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[2018] ZAECELLC 11
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Kriedmann and Another v One Vision Investments 139 (Pty) Ltd and Others (850/2018) [2018] ZAECELLC 11 (13 December 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
EAST
LONDON CIRCUIT LOCAL DIVISION
CASE NO: 850/2018
DATE HEARD: 15/11/2018
DATE DELIVERED: 13/12/2018
In
the matter between
RENAE
OLGA KRIEDEMANN
1
ST
APPLICANT
THE
TRUSTEES FOR THE TIME BEING
2
nd
APPLICANT
OF
THE RYETT TRUST
and
ONE
VISION INVESTMENTS 139 (PTY) LTD
1
ST
RESPONDENT
(
Registration
number: 2005/014045/07)
GARRY
EDWARD RIEGER
2
ND
RESPONDENT
ROWAN
WILLIAM
RIEGER
3
RD
RESPONDENT
THE
TRUSTEES FOR THE TIME BEING
4
TH
RESPONDENT
OF
THE RIEGER FAMILY TRUST
THE
TRUSTEES FOR THE TIME BEING
5
TH
RESPONDENT
OF
THE RODIC TRUST
JUDGMENT
ROBERSON
J:-
[1]
This is an application for an order provisionally winding up the
first respondent
(One Vision), on the grounds that it is just and
equitable, as provided for in s 81 (1) (d) (iii) of the Companies Act
71 of 2008
(the Act). Alternative relief sought in terms
of s 163 (2) of the Act was not pursued. Section 81 applies to
the winding up of solvent companies. Section 81 (1) (d) of the
Act provides:
“
Winding-up of solvent
companies by court order
(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;
(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;”
[2]
The first applicant and the second and third respondents are
siblings. Without
intending disrespect, I shall refer to them
by their first names, as they were referred to in the papers. I
shall refer to
them jointly as the siblings. Renae is a trustee
of the second applicant, Gary is a trustee of the fourth respondent
and
Rowan is a trustee of the fifth respondent.
[3]
The application is brought on the basis that, with regard to the
affairs of One Vision,
the relationship between the siblings is a
personal one of confidence and trust similar to that existing between
partners in a
partnership, and that the relationship has
irretrievably broken down.
Background
[4]
A piece of land known as Riegerton Farm (the farm) was originally
owned by the siblings’
late father and his brother in equal
shares. The siblings purchased a 50% share of the farm after
their uncle died.
According to Renae in 1983 a partnership was
formed between the siblings and their father, the father having a 50%
interest in
the partnership and the siblings 16.67% each. Garry
and Rowan denied that there was a partnership and maintained that it
was merely a situation of co-ownership. I shall deal with this
dispute later in this judgment and in the meantime refer to
the
arrangement as a partnership.
[5]
Portions of the farm were subdivided for the purpose of selling
residential erven.
According to Renae this was the business of
the partnership. During 2005, following advice from a tax
expert, it was
decided that subdivided portions of the farm would be
sold to a development company which would install services and sell
the subdivided
portions on a plot and plan basis. The written
advice of the tax expert was annexed to the answering affidavit.
In
his opening remarks he said with regard to the co-owners of the
farm that:
“
It is suggested that they are
all partners as far as this property is concerned.”
[6]
It was pointed out in the advice that if the sale of land was to
comprise anything
more than the subdivision and sale of land, the
resultant gains could be exposed to taxation in full. This tax
exposure,
so the advice went, is generally managed by the sale of
land to a development company. It was proposed that the land be
sold
piecemeal to a developer for onward sales to individual buyers
on a plot and plan basis, with no infrastructural services being
provided by the sellers, and that the developer should be a company
with shares held by the family trusts. All development
profits
would then accrue to the company. The remaining property and
loan accounts would remain in the estates of the sellers.
It
was further recommended that the siblings’ parents should not
be connected to the development company.
[7]
One Vision was the company formed as the development company and the
three siblings
hold equal shares in One Vision through their
respective trusts. The siblings are also the directors of One
Vision.
[8]
After the siblings’ father died their mother Norma Rieger
(Norma) became a 50%
partner and co-owner of the farm. A
portion or portions of the farm were subdivided and sold to One
Vision (there was a dispute
about the number of portions purchased by
One Vision), which developed the portion(s) for the benefit of the
shareholders.
One of the developments was called Panorama
Heights. The business of the partnership and of One Vision was
conducted for
many years.
