [Louw], [Du Preez], [Mothupi] and
[Lindoor] purchase [Nel’s] shares in [the company] at a value
to be determined
by an independent auditor appointed by agreement
between the [parties] and, failing such agreement by an independent
auditor duly
appointed by the current President of the Institute of
Chartered Accountants of the Republic of South Africa, having regard
to
the provisions of Section 252(3) of the Companies Act 61 of 1973;
5 Directing that [Louw], [Du Preez], [Mothupi] and
[Lindoor] pay the costs of this Application, jointly and severally,
the one paying
the other to be absolved.’
[8] In his founding affidavit in support of the winding-up
application Nel alleged that:
‘
In support of my contentions
that it would be just and equitable to place [the company] under
winding up, I rely,
inter
alia
on the
following:
frauds have been perpetrated in the conduct and
management of the affairs of the company by their controllers namely
[Louw], [Du
Preez], [Mothupi] and [Lindoor];
I have been excluded from the business affairs of [the
company] and its affairs and business have been conducted to its
detriment
and to my prejudice as an excluded outside shareholder when
the intention at the formation of the business of the company was to
participate as an equal partner and shareholder;
. . .
the main business of [the company] has been disposed of
to other companies whose directors and shareholders are common with
that
of [the company], save that I have been excluded, [the company]
has not been compensated for such disposal and this was in violation
of my rights in terms of the Companies Act.
[Louw], [Du Preez], [Mothupi] and [Lindoor] have
contrived to ensure that:
(i) the business of [the company] has ceased trading;
(ii) the assets of [the company] have been transferred
to companies with common shareholders and directors of [the company]
to my
exclusion, which companies are
inter
alia
:
De La Harpe Trading (Six) (Pty) Ltd [De La Harpe];
Matlotlo Trading 26 (Pty) Ltd [Matlotlo];
[the company] has ceased invoicing for work undertaken
by it for its customer base and is not participating in those
revenues;
the sales representatives engaged by [the company] have
been instructed to, and are no longer taking orders in the name of
[the
company] but are now canvassing business for those other
entities;
the entire customer base of [the company] has been
diverted to the aforementioned companies;
the sales representatives of [the company] have been
instructed to and are furnishing quotations to customers of [the
company] in
the name of the aforementioned companies;
[the company's] customer base and the market which it
services have been informed that the affairs of [the company] are
being wound
down.
there has been a wrongful and wholesale diversion of the
business of [the company] to the aforementioned companies;
. . .
I have been removed as director of [the company] and
have now been totally excluded from its affairs.
. . .
My entire interest in [the company] has been now eroded
and there are in fact now no assets in [the company].
As a result of this conduct and other conduct to which
reference is made in this affidavit, there has been a complete
breakdown
of the relationship of mutual trust and confidence between
[Louw], [Du Preez], [Mothupi] and [Lindoor], on the one hand and me
on the other. In addition I have a justifiable lack of confidence in
their integrity and, in turn, in their ability to honestly
manage the
affairs of [the company] and to ensure that I receive what dividend
is due to me.'
[9] And in support of the alternative relief sought by him, Nel
stated:
'(a) In the alternative to winding up, I seek relief
from oppression in terms of section 252 of the Act.
(b) I maintain that the affairs of [the company] are
being conducted in a manner unfairly prejudicial, unjust or
inequitable to
me.
(c) I seek relief from oppression in terms of Section
252(3) of the Act, in the form of an Order directing that [Louw], [Du
Preez],
[Mothupi] and [Lindoor] purchase my shareholding against [the
company]. [Louw], [Du Preez], [Mothupi] and [Lindoor] are in a
financial
position to purchase my shares. In order to achieve this
objective I request the appointment of an independent auditor to be
agreed
by [Louw], [Du Preez], [Mothupi] and [Lindoor], on one hand
and me on the other, failing agreement by an independent auditor
appointed
by the President for the time being, of the Institute of
Chartered Accountants for the Republic of South Africa.'
[10] At various stages the record in this matter came to be
considerably lengthened by a steady accretion of affidavits. Thus
after the usual three sets of affidavits had been filed, which were
already quite voluminous, the parties with a blatant disregard
for
the rules of court, appropriated to themselves the right to file all
manner of further affidavits. The effect is that the papers
may have
been needlessly long in some respects and, as shall become apparent,
grossly deficient in others.
[11] Significantly, in a duplicating affidavit filed on behalf of the
appellants during June 2006 Mothupi states:
‘
that the respondents [Louw, Du
Preez, Mothupi and Lindoor] herewith consent to an order in terms of
prayer 4 of the notice of motion
without admitting that the affairs
of the first respondent are being conducted in a manner unfairly
prejudicial, unjust or inequitable
to the applicant'.
The response it elicited from Nel was:
‘
I note in . . . the
duplicating affidavit, the respondents' consent to an order in terms
of prayer 4 of the notice of motion. While
I am quite prepared to
have my 21%
1
member's interest bought out
by the respondents, the wording of prayer 4 ought to be amplified in
order to address and resolve the
issue between the respondents and me
as well as to do me justice.
The purported consent given in prayer 4 of the notice of
motion in its current wording was merely a strategy by the
respondents
to attempt to cheat me of my legitimate interest in [the
company], consistent with what they have done to date.
Without an amplification of paragraph 4, the
respondents, by their consent, are attempting to avoid dealing with
the issue and hope
to purchase my shares for no value.
In essence what the respondents hope to achieve is the
purchase of my shares in [the company] at a worthless valuation
because,
in the interim while this matter has progressed, they have
made the respondent progressively worthless.
