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[2018] ZAGPPHC 639
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Tait NO and Another v Wescom Business Ventures (Pty) Ltd and Others, Tait NO and Others v Van Niekerk and Other (29833/2016, 2495/2016) [2018] ZAGPPHC 639 (2 March 2018)
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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA,
GAUTENG DIVISION, PRETORIA
(1)
NOT
REPORTABLE
(2)
NOT OF
INTEREST TO OTHER JUDGES
(3)
REVISED.
CASE NO: 29833/2016 &
2495/2016
2/3/2018
In
the matter between:-
ANDREW
SAUL TAIT NO
First
Applicant
LYNETTE
TAIT NO
Second Applicant
and
WESCOM
BUSINESS VENTURES (PTY)
LTD
First Respondent
(Registration
No: [….])
JOSEF
FREDERICK VAN NIEKERK NO
Second
Respondent
MARIA
MAGDALENA VAN NIEKERK NO
Third
Respondent
JACOBUS
FRANCOIS VAN HEERDEN NO
Fourth Respondent
AND
In
the matter between:-
ANDREW
SAUL TAIT
NO
First Applicant
LYNETTE
TAIT NO
Second Applicant
ANDREW
SAUL TAIT
Third Applicant
[IDENTITY
NUMBER: [….]]
WEBCOM
BUSINESS VENTURES (PTY) LTD
Fourth Applicant
[Registration
No: [….]]
and
JOSEF
FREDERICK VAN NIEKERK
First Respondent
[IDENTITY
NUMBER: [….]]
JOSEF
FREDERICK VAN NIEKERK NO
Second
Respondent
FIRST
NATIONAL BANK
Third Respondent
JUDGMENT
CRUTCHFIELD
AJ:
[1]
This matter comprised three applications
that were heard together. The papers under case number 29833/2016
alone, spanned in excess
of 560 pages.
[2]
Save where specifically indicated, the
parties are referred to as they are cited under case number
29833/2016.
[3]
Case number 29833/2016 was an
application by the Trustees of the Tait Family Trust for the
winding-up of the first respondent, Webcom
Business Venture (Pty) Ltd
('Webcom'), ('the winding-up'). The second, third and fourth
respondents were the Trustees of the LVN
Family Trust (the 'Van
Niekerks').
[4]
The Tait Family Trust (the'TFT') held
60% of the issued share capital in Webcom, and the LVN Family Trust
(the 'LVN'), the remaining
40%.
[5]
The applicants (the'Taits'), alleged a
deadlock between the TFT and the LVN and claimed the winding-up of
Webcom as a solvent company
in terms of section 81(1)(d)(i) of the
Companies Act, 71 of 2008 ('the Act').
[6]
The Van Niekerks opposed the winding-up
applicatio.n
[7]
Case number 2495/2016 was an urgent
application launched inter alia by the Taits on 14 January 2016, to
prevent both the second
respondent (an LVN trustee}, and Josef
Frederick Van Niekerk, the first respondent under case number
2495/2016 ('Josef'), from
accessing Webcom's bank accounts ('the
urgent application').
[8]
First National Bank was cited as a party
under case number 2495/2016 but did not participate in the
proceedings and no order was
sought against it.
[9]
The Taits brought the urgent
application, initially ex parte. An interim order was granted on 19
January 2016, without prior service
on the second respondent or on
Josef. The urgent application was served subsequently, on 20 January
2016, on the Van Niekerks'
attorney only.
[10]
Both the second respondent and Josef opposed the urgent application
and launched a counter-application
claiming that the terms of an
agreement allegedly concluded between the TFT, LVN and Josef in
settlement of their disputes under
case numbers 29833/2016 and
2495/2016, be given effect.
[11]
The parties agreed at the hearing that
only the costs of the urgent application required my attention.