Events leading up to
present dispute
[9]
Renae said she lives in Cape Town and relied on Garry and Rowan to
keep her informed
of the respective businesses. Garry is
primarily responsible for the business of One Vision and the
partnership. Garry
became increasingly abusive towards her and
her family and her relationship with Garry and Rowan deteriorated
significantly.
She learned that her brothers had enriched
themselves from the partnership and had not shared any profits with
her, but it was
difficult for her to identify precisely what had
happened. She said that more than R6 000 000.00 had
been stripped
from the partnership.
[10]
In these circumstances, Renae decided to terminate the partnership.
Garry did not agree
and Renae brought an application in this court
for a liquidation of the partnership. The three respondents in
the application
were Garry, Rowan and Norma. Garry opposed the
application on the grounds that there was no partnership.
Renae’s
replying affidavit in that application was annexed to
her replying affidavit in this application. In that affidavit
she mentioned
numerous documents which she said indicated that there
was a partnership. For example Garry himself had used the word
“partnership”
in correspondence with Renae’s
attorney; reference was made in minutes of meetings, at which the
siblings and their father
were present, to the development of the
farm as a “business”; other minutes headed “Minutes
of a meeting of partners
of Riegerton Farms” recorded that “any
partners selling an erf would be paid 5%”; annual financial
statements
for the year ended 28 February 1995 were for “R F
Rieger, N M Rieger, G E Rieger, R W Rieger and R Kriedemann trading
as
‘Riegerton Farms’”; and a rent income statement
reflected that the nett profit was distributed between the siblings
and their parents.
[11]
Renae said that Garry eventually conceded that there was a
partnership and the parties entered
into a settlement agreement on 13
September 2017. The terms were as follows: the
respondents were to pay Renae R1 822 599.00
(Renae said
this was made up of amounts which had been unlawfully withheld from
her by Garry and Rowan); Renae sold to the trustees
of the Riegerton
Trust and the trustees of the Rodic Trust her one sixth share in the
farm for a price of R5 000 000.00;
Garry and Rowan agreed
to sign a deed of suretyship for the obligations of the two trusts;
the respondents were to make a contribution
of R150 000.00 to
Renae’s costs; Garry and Rowan undertook not to communicate
with Renae other than in relation to the
affairs of One Vision and in
relation to the Bob and Norma Rieger Trust of which the siblings were
co-trustees; and Garry and Rowan
undertook not to abuse Renae
emotionally or otherwise, including not to do so at Norma’s
funeral.
[12]
However, according to Renae, Garry continued with his abuse. He
arranged for a newspaper
reporter to visit Norma, who was suffering
from dementia, and ask her questions about Renae. These
questions were contained
in a letter from Renae’s attorneys to
Garry’s attorneys and included asking Norma when Renae had last
visited her,
what presents she gave Norma, and who looked after Norma
and took her to the doctor. It was alleged in the letter that
Garry
had set up the interview. The response from Garry’s
attorneys stated that the reporter had requested to consult with
Norma in connection with the High Court matter but that Garry had
informed the reporter that it was a family matter and should
not be
reported in the newspaper. In late 2017 Renae sent birthday and
Christmas presents to Norma but Garry took them and
posted them back
to Renae. Garry instructed Norma’s carers not to allow
Renae to speak to Norma on the telephone and
that any of Renae’s
queries should be directed to him. In January 2018 Norma’s
doctor advised Renae that because
of Norma’s extremely poor
state of health she should visit her as soon as possible. Renae
arrived at Norma’s
home on 11 January 2018 but one of the
carers refused to let her into the house. The carer explained
that Garry had instructed
her not to allow Renae to enter Norma’s
home and that Renae should discuss the matter with him. Renae
instructed her
attorneys to deal with the situation via Garry’s
attorneys but then received a call from a family member offering
consolation
for Norma’s death. It appeared that Norma had
already died before Renae arrived.
[13]
In terms of Norma’s will, the residue of Norma’s estate,
which according to Renae
included her 50% ownership of the farm, was
left to the Bob and Norma Rieger Trust. The beneficiaries of
this trust are the
three trusts of which the siblings respectively
are trustees (the second applicant and the fourth and fifth
respondents).
The trustees of the Bob and Norma Rieger Trust
are the three siblings and a Mr Thayn Niemand (Niemand).
[14]
On 28 February 2018 Renae received an email from Niemand in which he
advised that he, Garry and
Rowan intended, through their majority
power, to remove her as a trustee from the Bob and Norma Rieger Trust
because of a material
conflict of interest which had irreparably
damaged the relationships between the parties and the trustees.