In order to do proper justice, the valuation of my
interests in [the company] must be undertaken on the basis that the
business
appropriated by the respondents and placed into Matlotlo
Trading 28 (Pty) Limited (subsequently renamed Lejara ERP Solutions
(Pty)
Limited) and De La Harpe Trading (Six) (Pty) Limited (now
renamed Lejara Business Intelligence (Pty) Limited). This is so
because
my principal complaint was that what was in essence a
partnership business has been appropriated by four of the partners
into other
entities controlled by them.
As an alternative to winding up an order for payment of
my share was sought, which appears now to have been consented to.
However,
the intention behind the consent is to consent to a purchase
of my share of the business after it has been stripped of its assets
and revenue.
It is only just and equitable that if I am to be bought
out, the purchase of my interest must include the business which has
been
stripped and transferred to the other entities.'
[12] Thereafter on 14 September 2006 Nel served and filed a notice of
amendment. It read:
'By the insertion immediately after prayer 4 of the
notice of motion of the following:
For the purposes of such valuation, the said value shall
be determined as the equivalent of 21% of the value of the
businesses,
as a going concern, of Lejara ERP Solutions (Pty) Ltd
(formerly known as Matlotlo Trading 28 (Pty) Ltd), Lejara Business
Intelligence
(Pty) Ltd (formerly known as De La Harpe Trading (Six)
(Pty) Ltd), Lejara Investment Holdings (Pty) Ltd, any other entity
trading
or using the name Lejara in the SAP consulting and/or SAP
software industry and [the company] which shall be deemed to be one
going
concern consolidated as such and all inter-company liabilities
or expenses shall be ignored.
The said auditor shall have the same powers as a referee
appointed in terms of section 19
bis
of the Supreme Court Act of 1959 and the provisions of
section 19
bis
(3),
(4), (5) and (6) shall be applicable.'
[13] It was met with the objection that ‘the amendment that
[Nel] seeks is an order against entities which is not a party
to this
application’. In response Nel filed a supplementary affidavit
in which he alleged that:
‘
Accordingly, to the best of my
knowledge there are at least five companies with the name Lejara that
have appropriated the business
of [the company]. I annex hereto
marked "RA39" a copy of the company search printouts. These
companies are:
Lejara Business Intelligence (Pty)
Limited
2
(which was formerly De La Harpe
Trading Six (Pty) Limited).
Lejara Investment Holdings (Pty)
Limited.
3
Lejara ERP Solutions (Pty) Limited
4
(which was formerly Matlotlo Trading
28 (Pty) Limited).
Lejara Informational Management (Pty)
Limited.
5
Lejara Enterprise Solutions (Pty)
Limited
6
(which featured in the restraint of
trade application).
With the exception of Informational Management (Pty)
Limited, all the Lejara companies have, [Louw], [Du Preez], [Mothupi]
and [Lindoor]
as their directors. In Lejara Informational Management
(Pty) Limited the directors are [Louw], [Du Preez], and [Lindoor] and
two
other directors, [Mothupi] is not a director.
All the companies, with the exception of Lejara
Informational Management (Pty) Limited have exactly the same
registered office,
Unit L13 in the Enterprise Building, Mark
Shuttleworth Street, 0087. Lejara Informational Management (Pty)
Limited has its registered
office at 287 Lynwood Road, Menlo Park. In
the case of Lejara Enterprise Solutions (Pty) Limited, it seems that
the details of
its registered office, according to the company
search, have been incorrectly captured, however according to the
affidavit of [Mothupi]
in the restraint proceedings, it shares its
registered office with the other Lejara entities. In this regard I
refer to annexure
"RA37" above.
By reason of the above, and because of the time that has
elapsed since the commencement of these proceedings, as mentioned in
my
answering affidavit to the respondents' duplicating affidavit, I
shall be seeking, in the first instance, an order in terms of an
amended prayer 4 of the notice of motion.
By reason of the additional facts which have come to
light since this matter was last set down, the original proposed
notice of
amendment, annexure "RA36", ought to be further
modified to include a reference to Lejara Informational Management
(Pty)
Limited, Lejara Enterprise Solutions (Pty) Limited as well as
excluding payments made by [Louw], [Du Preez], [Mothupi] and
[Lindoor]
to themselves by way of remuneration after 31 July 2005.'
[14] As presaged in his supplementary affidavit, prayer 4 of the
notice of motion was amended once again by Nel, this time to read:
‘
Directing that [Louw] [Du
Preez] [Mothupi] and [Lindoor] purchase [Nel's] shares in [the
company] at a value to be determined by
an independent auditor
appointed by agreement between [the parties] and, failing such
agreement, by an independent auditor duly
appointed by the current
President of the Institute of Chartered Accountants of the Republic
of South Africa, having regard to
the provisions of Section 252(3) of
the Companies Act, 61 of 1973;
For the purposes of such valuation, the said value shall
be determined as the equivalent of 21% of the value of the
businesses,
as a going concern, of Lejara ERP Solutions (Pty) Ltd
(formerly known as Matlotlo Trading 28 (Pty) Ltd), Lejara Business
Intelligence
(Pty) Ltd (formerly known as De La Harpe Trading (Six)
(Pty) Ltd), Lejara Investment Holdings (Pty) Ltd, Lejara
Informational Management
(Pty) Limited, Lejara Enterprise Solutions
(Pty) Limited, any other entity trading or using the name Lejara in
the SAP consulting
and/or SAP software industry and [the company]
which shall be deemed to be one going concern consolidated as such
and all inter-company
liabilities or expenses, and all payments made
to [Louw], [Du Preez], [Mothupi] and [Lindoor] by way of remuneration
from [the
company] after 31 July 2005, shall be ignored.
The said auditor shall have the same
powers as a referee appointed in terms of section 19
bis
of the Supreme Court Act of 1959 and
the provisions of section 19
bis
(3), (4), (5) and (6) shall be
applicable.'
