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[2019] ZALMPPHC 66
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Ferreira v Swift-er (Pty) Ltd and Another (4565 /2019) [2019] ZALMPPHC 66 (12 December 2019)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
LIMPOPO DIVISION,
POLOKWANE
(1)
REPORTABLE:YES/
NO
(2)
OF
INTEREST TO OTHER JUDGES: YES/
NO
(3)
REVISED
CASE
NUMBER: 4565 /2019
In
the matter between:
JOHAN
THEO FERREIRA
APPLICANT
AND
SWIFT-ER
(PTY) LTD
FIRST
RESPONDENT
PIETER
IGNATIUS PAPSDORF
SECOND RESPONDENT
JUDGEMENT
KGANYAGO
J
[1]
The applicant and the second respondent are both directors and
shareholders of the
first respondent. They each hold 50% shareholding
in the first respondent. The first respondent is rendering emergency
medical
services around Hoedspruit area in Limpopo. The ambulances
that are being used by the first respondent are registered in the
names
of the second respondent as a temporary arrangement. The
applicant was entrusted with the day to day management of the first
respondent.
[2]
The applicant has brought an application seeking an order that the
first respondent
be finally wound-up and placed in the hands of the
Master in terms of section 81 (1) (d) of the Companies Act
[1]
(the Act).
[3]
The grounds upon which the applicant has based his application are
that whilst he was busy
compiling an application to apply for the
necessary licence from the Department of Health to enable them to
practice as emergency
services providers he discovered quite a number
of irregularities in the business which was previously operated by
the second respondent.
When he confronted the second respondent about
the irregularities, he became violent to the extent that it was
impossible to properly
manage the business of the first respondent.
The second respondent did a sim-swap of his emergency cell phone
without his knowledge.
The second respondent confronted him in the
office and told him that it was impossible to work with him and he
also threatened
to ruin his life.
[4]
That resulted in the applicant consulting with his attorney for
assistance. The attorneys
of both parties started communicating with
each other with the aim of procuring a possible settlement for both
parties. By then
the animosity between the parties was to such an
extent that the applicant’s access to the business bank account
has been
stopped by the second respondent. The second respondent had
removed all the ambulance equipments from the business premises and
was refusing the applicant with access to them. The parties could not
reach any settlement agreement. That resulted in the applicant
launching the present application on urgent basis. The application
was struck off the roll due to lack of urgency.
[5]
The second respondent in his answering affidavit concedes that
the parties were negotiating
a settlement, but denies that the
parties have reached a deadlock. According to the second respondent,
there are other alternative
remedies, and it is not just and
equitable to liquidate the first respondent.
[6]
According to the second respondent, at a meeting of directors,
the applicant has
threatened him that he will implement certain
procedures in operation without his knowledge or consent. The second
respondent concede
that he did a sim-swap of the applicant’s
emergency cell phone as the applicant has resigned as an employee of
the first
respondent and was refusing to return the cell phone. The
second respondent further concede that he had blocked the applicant’s
business bank card and state that he did so as the applicant was
withdrawing the money from the business account without his prior
knowledge. He did so in trying to safeguard the rights of the first
respondent. However, he later unblocked the card. The second
respondent has also stated that the applicant is correct to state
that he did not trust him anymore. However, he denies that the
negotiations have reached a deadlock, and state that the applicant
had only made one offer and abruptly stopped negotiations and
prematurely launched the present application in order to blackmail
him into a settlement that is favourable to him (applicant).
[7]
The first respondent is a solvent company and the applicant has
brought an application
that it be wound up in terms of section 81 (1)
(d) of the Act. Section 81 (1) (d) of the Act reads as follows:
“
(1) A court may
order a solvent company to be wound up if-
(d) the company, one or
more directors or more shareholders have applied to the court for an
order to wind up the company on the
grounds that-
(i) the directors are
deadlocked in the management of the company and the shareholders are
unable break the deadlock, and-
(aa) irreparable injury
to the company is resulting, or may result, from the deadlock; or
(bb) the company’s
business cannot be conducted to the advantage of shareholders
generally, as a result of the deadlock;
(ii) the shareholders are
deadlocked in voting power, and have failed for a period that
includes at least two consecutive annual
general meeting dates, to
elect successors to directors whose terms have
expired;
or
(iii) it is
otherwise just and equitable for the company to be wound up;”
[8]
In terms of section 81(1) (d) directors or shareholders of the
company may invoke
the provisions of this section in instances where
there is a deadlock or where it is just and equitable for the company
to be wound
up. This section will most probably come to the rescue of
small businesses which consist mostly of two directors and two
shareholders
where in it is easy for one director who will also be a
shareholder to make the proper running of the company to be
impossible.
[9]
In
Thunder
Cats v Nkonjane Economic Prospecting
[2]
Malan JA said:
“
Meyer J’s
conclusion that the just and equitable ground in s 81(1)(d)(iii)
should not be interpreted so as to include only
matters similar to
the other grounds stated in s 81(1) is clearly correct. However, his
conclusion that s 81(1)(d)(iii) modified
the ‘judicially
developed deadlock category’ is doubtful. Meyer J was dealing
with what has been (inappropriately)
termed the ‘complete
deadlock’ category and not with the ‘deadlock principle’.