The email specifically
mentioned that Renae had recently instituted
legal proceedings against Norma who was a beneficiary of the trust,
as well as against
Garry and Rowan, who were beneficiaries and
trustees of the trust. Renae’s attorneys wrote to the
other three trustees
suggesting that all four trustees resign and
arrange for the appointment of independent trustees.
[15]
In Garry and Rowan’s attorney’s reply it was revealed
that Norma had sold and transferred
her 50% share in the farm to
Garry and Rowan for R6 000 000.00, a price which Renae
maintained was well below market
value. Renae suspected that
someone had forged Norma’s signature on the sale agreement.
Garry and Rowan also
declined to resign as trustees. In this
letter it was stated that there was no intention on the part of One
Vision to acquire
or develop any further land and that once the last
plot of Panorama Heights was sold, the company would be wound up.
[16]
By this time, so Renae maintained, the relationship between her and
her brothers was non-existent.
She received a request from
Garry to sign One Vision’s financial statements. Because
Garry had withheld material information
from her she had little
insight into One Vision’s affairs. Given
conflicting information concerning the
number of plots still
available for sale in the development she wrote to the auditors
asking for a reconciliation of all property
sales by One Vision since
inception. The auditors were unable to provide the
reconciliation. Renae did not sign the
financial statements.
[17]
In March 2018 Renae’s attorneys received a letter from Garry
advising that expenses would
have to be incurred to remove vegetation
from some of One Vision’s properties and that he and Rowan had
authorised the expenditure.
Three quotes were mentioned in the
letter. The cheapest was from Riegers Contractors for
R666 000.00 plus VAT.
Garry also said that it was their
intention to sell all plots and wind up One Vision, and that they
were thinking of auctioning
the plots. Garry also mentioned
that security services were to be employed owing to crime committed
at the development.
Renae’s attorneys wrote to Garry
pointing out that a special resolution of shareholders was required
for the disposal of
the property, and requesting certain information,
including confirmation of the date of a shareholders meeting and a
copy of the
necessary special resolution proposed to be tabled at the
meeting. An undertaking was requested that no disposal of
assets
would take place until the necessary formalities had been
complied with. The attorneys also pointed out that the costs of
clearing of vegetation appeared to be very high and requested copies
of quotations for the clearing and for security services.
Garry’s
response was to send three quotations for the clearing and one for
security services. The quotation from Riegers
Contractors (Pty)
Ltd reflected that its directors are Garry E Rieger and Warren B
Rieger. Garry did not provide the requested
undertaking nor did
he refer to the requirement of a special resolution of shareholders.
[18]
In a further letter Renae’s attorneys requested a breakdown of
the quoted cost for bush
clearing. Garry’s response was
to suggest that Renae send the attorneys to the area so they could
see for themselves
the extent of the bush clearing. He also
said that he did not have to waste his energy on One Vision because
he had other
major projects to attend to.
[19]
Renae made further allegations against Garry and Rowan including that
Garry had purchased a shelf
company using One Vision’s funds,
and that other withdrawals had been made from One Vision’s bank
account without her
permission. She expressed the view that
Garry and Rowan seemed intent on disposing of One Vision’s
remaining properties
at minimal value on auction, that they
apparently do not intend to pursue the objectives of One Vision by
not undertaking further
development of the property and that they are
in the process of establishing a separate entity from which she will
be excluded,
which would prevent One Vision from pursuing the
objectives for which it was established. Her position is that
the situation
has been caused by Garry and Rowan. She has no
confidence in her brothers’ management of One Vision and is of
the view
that they are breaching their fiduciary duty towards One
Vision in order to exclude her from future development
opportunities.
The directors are not on speaking terms and
there has not been a directors meeting since 2014. Renae sees
no prospect of
the deadlock between her and her brothers being
resolved.
[20]
Garry deposed to the answering affidavit. He said that he at
all material times ran businesses
from the farm with the consent of
the co-owners. Rowan also runs a business from the farm.
Their father used to rent
out houses on the farm, ran a dairy, and
sold building sand from the farm. Garry continued in the manner
of his late father,
thereby earning income for the farm which would
provide for Norma and cover property expenses. When a portion
of the farm
was subdivided and sold, all the co-owners received their
pro-rate share of the proceeds of the sale, as co-owners, not as
partners.
They also shared rental income and income from the
sale of top soil and sabunga.