[15] The matter was argued before Mavundla J
during October 2007. By then a further two entities – Lejara
Enterprise Outsourcing
(Pty) Ltd
7
and Lejara Change Management (Pty) Ltd
8
had been joined as respondents in the application.
Moreover, by that stage the company had been wound up at the instance
of a third
party creditor. Judgment was handed down some 18 months
later on 19 March 2009. The learned judge ordered Louw, Du Preez,
Mothupi
and Lindoor
to:
‘
purchase [Nel's] shares in
[the company] at a value to be determined by an independent auditor
appointed by agreement between [the
parties] and, failing such
agreement by an independent auditor duly appointed by the current
President of the Institute of Chartered
Accountants of the Republic
of South Africa, having regard to the provisions of Section 252(3) of
the Companies Act 61 of 1973;
[and]
individually, jointly and severally, the one paying the
others to be absolved, . . . pay the costs of this application'.
Leave to appeal and to cross appeal was granted by the court below.
[16] The order of the court below mirrored in all
material respects that consented to by Louw, Du Preez, Mothupi and
Lindoor. That
notwithstanding they sought and obtained leave to
appeal against the judgment and order of the learned judge. So did
all of the
Lejara entities, the fifth to 11
th
appellants, although none of them was implicated
by the terms of the order of the high court. The judgment of the high
court is
silent on the fate of the application against the fifth to
11
th
appellants.
Presumably they would have been entitled to a dismissal of Nel’s
claim as against them and an order of costs in
their favour. But that
is not the basis on which they are on appeal before us and nothing
further need be said about that. The
company in the meantime having
been placed under winding-up took no part in the appeal. On the eve
of the hearing of the appeal,
one of the liquidators filed an
affidavit with this court which stated:
‘
I and my co-liquidator have no
intention or desire to intervene or participate in these proceedings
nor cause the insolvent company
to participate therein as same is
considered a dispute between the shareholders of the insolvent
company in which the liquidators
and the insolvent company have no
interest.
I and my co-liquidator undertake to abide the decision
of this Honourable Court and will sanction any transfer of shares of
the
insolvent company pursuant to any order made or confirmed by this
Honourable Court in respect of the purchase of such shares.’
[17] Against that backdrop the decision by the
appellants to prosecute this appeal is perplexing. There is some
suggestion in the
heads of argument filed on behalf of the appellants
that the ‘consent’ amounted to no more than an offer,
which was
not accepted by Nel, but rather met with a counter-offer in
the form of an amendment to his notice of motion. I do not agree. In
my view the ‘consent’ amounted to a formal admission. In
motion proceedings the parties’ affidavits constitute
both
their pleadings and their evidence (see
National
Director of Public Prosecutions v Phillips & others
9
and the cases there cited). In
Gordon
v Tarnow
,
10
Davis AJA explained the import of a formal
admission in these terms:
‘
But this admission in the plea
is of the greatest importance, for it is what
Wigmore
(paras 2588-2590) calls a
“judicial admission” (cf the
confessio
judicialis
of Voet (42.2.6)) which is
conclusive, rendering it unnecessary for the other party to adduce
evidence to prove the admitted fact,
and incompetent for the party
making it to adduce evidence to contradict it (See also
Phipson
(7
th
ed., p 18))’.
And in
Water
Renovation (Pty) Ltd v Gold Fields of SA Ltd
11
it was expatiated upon thus:
‘
In regard to counsel’s
first submission, I do not agree that the admission was not a formal
admission. It was made in the
counterstatement as a formal admission
of an allegation made in the statement of particulars, and it
constituted what
Wigmore
on Evidence
vol
IX paras 2588-90 calls a “judicial admission”. Such an
admission is binding upon the party making it, ie it prohibits
any
further dispute of the admitted fact by the party making it and any
evidence to disprove or contradict it (para 2590). Compare
Gordon
v Tarnow
1947
(3) SA 525
(A) at 531-2 where Davis AJA said:
“
Wigmore
(
loc
cit
), speaking of
judicial admissions in general, refers to the Court’s
discretion to relieve a party from the consequences of
an admission
made in error. It does not seem to me that such a discretion could be
exercised, in a case where the admission has
been made in a pleading,
in any other way than by granting an amendment of that pleading . . .
Here, there has at no stage been
any such application to amend. But
it is only right to add that in any case I see no valid grounds for
thinking that there has
been any error.”’
It follows that the appellants’ appeal is misconceived and it
must fail. That leaves the cross appeal to which I now turn.
[18] In the present case it seems clear that the
parties came together on the basis, substantially, of a partnership
between them.
The company can properly be designated a small private
company. It was at the instance of the partnership that the company
was
formed. It is thus undisputed that there ought to exist between
the members in regard to the company's affairs a particular personal
relationship of confidence and trust similar to that existing between
partners in regard to a partnership business.
12
[19] By the time the matter came to be argued before the learned
judge in the high court the company had already been wound up
by a
third party creditor. Nel thus restricted the relief that he sought
to that available to him under s 252 of the Act. Section
252 provides
a member with the means of obtaining relief from unfairly
prejudicial, unjust or inequitable acts or omissions of
a company or
conduct of its affairs. It provides:
‘
(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 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.’
[20] It has been suggested that s 252 only applies
as an alternative to winding-up and that an order in terms of that
section can
only be made if the company is fit to be kept alive. On
this score Professor Gower
13
observes:
‘
Another valuable point emerges
from the speeches in the House of Lords. The fact that the company
cannot be preserved as a going
concern is no ground for refusing the
so-called alternative remedy under section 210. This, too, had been
the view of the Court
of Session, but a contrary decision had been
reached in South Africa under the equivalent section in their Act.