Indeed he made the winding-up
order on what has been referred to as
the ‘deadlock principle’. This case is also concerned
with the ‘deadlock
principle’ or, preferably, the failure
of the relationship between the parties. The examples of ‘deadlock’
given
in s 81(1)(d) (i) and (ii), that is, where either the board or
the shareholders are deadlocked are examples only, and, it seems
to
me, are not exhaustive and do not limit s 81(1)(d)(iii). The use of
the word ‘otherwise’ in the subsection does
not limit
what is meant by ‘just and equitable’. On the contrary,
it extends the grounds of winding-up to include other
cases of
deadlock. It is conceivable that it may be just and equitable to
liquidate even if the shareholders have been unable to
elect
successors to directors for less than the stipulated period that
includes two consecutive annual general meeting dates, as
s
81(1)(d)(ii) requires.”
[10]
The applicant and the second respondent are making counter
allegations of threats against each other.
Both parties are in
agreement that they do not trust each other to the extent that the
second respondent had to block the business
bank card of the
applicant. The applicant was tasked with the running of the day to
day affairs of the first respondent. If the
business bank card which
he had to use to run the day to day affairs of the first respondent
is blocked, how is he expected to
manage the first respondent
properly. That shows that their relationship has irretrievably broken
down to the extent that it is
now toxic.
[11]
This is a small company where the same directors are the same
shareholders and they hold equal
powers. Therefore, the smooth
and proper running of the first respondent depends on full
co-operation, dedication and honesty
of the other
director/shareholder. In this case both directors/shareholders are on
their own missions which is turn will affect
the proper management of
the first respondent.
[12]
In
Thunder Cats
case supra at para 17 Malan JA said:
“
The word
‘deadlock’ is not always given the same meaning. The
reference to deadlock in the previous paragraph and also
in s
81(1)(d)(i) and (ii) was described as a case of ‘complete
deadlock’, but there is no particular advantage in the
introduction of this term. The ‘deadlock principle’, on
the other hand, is –
‘
founded
on the analogy of partnership and is strictly confined to those small
domestic companies in which, because of some arrangement,
express,
tacit or implied, there exists 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 the partnership business.”
[13]
The first respondent is in the business of rendering emergency
services. After rendering the service an
invoice must be issued in
the name of the first respondent and payment must be made into the
business bank account of the first
respondent. The second respondent
is accusing the applicant of trying to defraud or steal from the
first respondent as the first
respondent had rendered services to KZN
Trail Running and the invoice was issued on the letterhead of the
first respondent but
the bank details was that of the applicant. The
applicant in his replying affidavit has stated that he had personally
rendered
the services at the event and his mistake was to invoice the
client using the first respondent’s letterhead.
[14]
The applicant has offered the same services that is being
offered by the first respondent to KZN Trail
Running. He was
therefore competing with the first respondent whilst he is a director
and shareholder. In the first place by rendering
the same services
offered by the first respondent to KZN Trail Running he was
conflicted. Secondly he had a fiduciary duty to act
in good faith and
to the best interest of the first respondent, but has failed to do
so. All these shows that the trust relationship
between the two
directors/shareholders has irretrievably broken down. Taking into
consideration the counter allegations levelled
against each other, it
will be difficult to restore the trust that has been broken and work
with each other in future.
[15]
The second respondent denies that the parties are deadlocked, but
that the applicant abruptly
stopped negotiations unilaterally by
launching the present application in order to blackmail him into a
settlement that is favourable
to the applicant. If indeed the
applicant was trying to blackmail the second respondent, that shows
that there is no relationship
that still exist between the
directors/shareholders.
[16]
The deadlock in this case is not about how best can they settle
the matter, but it relates to how
they can properly manage the first
respondent. In this case the manner in which the applicant and the
second respondent are conducting
themselves to each has definitely
affected the management of the first respondent. The first respondent
will no longer be managed
properly if the other director is able to
render services in competition with the first respondent and whilst
the other director
is able to block the business bank card of the
other director which in turn will affect the proper management of the
first respondent.
[17]
The particular personal relationship of confidence and trust which
must exist between the applicant
and the second respondent is no
longer there. It will therefore be just and equitable if the first
respondent Swift-ER (Pty) Ltd
be finally wound up.
[18]
In the results I make the following order:
18.1.
The first respondent Swift-ER (Pty) Ltd is finally wound-up and
placed in the hands of the Master.
18.2.
The costs of the application are to be costs in the winding-up.
MF. KGANYAGO J
JUDGE OF HIGH
COURT OF SOUTH AFRICA, LIMPOPO DIVISION, POLOKWANE
APPEARANCE:
COUNSEL FOR
APPLICANT
: ADV BRESLER
INSTRUCTED BY
:
CHM STEYN ATTORNEYS
COUNSEL FOR 1
ST
AND 2
ND
RESPONDENTS: JF MOOLMAN
INSTRUCTED BY
: ANTON SMITH
ATTORNEYS
DATE OF HEARING
:
20 NOVEMBER 2019
DATE OF JUDGEMENT
:
12
TH
DECEMBER 2019
[1]
Act 71 of 2008
[2]
2014 (5) SA 1
(SCA) at para 14