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[2018] ZAGPPHC 251
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Erasmus v Kalentra Deals 120 CC and Others (12223/16) [2018] ZAGPPHC 251 (25 January 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, PRETORIA
CASE
NO:
12223/16
DATE:
25/01/2018
In
the application of:
JAC
ERASMUS
Applicant
and
KALENTRA
DEALS 120 CC
First
Respondent
STEYN
SJS Second
Respondent
BMS
TAX
CONSULTANTS Third
Respondent
JUDGEMENT
NAIRAJ:
[1]
The applicant in these proceedings seeks an order in the following
terms: [1.1] Transfer of 10% membership interest in the first
respondent to his name;
[1.2]
A forensic audit to be conducted by a firm of independent auditors
into the affairs of the first respondent, over a specified
period, to
establish the value of the first respondent and such audit to be paid
for by the first respondent;
[1.3]
Interim interdictory relief preventing alienation, burdening or
encumbering of the first respondent's assets and funds, pending
finalization of the forensic audit.
[2]
The applicant is Johannes Erasmus, an adult male and former farm
manager at the farm Harlestone, Mpumalanga.
The 1
st
respondent is a Close
Corporation ((Kalentra), duly incorporated in terms of the
Close Corporations Act,
with registered address at Three
Rivers, Vereeniging, Gauteng. The 2nd
respondent is
a medical practitioner and the only
registered member of Kalentra which owns the farm Harlestone. The 3
rd
respondent is a tax consulting practice and a close corporation with
registered offices in Vereeniging.
[3]
The applicant was employed as a farm manager of the farm Harlestone
from November 2005 until October 2015. The farm belonged
to the first
respondent. In terms of clause 4.4 of the contract of employment
dated 30 November 2005, entered into between the
applicant and the
first respondent the applicant is entitled to ten percent of the
member’s interest in the 1
st
respondent.
[4]
The agreement makes provision for the applicant to receive a 1%
membership interest in Kalentra annually commencing from 2006
and
includes a share in the profits of the 1st respondent. The applicant
was not involved in the daily financial and administrative
running of
Kalentra because he concentrated on operational duties as the
farm manager.
[5]
The applicant considered the signing of the agreement as both an
opportunity and an investment. In November 2005, one Dr Fulton
joined
Kalentra as a member. The 2
nd
respondent and Dr Fulton had
50% members' interest each in Harlestone.
[6]
On 1 February 2008 a meeting was held between the 2nd respondent and
Dr Fulton. The minutes of that meeting confirm the value
of the farm
to be R12 000 000 Of importance to the applicant is that a 2%
members' interest was so recorded as being his as per
the minutes of
the meeting.
[7]
On 28 February 2008, the immovable property was valued at
R11 000 000.
This
is evinced by a valuation certificate by one Clive Lang. The 2nd
respondent has since bought out Dr Fulton in 2015.
[9]
Things turned sour in the relationship after the applicant suffered a
stroke in May 2015 and was booked off until August
2015. He
resigned effective end October 2015.His wife who was also employed at
the farm was also retrenched.
[10]
He then received a letter and valuation dated 15 December 2015 by
3rc1 respondent. The second respondent,
requested
his banking details and gave an
undertaking
to pay R 747 457,30 for applicants
10% membership interest in
1s t
respondent within 6 months.
[11]
The applicant believed that the 1st respondent's net assets were
valued at R7 474 573, 00 by the 3rd
respondent as evinced by a valuation
report by the 3rd respondent dated
10 December
2015. At the beginning of 2015 the applicant compiled his own
inventory in respect of the movable assets of the first
respondent.
His investigation revealed that the first respondent owns movable
assets to the amount of no less than R 13 485 050,
00.
[12]
In February 2008, the immovable property of the first respondent was
valued at eleven million rand (R11,
000 000). The
applicant concluded therefore that his ten percent (10%) membership
interest in the first respondent would amount
to three million three
hundred thousand (R3, 300 000) being 10% of R 33 000 000.
[13]
The offer to pay R 747 457, 30 came as a shock and he consulted his
attorneys on the 5t h January 2016. He was further
surprised
when he conducted a
Windeed
search on the 6
th
of
January 2016 which reflected·
that the second respondent was the
only active
member of the first respondent. The search revealed that no
membership interest in the first respondent was ever registered
in
the applicant's name.
[14]
On the 8
th
of January 2016 the applicant's attorneys wrote
a letter to the first and second respondents the salient aspect of
which are set
out hereunder:
1.
Demanding immediate registration of the applicants ten percent (10%)
membership in the first respondent,
2.
Rejecting the second respondent's offer to pay R 747 457, 30 as the
applicant's ten percent(10%) membership interest
in the first
respondent.
3.
Inviting the second respondent to concede to the current value of the
first respondent being R 33 000 000 and to do so
within 7 days, in
the failure of which the applicant requested the appointment of an
independent valuator.
4.
Offering to accept payment of R 3 300 000 for his ten percent (10%)
membership interest in the first respondent.
[15]
In response to his letter, the respondent's attorney addressed a
letter dated 61h January to the applicant's
attorney with a further valuation
report by the third
respondent
dated 7
th
January 2016.
[16]
According to this letter marked annexure O, the following is
recorded:
1.