Both Lord Keith
and Lord Denning expressly advert to this point and
happily decide that the section is not restricted in this way.’
The House of Lords decision to which Gower refers
is
Scottish Co-Operative Wholesale
Society Ltd v Meyer & another
.
14
In it, Lord Keith held (at 86):
‘
It was said that appeal could
not be made to s 210 unless the company had a continuing life ahead
of it, and here it was clear that
the company would have to be
wound-up. But that means that, if oppression is carried to the extent
of destruction of the business
of the company, no recourse can be had
to the remedies of the section. This would be to defeat the whole
purpose of the section.
The present position is due to the oppression
and, but for the oppression, it must be assumed that the company
would be an active
and presumably flourishing concern. The section
is, in my opinion, very apt to meet the situation which has arisen.’
And Lord Denning held (at 89):
‘
Now I quite agree that the
words of the section do suggest that the legislature had in mind some
remedy whereby the company, instead
of being wound-up, might continue
to operate. But it would be wrong to infer therefrom that the remedy
under s 210 is limited to
cases where the company is still in active
business. The object of the remedy is to bring “to an end the
matters complained
of,” that is, the oppression, and this can
be done even though the business of the company has been brought to a
standstill.
If a remedy is available when the oppression is so
moderate that it only inflicts wounds on the company, whilst leaving
it active,
so, also, it should be available when the oppression is so
great as to put the company out of action altogether. Even though the
oppressor by his oppression brings down the whole edifice –
destroying the value of his own shares with those of everyone
else –
the injured shareholders have, I think, a remedy under s 210.’
Whilst the contrary South African decision to
which Gower alludes is that of Reynolds J in
Irvin
and Johnson Ltd v Oelofse Fisheries Ltd; Oelofse v Irvin and Johnson
Ltd & another
, which held:
15
‘
. . .
it
seems to me that there is a fourth essential. It must be shown that
the order that the Court can make – if it does make
it –
can remedy the complaints in such a manner that the company can then
continue to function properly and will in all probability
not perish.
This seems to be so from the wording of sub-sec 2 of sec 111
bis
that the Court makes its order
“with a view to bringing to an end the matters complained of”
for it would be futile
to grant an order which would leave the
company so to perish.’
I shall accept in Nel’s favour, without deciding, that the
grant of a winding-up order is no bar to an invocation by a minority
shareholder of s 252.
[21] The wording of the section indicates the
conferment of a very wide discretion upon the court.
16
The court has the power to do what is considered
fair and equitable in all the circumstances of the case, to put right
and cure
the unfair prejudice which a minority shareholder has
suffered at the hands of the majority of the company.
‘
The foundation of it all lies
in the words “just and equitable” and, if there is any
respect in which some of the cases
may be open to criticism, it is
that the courts may sometimes have been too timorous in giving them
full force. The words are a
recognition of the fact that a limited
company is more than a mere judicial entity, with a personality in
law of its own: that
there is room in company law for recognition of
the fact that behind it, or amongst it, there are individuals, with
rights, expectations
and obligations inter se which are not
necessarily submerged in the company structure. That structure is
defined by the Companies
Act 1948 and by the articles of association
by which shareholders agree to be bound. In most companies and in
most contexts, this
definition is sufficient and exhaustive, equally
so whether the company is large or small. The “just and
equitable”
provision does not, as the respondents suggest,
entitle one party to disregard the obligation he assumes by entering
a company,
nor the court to dispense him from it. It does, as equity
always does, enable the court to subject the exercise of legal rights
to equitable considerations; considerations, that is, of a personal
character arising between one individual and another, which
may make
it unjust, or inequitable, to insist on legal rights, or to exercise
them in a particular way.
It would be impossible, and wholly undesirable, to
define the circumstances in which these considerations may arise.
Certainly the
fact that a company is a small one, or a private
company, is not enough. There are very many of these where the
association is
a purely commercial one, of which it can safely be
said that the basis of association is adequately and exhaustively
laid down
in the articles. The superimposition of equitable
considerations requires something more, which typically may include
one, or probably
more, of the following elements: (i) an association
formed or continued on the basis of a personal relationship,
involving mutual
confidence—this element will often be found
where a pre-existing partnership has been converted into a limited
company; (ii)
an agreement, or understanding, that all, or some (for
there may be ‘sleeping’ members), of the shareholders
shall
participate in the conduct of the business; (iii) restriction
on the transfer of the members’ interest in the company—so
that if confidence is lost, or one member is removed from management,
he cannot take out his stake and go elsewhere.
It is these, and analogous, factors
which may bring into play the just and equitable clause, and they do
so directly, through the
force of the words themselves. To refer, as
so many of the cases do, to ‘quasi-partnerships’ or ‘in
substance
partnerships’ may be convenient but may also be
confusing. It may be convenient because it is the law of partnership
which
has developed the conceptions of probity, good faith and mutual
confidence, and the remedies where these are absent, which become
relevant once such factors as I have mentioned are found to exist:
the words ‘just and equitable’ sum these up in the
law of
partnership itself. And in many, but not necessarily all, cases there
has been a pre-existing partnership the obligations
of which it is
reasonable to suppose continue to underlie the new company structure.
But the expressions may be confusing if they
obscure, or deny, the
fact that the parties (possibly former partners) are now co-members
in a company, who have accepted, in law,
new obligations. A company,
however small, however domestic, is a company not a partnership or
even a quasi-partnership and it
is through the just and equitable
clause that obligations, common to partnership relations, may come
in.’
(Per
Lord
Wilberforce in
Ebrahimi
v Westbourne Galleries Ltd.)
17
[22] The same reasoning, I daresay, must apply to
the concept of unfairness encompassed by s 252.