[12]
The LVN and Josef sought the following
relief in respect of the urgent and counter-applications under case
number 2495/2016:
12.1
Payment of the costs of the urgent
application heard on 19 January 2016 by the applicants cited under
case number 2495/2016; and
12.2
That the first and second applicants, in
their representative capacity as the trustees of the TFT be ordered
to take all steps necessary
to ensure that the Tait Family Trust
complies with the terms of the agreement referred to as annexure
'NV28',
concluded
between the TFT and the LVN and signed by the second respondent on
behalf of the LVN at Barberton on 23 March 2016. (Annexure
'NV28'
is
located in Volume 4 pages 321- 337 of case number 2495/2016.)
12.3
Leave to Josef and the second respondent
to approach the court on the papers duly filed or supplemented as
necessary for:
12.3.1
Appropriate relief in the event that the first and second applicants'
fail to adhere to the agreement,
annexure
'NV28',
within ten
days from date of service of this order on their attorneys of record;
12.4
Payment
by the applicants under case number 2495/2016, of the costs of the
counter-application on the scale as between attorney
and client.
[13]
Section 81 of the Companies Act, 71 of
2008 ('the Act'), provides that:
'(1)
A court may order a solvent company to be wound up if - ......
(d)
the
company, one or more directors or one 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 to 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; ...'
[14]
A court dealing with an application in
terms of section 81(1)(d)(i) is vested with a discretion to grant or
refuse the application.
[15]
The Taits relied on a deadlock between
Webcom's shareholders, caused by the alleged failure of the second
respondent, (initially
the sole director of Webcom), to keep the
first applicant informed as to the running and management of Webcom's
business. The applicants
alleged that Webcom's business had come to a
standstill as a result, and that it was just and equitable that
Webcom be wound up.
[16]
The Van Niekerks painted a picture
wholly at variance with that of the Taits. Whilst the Van Niekerks
essentially conceded the deadlock,
they alleged that it would be
unjust to grant the winding-up order as the first applicant had
'unclean hands'. The first applicant
allegedly engineered the
deadlock and then sought to rely upon his own misconduct as the basis
for the winding-up proceedings.
[17]
The first applicant allegedly caused the
deadlock with a view to hijacking Webcom's business and financial
resources, and took decisions
in his own interests to the detriment
of Webcom and its shareholders. Thus, the first applicant breached
his fiduciary obligations
to Webcom and should not escape the
consequences of his actions by succeeding in Webcom's winding-up.
[18]
The winding-up application was issued
during April 2016, on an ex parte basis. Although the application was
served on their attorney,
the Van Niekerks were not cited as parties
to the proceedings. This was not withstanding that the basis for the
winding up
was the alleged dispute between the shareholders,
and, the Taits' acknowledgment that LVN was the minority shareholder.
The result
was a successful application for leave to intervene by the
Van Niekerks.
[19]
The chronology of events in these
applications is material:
19.1
It
was common cause that Webcom's bank account showed a positive balance
of R1 063 444.54 as at 31 December 2015.
19.2
The
shareholders meeting at which Josef was removed as the sole director
of Webcom, and the first applicant appointed to the position,
was
convened on 8 January 2016.
19.3
The
urgent application was launched on 14 January 2016 and the interim
order granted on 19 January 2016.
19.4
Thereafter
the first applicant convened a round table conference, held on 18
February 2016.
19.5
The
winding-up application was issued on 11 April 2016 to be heard on 30
May 2016.
The costs in the urgent
application
[20]
The Van Niekerks alleged, and the Taits
denied, that the urgent application was part of an attempted
hijacking of Webcom's business
and financial resources by the Taits.
[21]
The urgent application was premised on
the prior removal of Josef as the sole director of Webcom, and the
appointment of the third
applicant under case number 2495/2016
('Andrew'), in his stead. The respondents alleged that the removal
was unlawful and of no
force and effect, as was the appointment of
the first applicant.