That the second respondent admits the contract of employment between
the applicant and the first respondent.
2.
That the current value of the assets of the first respondent at
around R 33 000 000.
3.
An alleged loan account of the second respondent showing indebtedness
of the first respondent to the second
respondent in the amount of R21
402 137.
4.
Further alleged debts of the first respondent in the amount of R 10
227 802.
5.
The first respondent's net asset value as R234 315, 00 and therefore
concluding that the ten percent
members interest that the applicant
held in the first respondent amounted to R 23 431, 50.
[17]
This sudden change for the worse in the value of his membership
interest against the back drop of no fewer than three valuations,
prompted him to bring this application. Paragraph 5 & 6 of the
founding affidavit states:
"The
second respondent has been misleading the applicant regarding the
value of member’s interest in the 1st respondent
apparently in
collaboration with the third respondent. The purpose of this
application is to protect my interests and to enable
me to make
informed decision about my membership interest in the 1
st
respondent". I am unable to make such decision, due to the
inconsistent and contradiction version, pertaining to the
value of the 1s t respondent presented to me
by the 2
nd
and 3
rd
respondent recently."
[18]
The second respondent argues that the applicant's right to take up
his 10% membership was never disputed and that he offered
the
applicant in writing, in the letter dated 15 January 2016, to
indicate whether the applicant would prefer to accept a
cash
amount or take up the 10% membership in the first respondent.
[19]
This clearly does not reflect the
content of the letter or the
purport thereof.
Paragraph 17 of the particular letter reads as follows:
"In
the circumstances, we look forward to hearing from you as to whether
your client is willing to agree to the valuation of
its 10% in
Kalentra(being an amount of R23 431.50 (twenty three thousand
four hundred and thirty one rand and fifty cents)
alternatively
whether it would prefer it (or its trustee) to be appropriately
recorded on Kalentra's member’s register as
10% member. In this
regard, should your client chose this option, our client will
be in contact with your client directly
in an effort to facilitate
the-payment of outstanding contributions from your client".
[20]
The second respondent states that as a member, the applicant has
access to all the financial records of the first respondent
He
believes that the reason why the applicant desires to have his
interest valuated is because the applicant is not willing to
pay for
the valuation of his interest in the first respondent which according
to the second respondent, the applicant wants to
sell back to the
respondents.
[21]
Strangely the respondent in the very next paragraph alleges that the
respondent has failed to set out any justification legally
or
otherwise for the request to valuate the first respondents business.
The respondent also contends that the applicant has failed
to make
any financial consideration in return for his membership in the first
respondent.
[22]
In June 2016, the second respondent caused the name of the applicant
to be registered as a member of the second respondent
with a 10%
member's interest therein. The first prayer has therefore become
moot. I pause at this juncture to note that the application
was
launched in February 2016. All that remains to be decided on this
score is the issue of costs. The respondent belatedly contends
that
the applicant has failed to contribute anything in respect of the
purchase of his member's interest as he is required to do
so by law.
In addition he states that any physical labour by the applicant
cannot equate to a monetary contribution as is the legal
requirement.
[23]
The interim relief sought by the applicant is to be decided on the
criteria relating to the determination of an interim interdict
:
Those requirements were set out in
Webster v Mitchell
1948
(1) SA 1186
(WLD) as (i) a
prima facie
right that might be
open to doubt; (ii) a reasonable apprehension of irreparable and
imminent harm to the right if the interdict
is not granted; (iii) the
balance of convenience favourable to the grant of the interdict; and
(iv) the absence of any other adequate
remedy.
[24]
The applicant has shown that he has a prima facie right and this is
evinced by the late registration of his membership in the
second
respondent. The sequence of
events
and late disclosure of the first respondent being indebted to the
second respondent gives rise to doubt. The likelihood of
dissipation
of assets or encumbering the first respondent reveals that reality of
irreparable harm. The change in the value of
the applicant’s
membership from R 747 457, 30 to R23 431, 50 is indeed surprising.
[25]
The applicant entertained the genuine bona fide belief at all times
that he was a member of Kalentra. Such belief was founded
on for
example a power of attorney to tender for cattle on 12 May 2008
which was repeated on 23 September 2010.
[26]
There is no other remedy available to the applicant and there is
equally less prejudice to the respondents than to him if the
interim
order is granted. The balance of convenience indeed favours the
applicant.
[27]
In the result the application is granted in the following terms:
ORDER
[28]
The second respondent is prevented from alienating, burdening or
encumbering the first respondent's assets and funds, pending
finalization of a forensic audit to be conducted by an independent
auditors firm into the affairs of the first respondent, over
a 6
months period, to establish the value of the first respondent and
such audit is to be paid for by the first respondent;
[29]
Costs will follow the result and the applicant is awarded costs
including costs of counsel.
____________________________
NAIR
AJ
ACTING
JUDGE OF THE HIGH COURT
APPEARANCE:
COUNSEL
FOR THE APPLICANT
: J GREEF
INTRUCTED
BY
: WYNAND PRINSLOO AND VAN
EENDEN
COUNSEL
FOR RESPONDENT
: ADV. B R ANDERSON
INTRUCTED
BY
: CLIFF DEKKER HOFMEYR INC
DATE
OF HEARING
DATE
OF JUDGEMENT