Fairness,
according to Lord Hoffmann (
Re a company
(No 00709 of 1992) O’Neill & another v Phillips &
others
),
18
is the criterion by which a court must decide
whether it has jurisdiction to grant relief. Generally speaking an
application of
this kind, based upon the partnership analogy cannot
succeed if what is complained of is merely a valid exercise of the
powers
conferred on the majority. To hold otherwise would enable a
member to be relieved from the consequences of a bargain knowingly
entered into by him. For, as Trollip JA put it in
Sammel
v President Brand Gold Mining Co Ltd:
19
‘
By becoming a shareholder in a
company a person undertakes by his contract to be bound by the
decisions of the prescribed majority
of shareholders, if those
decisions on the affairs of the company are arrived at in accordance
with the law, even where they adversely
affect his own rights as a
shareholder . . . . That principle of the supremacy of the majority
is essential to the proper functioning
of companies.’
[23] The combined effect of subsections (1) and
(3) is to empower the court to make such order as it thinks fit for
the giving of
relief, if it is satisfied that the affairs of the
company are being conducted in a manner that is unfairly prejudicial
to the
interests of a dissident minority. The conduct of the minority
may thus become material in at least the following two obvious ways.
First, it may render the conduct of the majority, even though
prejudicial to the minority, not unfair. Second, even though the
conduct of the majority may be both prejudicial and unfair, the
conduct of the minority may nevertheless affect the relief that
a
court thinks fit to grant under subsection 3.
20
An applicant for relief under s 252 cannot content
himself or herself with a number of vague and rather general
allegations, but
must establish the following: that the particular
act or omission has been committed, or that the affairs of the
company are being
conducted in the manner alleged and that such act
or omission or conduct of the company’s affairs is unfairly
prejudicial,
unjust or inequitable to him or some part of the members
of the company; the nature of the relief that must be granted to
bring
to an end the matters complained of; and that it is just and
equitable that such relief be granted.
21
Thus, the court’s jurisdiction to make an
order does not arise until the specified statutory criteria have been
satisfied.
22
[24] As Buckley J put it in In
Re
Five Minute Car Wash Service Ltd:
23
‘
The mere fact that a member of
a company has lost confidence in the manner in which the company’s
affairs are conducted does
not lead to the conclusion that he is
oppressed; nor can resentment at being outvoted, ...’
In
Re a company
,
24
Lord Hoffmann put it thus:
‘
Mr Hollington’s
submission comes to saying that, in a “quasi-partnership”
company, one partner ought to be entitled
at will to require the
other partner or partners to buy his shares at a fair value. All he
need do is to declare that trust and
confidence has broken down. . .
.’
‘
I do not think that there is
any support in the authorities for such a stark right of unilateral
withdrawal. There are cases, such
as
Re
a company (No 006834 of 1988)
,
ex p Kremer
[1989] BCLC 365
, in which it
has been said that if a breakdown in relations has caused the
majority to remove a shareholder from participation
in the
management, it is usually a waste of time to try to investigate who
caused the breakdown. Such breakdowns often occur (as
in this case)
without either side having done anything seriously wrong or unfair.
It is not fair to the excluded member, who will
usually have lost his
employment, to keep his assets locked in the company. But that does
not mean that a member who has not been
dismissed or excluded can
demand that his shares be purchased simply because he feels that he
has lost trust and confidence in
the others. I rather doubt whether
even in partnership law a dissolution would be granted on this ground
in a case in which it
was still possible under the articles for the
business of the partnership to be continued. And as Lord Wilberforce
observed in
Ebrahimi
v Westbourne Galleries Ltd
[1972] 2 All ER 492
at 500,
[1973] AC 360
at 380, one should not press the quasi-partnership
analogy too far: “A company, however small, however domestic,
is a company
not a partnership or even a quasi partnership ...”
‘
[25] The allegations of unfair and oppressive
conduct in the management of the affairs of the company boiled down
to: first, that
Nel had been excluded as a director and thus from the
management of the company; and, second, that the majority
shareholders had
destroyed the substratum of the company by starving
it of business, which was diverted to other entities in which they
had an interest.
Mothupi, on behalf of the appellants, dealt with the
first in these terms:
‘
The applicant’s general
conduct and the fact that he caused the first respondent damages as
aforesaid, caused the relationship
between the second, third and
fifth respondents on the one side, and the applicant on the other
side, to become strained.’
And after detailing various allegations of misconduct that had been
levelled against Nel, he said:
‘
From the aforegoing it is
apparent that the applicant acted in an obstructive and disruptive
manner, breached his fiduciary duty
as director of the first
respondent, caused the first respondent irreparable harm and damages
and strained the relationship with
the other directors and
shareholders.
The situation became so untenable that the shareholders
had no other option but to convene a general meeting on 6 September
2005
and to consider the removal of the applicant as a director of
the first respondent in terms of section 220 of the Companies Act.
A
copy of the notice of the general meeting as well as the agenda is
annexed hereto as annexure “LLM28”.’
[26] In substantiation of the second, Nel contended that the business
of the company had been diverted to De La Harpe Trading (Six)
(Pty)
(De La Harpe) and Matlotlo Trading 28 (Pty) Limited (Matlotlo) and in
turn to the various Lejara entities that have been
joined as parties
to the proceedings. In that regard Nel states:
‘
The two entities controlled by
[Louw, Du Preez, Mothupi and Lindoor] effectively control all the
business that was previously the
business of [the company]. In the
case of De La Harpe Trading (Six) (Pty) Limited (now Lejara Business
Intelligence), through the
transfer of the business pursuant to a
purported sale. In the case of Matlotlo Trading 28 (Pty) Limited (now
called Lejara ERP
Solutions (Pty) Limited), through a management
agreement.’