[22]
The applicants alleged that Josef and
the second respondent had been furnished with due, proper and timeous
notice of the shareholder’s
meeting at which the issue of
Josef's removal as sole director of Webcom and the appointment of
Andrew was to be raised. Furthermore,
that Josef and the second
respondent had declined to attend the meeting thus justifying the
outcome. No proof of delivery of the
notice of the shareholders'
meeting was placed before the urgent court.
[23]
The alleged delivery of proper notice of
the shareholders meeting was, however, denied by Josef and the second
respondent. In the
event of service of the urgent application prior
to the granting of the interim order, the absence of notice of the
shareholders'
meeting to Josef and the second respondent would have
come to the attention of the urgent court dealing with the matter.
[24]
In effect, Josef and the second
respondent's version was that the initial email of 2 December 2015
did not include the attachment,
being the notice of the shareholders'
meeting. Hence, although the Josef received the covering email and
acknowledged as much by
way of a 'read receipt', he did not receive
the required notice advising of the shareholders' meeting.
[25]
Subsequently, a second email, including
the attachment, was sent to the Van Niekerks' attorneys on 9 December
2015, but was not
received by them. This transpired in the context of
difficulties then being experienced by the applicants' attorneys with
their
email facility.
[26]
In so far as the applicants relied upon
the 'read receipt' furnished by Josef as proof of delivery of notice
of the shareholder's
meeting, the 'read receipt' was dated 2 December
2015. It was transmitted in response to the initial email sent by the
applicants
on 2 December 2015, without the attachment.
[27]
Josef did not deny receipt of the email
of 2 December 2015, merely averred that the attachment was not
included, a fact that appeared
to be borne out by the copy of the
'read receipt' included by the Taits in the winding-up application.
[28]
The probabilities favour Josef and the
second respondent's version that delivery of notice of the
shareholders' meeting did not
take place. There would not have been
any benefit to them in not attending the meeting, if they had known
of it. Thus, the underlying
premise of the urgent application lacked
cogence. In addition, the LVN was not properly cited as a party to
the urgent application.
[29]
The completed papers demonstrated, in my
view,
that
the urgent application should have been served on the parties thereto
prior to the granting of the interim order. The failure
to do so
resulted in an injustice to Josef and to the LVN, (and potentially
also to Webcom,) which could have been avoided.
[30]
In the circumstances, I am of the view
that the applicants under case number 2495/2016 should pay the costs
of the urgent application
heard on 19 January 2016 and I intend to
make such an order.
The
winding-up application
[31]
The fact that the winding-up application
was brought
ex parte,
notwithstanding
the acknowledgment that LVN was an interested party, was a matter for
considerable disquiet. The service on LVN's
attorneys did not cure
that fundamental defect. The basis for the winding-up was the
deadlock between the shareholders, the issues
in respect of which
were heavily contested between the parties.
[32]
The Taits alleged that the winding-up
was just and equitable in the light of the deadlock.
[33]
The Van Niekerks' version was that the
winding-upwas sought not in the best interests of Webcom's
shareholders or Webcom itself,
but in the interests of Andrew
personally and a close corporation, Kelsey Construction ('the CC') of
which he was the sole member.
The Van Niekerks alleged that the first
applicant/ Andrew had not acted in good faith and posited a number of
instances in which
he had allegedly breached his fiduciary
obligations in terms of section 76 of the Act. The Taits denied these
allegations.
[34]
It was common cause, however, that
during Josef's tenure as sole director of Webcom, the business was
profitable to an extent of
approximately R1 million annually. Absent
the issues that led to the litigation, the shareholders would have
shared (proportionally
to their respective shareholding), in Webcom's
net profits for that financial year. I have already alluded to the
positive balance
in Webcom's bank account at the end of 2015.
[35]
Josef’s successful running of
Webcom's business cast doubt over Andrew and the Taits' averments
that Josef could not be trusted
to continue as the sole director of
Webcom, and had to be replaced.
[36]
In the event that the applicants were
bona fide
in
bringing the winding-up application, the prevailing circumstances
called for the citation of the Van Niekerks as parties to the
proceedings. The Van Niekerks, the LVN's trustees, were entitled to
be cited in the application.