The answer to that complaint, to paraphrase from Mothupi, is that at
a general shareholders’ meeting held on 7 June 2005
it was
unanimously agreed that the intelligence business division of the
company would be sold to De La Harpe and the SAP ERP business
to
Matlotlo. Whilst Mothupi is correct in his assertion that the
decision was a unanimous one, to be fair to Nel, the minutes of
the
meeting reflect that he abstained from voting on those resolutions:
it thus carried as a unanimous resolution.
[27] Mothupi explains the necessity for concluding the agreement with
De La Harpe in these terms:
‘
[Nel], however, before the
meeting of 6 September 2005, caused a letter by his attorney of
record to be served by the sheriff on
the first respondent,
foreclosing his loan account in the company and required payment of
the amount of R242 377.87 within three
weeks after the date of
service and threatened to continue with an application for the
winding-up of [the company].
[Nel’s] loan account plus interest was repaid by
[the company] on 13 September 2005 . . .
. . .
As a result of the repayment of [Nel’s] loan
account by [the company], [the company] was in no position to repay
the other
shareholders’ loan account totalling R646 453.70.
In order to prevent [the company] from becoming
insolvent, the directors of [the company] entered into a written
agreement with
De La Harpe . . . in terms of which:
the consideration payable in terms of annexure “LLM26”
will be R600 000.00 and this purchase price will be set off against
the loan accounts of [Louw], [Du Preez] and my loan accounts in the
amount of R200 000.00 each. (It should be noted that the [Lindoor]
did not have a loan account).’
[28] According to Mothupi the sale agreement between the first
respondent and Matlotlo, however, never materialised, resulting
in
the company and Matlotlo entering into a management agreement on 7
September 2005. A material term of that agreement was that:
‘[t]he
first respondent and De La Harpe . . . will not compete with each
other’. Nel’s response is:
‘
The “management
agreement” is not a true agreement. This is nothing more than
an attempt by [Louw, Du Preez, Mothupi
and Lindoor] to appropriate
for themselves the “partnership” business in the first
respondent to my detriment’.
Notwithstanding Nel’s denial one can hardly, without more, in
the face of that provision in the agreement, conclude that
Matlotlo
was set up by the majority shareholders in competition with the
company or that in doing so they subordinated the interests
of the
company to that of Matloto.
[29] Mavundla J made no finding as such that the affairs of the
company were being conducted in a manner by the majority that was
unfairly prejudicial to Nel, yet proceeded to grant relief to Nel in
terms of s 252. The gist of the learned judge’s judgment
is to
be found in the following three paragraphs:
‘
It is common cause that the
business of [the company] mutated into various entities. These
entities are the sixth to the twelfth
respondents, and these have
been joined in these proceedings. It is common cause that the then
partnership did not do any accounting
at its dissolution. It is
common cause that the [Nel] was never paid for his shares. A
partnership is an agreement of utmost trust.
The respondents have not
honoured the agreement in that they have not paid the applicant for
his respective shares in the seven
entities.
It brooks no argument that a partnership, although it
has been dissolved, is presumed to exist until such time that there
has been
accounting to all the partners. In casu, the very fact that
the business of [the company] devolved into the seven entities,
namely
the sixth to the twelfth respondents, without any prior
agreement between [Nel] and [Louw, Du Preez, Mothupi and Lindoor],
is,
in my view, sufficient reasons for me to conclude that there is
no agreement between the partnership as to how to dissolve the
partnership. Further it is not disputed by [Louw, Du Preez, Mothupi
and Lindoor] that [Nel] has not been paid his shares. I therefore
conclude that the parties have reached a dead end, thus requiring
that I must exercise my discretion in the determination of the
share
of [Nel].
When the business of [the company] subsequently mutated
into the seven to the twelfth respondents, it is axiomatic that the
21%
interest of the applicant, also mutated into the aforesaid seven
entities. It is, in my view, and I find that, it just and equitable
that Nel should be paid out, such equity that would be equivalent to
his 21% share, from each of the respective subsequent seven
entities
his equity has also mutated into. It therefore requires that I must
determine, what I consider to be a fair and reasonable
value of the
applicant’s 21% share in each individual entity. In this
regard, I need to bear in mind what the authorities
state, as
referred to herein below.’
[30] With respect to the learned judge what he perceived as common
cause was in fact not so. For, as Mothupi made plain:
‘
It is incorrect that five
companies with the name Lejara have appropriated the business of the
first respondent.
Lejara Business Intelligence (Pty) Ltd purchased the
business intelligence business division of [the company] as aforesaid
and also
pursued other business propositions in the SAP domain as
aforesaid which were not part of the business intelligence business
division
of the first respondent.
As far as I am aware, the following companies bear the
“
Lejara name
”
and
conduct the following business and have the following directors: . .
.’
From the aforegoing it is apparent that none of the
other companies bearing the name “Lejara” conducts
business similar
to that of [the company].
Having regard to the fact that:
the other companies conduct business different from [the
company] and which was sold by [the company] to Lejara Business
Intelligence
(Pty) Ltd;
the Lejara companies have different shareholders and
directors,
the value of the applicant’s shares in the first
respondent cannot be equated to 21% of shareholding in any of the
aforementioned
companies.
In the premises the applicant
is not entitled to the relief claimed
in the proposed amended notice of motion.’
[31] The nature of the remedy fixed by a court will depend upon its
conclusion on the type of oppression. Something that Mavundla
J
appeared not to appreciate.
‘
What has to be fixed is a
“fair price” (per Lord Denning in the
Scottish
Co-operative
case
at p 89). What is fair must necessarily depend upon the circumstances
of the particular case – it is not necessarily
limited to the
market value of the shares concerned – and I do not consider
that a tribunal other than the Court hearing
the application should
be required to deal with these considerations. Moreover, I could not
exclude the possibility that considerations
of the price might
legitimately affect the exercise of the Court’s discretionary
power to make an order in terms of sec 111
bis
.’