[37]
The Van Niekerks argued that Webcom could continue as a going concern
if the agreement concluded
between the parties (at the round table
conference on 19 February 2016), in respect of the sale of LVN's
shares, continued, as
the deadlock between Webcom's shareholders
would then be broken.
[38]
The just and equitable basis of a winding-up 'involves a balancing of
the interest of the individuals
affected with the interest of good
governance and the smooth administration of justice'.
[1]
[39]
In this regard, not only did the Van Niekerks allege that the first
applicant had approached
the court with unclean hands, but that the
applicants relied upon their own misconduct as the basis for the
winding-up application.
Allegations raised by the Van Niekerks
included that:
39.1
The
first applicant / Andrew allegedly misappropriated Webcom's funds for
his personal financial gain as well as that of the CC;
39.2
The
applicants, in initiating the winding-up application, allegedly
sought to disguise the first applicant / Andrew's financial
misconduct aforementioned;
39.3
Andrew
I
the
first applicant, having allegedly ousted the second respondent as the
sole director of Webcom, allegedly sought to evade and
avoid the
consequences of his financial misconduct;
39.4
Andrew
/ the first applicant allegedly breached his fiduciary duties
inter
alia
by way of appropriating
Webcom's business opportunities for the CC, by failing to act in
Webcom's best interests as well as those
of the entire body of
shareholders, and by failing to act with the appropriate measure of
care and skill in respect of decisions
regarding Webcom.
39.5
Pursuant
to Andrew/ the first applicant allegedly undermining Webcom's
financial resources and business, Webcom was reduced to dire
financial straits and was barely trading. This was despite Webcom's
financial position allegedly being robust as and when Andrew
replaced
Josef as the sole ·director of Webcom.
39.6
The
Van Niekerks drew attention to various alleged material facts that
were not disclosed by the applicants in their founding papers,
including the alleged transfer of money from Webcom to the CC
notwithstanding that the CC still owed money on previous loans taken
from Webcom.
39.7
Hence,
the Taits were alleged to have approached the court for reasons other
than those disclosed by them.
39.8
In
short, the Van Niekerks alleged that the Taits abused the process and
procedures of the court and that the relief claimed in
the winding-up
application should not be granted.
[40]
I reiterate that the Taits denied the
allegations abovementioned. In particular, the Taits furnished a
version as to the transfer
of the money from Webcom to the CC.
[41]
It is self evident from the above broad
summary of the Van Niekerks' allegations alone, that a substantial
dispute of fact existed
in respect of the just and equitable basis of
the winding-up application. The Van Niekerks relied upon the rule in
Plascon-Evans
[2]
to the effect that such disputes are
to be resolved with reference to the admitted allegations of the
applicants read together with
the respondent's version.
[42]
An application of the rule in
Plascon-Evans must necessarily intercede in favour of the
respondents.
42.1
None
of the applicants' essential allegations in respect of the winding-up
application was admitted. (As to the deadlock, although
effectively
admitted, if the agreement was allowed to continue the deadlock would
be broken.)
42.2
The
Van Niekerks' version did not support the conclusion that it was just
and equitable for Webcom to be wound up. In effect, the
Van Niekerks'
demonstrated that such an order should not be granted.
[3]
[43]
Given the nature and extent of the
disputes arising from the various allegations and counter-allegations
made by the parties, I
do not consider it appropriate to refer the
winding-up application to oral evidence or to trial.
[44]
In the circumstances, I am of the view
that the winding-up application ought to be dismissed and I intend to
make such an order.
I deal with the costs of the winding-up
application below.
The counter-application under
case number 2495/2016
[45]
Josef, the second respondent and
effectively the Van Niekerks, sought an order that the first and
second applicants, in their representative
capacity as the trustees
of the TFT, be ordered to take all steps to ensure that the TFT
complies with the terms of the agreement
referred to as annexure
'NV28',
concluded
between the TFT and the LVN.
[46]
Leave to Josef and the Van Niekerks (the
trustees of the LVN), to approach the court on the papers duly filed
or supplemented as
necessary for:
46.1
Appropriate
relief in the event of the first and second applicants' failing to
adhere to the aforesaid agreement within ten days
from date of
service of this order on their attorneys of record;
46.2
Payment
by the applicants of costs of the counter-application on the scale as
between attorney and client.
[47]
The first applicant and the second
respondent met on 18 February 2016, in an attempt to settle the
disputes between them. It was
common cause that they agreed terms at
that meeting. Broadly stated:
47.1
The
TFT would purchase the LVN's 40% shareholding of Webcom at a value to
be determined by an independent evaluator. The Taits'
attorneys would
draft the sale of shares agreement.
47.2
KPMG
would be approached to assist with the valuation of the shares.
47.3
Furthermore,
pending finalisation of the agreement, Webcom would continue to pay
Josef’s salary, thus affording him a fair
opportunity to obtain
alternate employment.
[48]
The agreement was reduced to writing ('the recordal'), by the Taits'
attorneys and remitted to
those of the second respondent by way of a
portable document format, under cover of correspondence advising that
they should furnish
comments to the recordal in order for any
necessary amendments to be made to the document.
[49]
Two clauses additional to those agreed at the meeting, were included
by the Taits' attorneys'
in the recordal; a clause providing for the
handing over by Josef of his personal email address, allegedly used
by him in the running
of Webcom's business, and a twelve (12) month
nationwide restraint of trade.
[50]
The second respondent's attorneys retyped the recordal and amended it
allegedly to accord with
the terms agreed at the meeting. One such
amendment specified Josef as an employee of Webcom falling within the
definition of
"prescribed employee" i
n the
agreement. The clauses in respect of the email address and the
restraint of trade were deleted and the effective date of the
agreement, alleged by the second respondent as 31 December 2015, was
amended.
[51]
The second respondent signed the amended recordal on behalf of the
LVN on 23 March 2016, at Barberton
('the amended recordal'),
('annexure
'NV28"),
and returned it to the first
applicant's attorneys. (Annexure
'NV28'
is located in Volume 4
pages 321- 337 of case number 2495/2016.)
[52]
The second respondent's amendments to
the recordal led to the breakdown in the settlement between the
parties and caused the Taits
to proceed with the winding-up
application. Webcom furthermore, ceased payment of Josefs salary,
contrary to the agreement. (I
mention that the applicants admitted
their agreement to pay Josef’s salary pending finalisation of
the dispute.)
[53]
The disputed issues in respect of the
sale of shares agreement related to the handing over by the second
respondent of his personal
email address, the restraint of trade and
the effective date of the agreement. I was informed from the bar that
the issue of Josef's
employment with Webcom was being resolved before
the CCMA and I do not deal therewith.
[54]
The Taits denied the Van Niekerks'
averment that the effective date was agreed as 15 December 2015.
Despite that denial, the first
applicant did not raise the effective
date as a dispute until the applicants' replying affidavits in the
urgent application and
the winding-up application. Furthermore, the
first applicant, despite his denial, did not depose to the date that
he alleged was
the effective date, a fact of which he had personal
knowledge.
[55]
Hence, the Taits did not raise a genuine
dispute of fact
[4]
in respect of the effective date of the agreement and the Van
Niekerks' averment in that regard must stand.
[56]
Nor was the issue of the effective date
raised in the Taits' founding affidavit in the winding-up
application, which referenced
the breakdown of the agreement reached
at the round table conference. The date of 16 March 2016, was alluded
to by the Taits' counsel
in argument and sourced in the recodal.
[57]
The second respondent undertook to cease
use of his personal email address for the business of Webcom upon
implementation of the
agreement.