(Per O’ Hagan J in
Benjamin
v Elysium Investments & another.
)
25
There is no rule of universal application
as to what is fair. The fairness envisaged is fairness to both sides.
The matter can never
be conclusively determined until all of the
facts of a particular case are known.
26
For, as Blackman cautions: ‘[t]he
very wide jurisdiction and discretion it [s 252] confers on the court
must, however, be
carefully controlled in order to prevent the
section from itself being used as a means of oppression’.
27
[32] Notwithstanding the wide discretion conferred
on the court it is essential that an applicant should formulate the
relief that
is sought (
Breetvedt v Van
Zyl
;
28
Lourenco v Ferela (Pty) Ltd (No1)
29
).
Here, as I have already shown Nel has simply failed to establish
which
Lejara Entities
(and
on what basis) should be encompassed by the order of the court. Every
amendment cast the net wider. In heads of argument filed
with this
court there was yet a further attempt to amend the relief sought to
read:
‘
1.1 For the purposes of such
valuation, the said value shall be determined as the equivalent of
21% of the value of the businesses,
as a going concern at 28 February
2009, of Lejara ERP Solutions (Pty) Ltd (formerly known at Matlotlo
Trading 28 (Pty) Ltd), Lejara
Business Intelligence (Pty) Ltd
formerly known as De La Harpe Trading (Six) (Pty) Ltd), Lejara
Investment Holdings (Pty) Ltd, Lejara
Informational Management (Pty)
Limited, Lejara Enterprise Solutions (Pty) Limited, Lejara Enterprise
Outsourcing (Pty) Ltd, Lejara
Change Management (Pty) Limited, any
other entity trading or using the name Lejara in the SAP consulting
and/or SAP software industry
and [the company] which shall be deemed
to be one going concern consolidated as such and all inter-company
liabilities or expenses,
and all payments made to [Louw, Du Preez,
Mothupi and Lindoor] by way of remuneration from [the company] after
31 July 2005, shall
be ignored.
. . .
1.3 [Louw, Du Preez, Mothupi and Lindoor] shall pay
interest to the applicant on the value so determined at the rate of
15,5% per
annum from 28 February 2009 to date of payment.’
[33] In addition to the claim for interest that
had not been sought in any of its previous incarnations, the order
prayed sought
relief against the 10
th
and 11
th
appellants, Lejara Enterprise Outsourcing (Pty)
Ltd, Lejara Change Management (Pty) Limited, and as previously ‘any
other
entity trading or using the name Lejara in the SAP consulting
and/or SAP software industry’. It would appear that what was
envisaged by the inclusion of the additional unidentified entities
was that an order should issue against entities that are not
parties
to the proceedings. The absurdity of such a course of conduct is
patent. Moreover, what was sought, absent any factual
foundation, was
that all of the identified and unidentified Lejara
entities together with the company be deemed to be one going concern
and consolidated
as such. The absurdity is thus compounded. In any
event as s 19 bis
30
is only applicable in circumstances where parties
to civil proceedings consent to a referral to a referee, it is
plainly inapposite
(even if just as a point of reference –
which is what counsel submitted) to a situation such as one
encounters here where
the parties are at loggerheads with each other.
Unsurprisingly counsel was unable to point to any such or similar
order having
issued by courts either in this country or England.
[34] Finally, where a liquidator has reason to
believe that a pre-liquidation transaction entered into by a company
may be impeachable,
it is his or her duty to make proper enquiries
into the transaction and if satisfied that it is impeachable it is
the duty of such
liquidator, provided that the creditors approve of
his action, to institute proceedings to set aside those
transactions.
31
As it was put in
Sackstein
NO v Proudfoot SA (Pty) Ltd
:
32
‘
In terms of s 391 of the
Companies Act it is the duty of the liquidator “forthwith to
recover and reduce into possession”
all such assets and
property. This means that the liquidator must take all steps
necessary to fulfil the prescribed duty. In the
case of voidable
transactions, he must take the steps that are necessary for the
impeachment of the transaction. This he can do
in the Republic of
South Africa, irrespective of where the property is situate.’
Here, Nel’s allegations of asset stripping
and diversion of the business of the company, if well founded, ought
on the winding-up
of the company to have warranted the attention of
the liquidators. Had those transactions not survived scrutiny, the
liquidators
would have been obliged, in the discharge of their duty,
to have taken steps to impugn those transactions. The liquidators are
given wide powers by sections 400
33
,
402
34
and 403
35
of the Act. I have little doubt that any such
investigations as they may have caused to be made would have been
invaluable to the
court hearing the matter. Notwithstanding that
these were proceedings against fellow directors Nel may have been
better served
from a practical point of view, in asking for the
matter to have been stayed until the liquidators had discharged their
duties
(even if just preliminarily) and reported on the steps that
they had taken in the discharge of their various duties envisaged by
the Act.
[35] As is patent from the affidavits that I have set out in greater
detail than is absolutely necessary, they reveal sharp disputes
of
fact upon a number of material issues. In my view those disputes
could only have been decided after oral evidence had been heard
in
terms of the rules of court. To my mind what is envisaged by the
section is a full investigation into the circumstances of the
alleged
oppression, if needs be with viva voce evidence on both sides. It was
thus impossible on the disputed, and in some crucial
respects meagre,
material to arrive at any reasonable conclusion or fair determination
under the section. No referral of the disputes
to viva voce evidence
was sought by Nel either in this court or the one below. It
accordingly does not arise. In my view, on the
papers as they stood,
the various disputes of fact constituted an insuperable obstacle to
the grant of relief to Nel under s 252.
[36] There remains the question of costs. As I have shown Nel
obtained no more than was consented to by Louw, Du Preez, Mothupi
and
Lindoor. It follows that but for the consent, the application ought
to have been dismissed in its entirety. Given that Nel
chose in the
face of the consent, to go to a full hearing on the papers in pursuit
of the additional relief on which, as I have
shown, he was not
entitled to succeed, he ought to have been mulcted with those costs
in the court below. It follows that the costs
order of the court
below cannot stand and accordingly falls to be set aside. For the
rest, in my judgment, the appeal fails and
so does the cross appeal.
[37] In the result:
1 Both the appeal and cross appeal are dismissed, in each instance
with costs, such costs, where applicable, to include those consequent
upon the employment of two counsel.
2 Paragraph 2 of the order of the court below is set aside and in its
stead is substituted:
‘
The applicant is ordered to pay the costs
of the application’.
___________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: C van der Westhuizen SC
D
B du Preez
A
R Venter
Ross
& Jacobsz Inc
Pretoria
McIntyre
& Van der Post
Bloemfontein
For
Respondent: J R Peter SC
Instructed
by:
Fluxmans
Inc
c/o
Friedland Hart Solomon & Nicolson
Pretoria
Lovius
Block
Bloemfontein
1
Nel
appears to allocate 21 per cent of the shareholding to
Louw,
Du Preez, Mothupi and himself and 16 per cent to Lindoor.
2
The
Fifth Respondent.
3
The
Sixth Respondent.
4
The
Seventh Respondent.
5
The
Eight Respondent.
6
The
Ninth Respondent.
7
The
Tenth Appellant.
8
The
Eleventh Appellant.
9
2002
(4) SA 60
(W) para 36.
10
1947
(3) SA 525
(A) at 531.
11
[1993] ZASCA 169
;
1994
(2) SA 588
(A) at 605H-J.
12
See
[zRPz] APCO Africa (Pty) Ltd & another v APCO
Worldwide Inc
[2008] ZASCA 64
;
2008 (5) SA 615
(SCA).
13
LCB
Gower ‘Company Law ― Oppression of Minorities’
(1958) 21
MLR
653.
14
[1958]
3 All ER 66.
15
1954
(1) SA 231
(E) at 241A-B.
16
Per
Corbett J in
Bader & another v Weston &
another
1967 (1) SA 134
(C) at 148B.
17
[1973]
AC 360
(HL) at 379
b
-
380
b;
[1972]
2 All ER 492
at 500
a
–
h
.
[zRPz]
.
18
[1992]
2 All ER 961
at 966.
19
1969
(3) SA 629
(A) at 678G-H.
20
In
Re London School of Electronics Ltd
[1986] 1 Ch 211
at 222.
21
Lourenco
v Ferela (Pty) Ltd (No1)
1998 (3) SA
281
(T) at 295F-H.
22
Blackman
Commentary on the Companies Act
Vol
2 p9-44.
23
(1966)
1 All ER 242
at 246.
24
See
fn 17.
25
1960
(3) SA 467
(E) at 478D-E cited with approval in
Donaldson
Investments v Anglo Transvaal Collieries
1983
(3) SA 96
(A) at 120A.
26
Blackman
p 9-51.
27
Blackman
p 9-4.
28
1972
(1) SA 304
(T) at 315.
29
1998
(3) SA 281
(T) at 295-296.
30
Subsection
(1) of 19
bis
provides: In any civil proceedings any court of
a provincial or local division may, with the consent of the parties,
refer . .
.’.
31
Rennie
NO v Gordon & another NNO
1988 (1)
SA 1
(A) at 21J-22A.
32
2003
(4) SA 348
(SCA) para 22.
33
Section
400 inter alia provides:
‘
(1) A liquidator shall examine the affairs and
transactions of t
he
company before its winding-up in order to ascertain―
(a) whether any of the directors and officers or past
directors and officers of the company have contravened or appear to
have
contravened any provision of this Act or have committed or
appear to have committed any other offence;
. . .
(2) A liquidator shall, before lodging his final
account with the Master, submit to him a report containing full
particulars of
any such contraventions or offences, suspected
contraventions or offences and any such ground which he has
ascertained.
(3)(a) Any report submitted to the Master under
subsection (2) shall be confidential and shall not be available for
inspection
by any person.'
34
Section
402 inter alia provides:
‘
Except in the case of a members’ voluntary
winding-up, a liquidator shall, as soon as practicable and, except
with the consent
of the Master, not later than three months, after
the date of his appointment, submit to a general meeting of
creditors and contributories
of the company concerned a report as to
the following matters:
(a) the amount of capital issued by the company and the
estimated amount of its assets and liabilities;
(b) if the company has failed, the causes of the
failure;
. . .
(d) whether or not any director or officer or former
director or officer appears to be personally liable for damages or
compensation
to the company or for any debts or liabilities of the
company as provided in this Act;
. . .
(f) whether or not further enquiry is in his opinion
desirable in regard to any matter relating to the promotion,
formation or
failure of the company or the conduct of its business;
(g) whether or not the company has kept the accounting
records required by section 284, and, if not, in what respects the
requirements
of that section have not been complied with. . .'
35
Section
403 inter alia provides:
‘
(1)(a) Every liquidator shall, unless he
receives an extension of time as hereinafter provided, frame and
lodge with the Master
not later than six months after his
appointment an account of his receipts and payments and a plan of
distribution or, if there
is a liability among creditors and
contributories to contribute towards the costs of the winding-up, a
plan of contribution apportioning
their liability.
(b) If the final account lodged under paragraph (a) is
not a final account, the liquidator shall from time to time and as
the
Master may direct, but at least once in every period of six
months (unless he receives an extension of time), frame and lodge
with the Master a further account and plan of distribution. . .'