[58]
The second respondent / Josef opposed
the restraint of trade alleging that it was overbroad in that it
operated throughout South
Africa, and was not validly enforceable. He
alleged however that he was amendable to a reasonable restraint of
trade that was fair
and subject to adequate compensation being paid
in return.
[59]
In the circumstances, the issues raised
by the applicant do not present real disputes of fact justifying a
referral of the counter-application
to oral evidence, and the relief
sought in respect of the counter-application should be granted
together with the costs thereof.
The period sought in respect of
compliance by the Taits is not sufficient and I intend to extend it
to a period that is sufficiently
long so as to be fair to both
parties, being two months.
[60]
The Van Niekerks sought costs of the
winding-up application and counter application on a punitive
scale. The Taits on the other
hand, sought punitive costs on the
basis that the Van Niekerks were vexatious in attaching the papers in
the winding up application,
annexure "NV4C", to the
Van Niekerks' answering affidavit under case number 29833/2016. I
agree with the Taits that the
Van Niekerks conduct in this regard was
unjustifiable and caused the length of the papers in the winding-up
application to be excessively
extended. This amounted to an abuse.
[61]
The Van Niekerks should be ordered to
pay all costs arising from the attachment of annexure "NV4C",
paginated pages 319
to 392 of the winding-up application, and all
costs orders will be on the party and party scale.
[62]
In the circumstances, I grant the
following order:
1.
In
respect of the application under case number 2495/2016, the
applicants under case number 2495/2016 are ordered to pay the costs
of the urgent application heard on 19 January 2016.
2.
The
winding-up application under case number 29833/2016, is dismissed.
3.
Subject
to paragraph 3.1 of this order, the costs of the winding-up
application under case number 29833/2016, including the costs
of the
opposition thereto, are to be paid by the applicants under case
number 29833/2016.
3.1.
The
costs occasioned by the attachment of annexure
"
NV4C"
to the winding-up
application (paginated pages 319 to 392), under case number
29833/2016, are to be paid by the second, third and
fourth
respondents under case number 29833/2016.
4.
In
respect of the counter-application under case number 2495/2016:
4.1.
The
first and second applicants in their representative capacities as the
trustees of the Tait Family Trust, ('the Taits'), are
ordered to take
all steps necessary to ensure compliance by the Tait Family Trust
with the terms of the agreement referred to as
annexure
'NV28',
concluded between the TFT and the
LVN and signed by the second respondent on behalf of the LVN at
Barberton on 23 March 2016. (Annexure
'NV28'
is located in Volume 4 pages 321-337
of case number 2495/2016.)
4.2.
Leave
is granted to Josef Frederick Van Niekerk and LVN duly represented by
the second and third respondents to approach the court
on the papers
duly filed or supplemented as necessary for:
4.2.1.
Appropriate
relief, in the event that the first and second applicants' fail to
ensure compliance by the Tait Family Trust with the
agreement,
annexure
'NV28',
within
two months from the date of service of this order on the first and
second applicants' attorneys of record.
4.3.
The
first and second applicants are ordered to pay the costs of the
counter-application.
A A CRUTCHFIELD
ACTING JUDGE OF THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
COUNSEL
FOR THE APPLICANTS:
Mr L
van Gass.
INSTRUCTED
BY
Van Der Merwe & Associates.
COUNSEL
FOR RESPONDENTS:
Mr D Davis SC.
INSTRUCTED
BY:
Prinsloo Attorneys.
DATE
OF HEARING:
13 October 2017.
DATE
OF JUDGMENT:
02 March 2018.
[1]
Weare
&
Another v Ndebe!e NO
&
Others
2009
(1) 600 (CC) para 42.
[2]
Plascon-Evans Paints (TVL) Ltd v Van Riebeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A)
(‘Plascon-Evans’).
[3]
APCO Africa (Pty) Ltd v APCO Worldwide Inc
2008 (5) SA
615(SCA).
[4]
Wightman t/a JW Construciton v Headfour (Pty) Ltd
2008(3) SA
371 (SCA) at 375E.