[21]
After One Vision was formed, a portion of the farm was transferred to
One Vision for the price
of R3 000 000.00. Garry arranged for
the re-zoning, subdivision and registration of the township named
Panorama Heights,
and arranged for the installation of roads and
services to the plots, which were then marketed. There are
presently 44 plots
remaining. It was always intended that once
the last plot was sold, One Vision would be wound up. It was
not intended
that further developments would be undertaken in the
name of One Vision. Since 2005 no other property has been
developed
in the name of One Vision.
[22]
Garry said he has been the person involved in the day to day running
of One Vision and Renae
and Rowan have made no contribution.
For his work he receives a management fee amounting to
15% of the selling
price of the plots. One Vision’s
business activities consist only of the marketing and selling of
erven which is achieved
mostly through the services of estate
agents. One Vision is solvent and profitable. The
shareholders have been paid
substantial dividends over the years.
In the last 18 months there has been a reduced demand for vacant
serviced erven but
One Vision remains solvent.
[23]
According to Garry One Vision is not a quasi-partnership. Renae
and Rowan do not contribute
to the running of One Vision other than
in their capacity as directors and shareholders when they approve
annual financial statements
and make decisions as directors.
Garry disagreed that it would be just and equitable for One Vision to
be wound up. The
running of One Vision continues as
normal in pursuing its objective of selling the remaining plots.
Renae, so he stated,
can dispose of her shares if she wishes subject
to his and Rowan’s pre-emptive right but neither of them are
prepared to
purchase them at present, nor do they have the funds to
do so.
[24]
Garry denied that there was any deadlock in the functioning of the
company or between the directors
and shareholders. Renae’s
interests in One Vision are treated identically to those of Garry and
Rowan. With regard
to Renae’s allegation that the
directors were not on speaking terms and that there had not been a
directors meeting since
2014, he said that One Vision’s
business is low level and does not require regular directors
meetings. He maintained
that the directors are on speaking
terms and that for this reason it was specifically recorded in the
settlement agreement that
the siblings would communicate in relation
to One Vision’s affairs. However Renae had decided not to
communicate with
her co-directors.
[25]
Garry denied that he excluded Renae and Rowan from the running of One
Vision or that he was stripping
One Vision’s assets. He
also denied that he and Rowan are establishing another company to
take over One Vision’s
business. He denied that he and
Rowan have acted fraudulently towards One Vision. With regard
to the allegation that
he and Rowan had enriched themselves from the
partnership, he said that a portion of the farm was expropriated and
the proceeds,
paid by Buffalo City Metropolitan Municipality, were
retained in an account for specific purposes. He and Rowan were
paid
for their services rendered during an extensive arbitration with
that Municipality. Garry denied purchasing a shelf company.
The payment was to the Commission for Intellectual Property and
Companies for One Vision’s annual return and the Commission’s
fee.
[26]
Garry regarded Renae’s request for information from the
auditors as unreasonable and said
that Renae had always been informed
of all sales and had signed all annual financial statements from 2007
to 2016. Renae
also has access to One Vision’s bank
accounts and can monitor movements on the accounts. Garry
denied preventing Renae
from accessing information about One Vision’s
affairs and said that he was prepared to provide such information,
within reason.
[27]
Garry denied that he was abusive towards Renae and her family.
He at times became frustrated
at her conduct and particularly when
she instituted proceedings against Norma. Garry maintained that
the breakdown in the
relationship between the siblings occurred when
Renae wanted to be paid out for her share of the farm. She
unsuccessfully
tried to find a purchaser. She brought the High
Court application which Garry labelled as extreme conduct which
resulted
in much hurt and acrimony in the family. Norma was
elderly and the application took its toll on her. The
settlement
was a compromise, in order to bring the application to an
end and protect Norma from its adverse effects. Garry denied
that
he had conceded that there was a partnership. The
compromise was reached because of the numerous factual disputes.
Garry denied that the payment of R1 822 599.00 was an
amount unlawfully withheld. He said it was made up of Renae’s
loan account and an
ex gratia
payment. With regard to
the inclusion in the settlement agreement that Garry and Rowan should
not emotionally abuse Renae,
Garry denied emotional abuse and said he
reasonably believed that Renae required an undertaking from him and
Rowan not to communicate
with her, because she knew she had
extensively damaged the family relationships. Her conscience
was such that she could not
face Garry and Rowan directly.
According to Garry Norma had disposed of her 50% share in the farm in
order to avoid further
acrimonious litigation in the future.
Despite the breakdown of the relationship, Garry maintained that this
did not affect
One Vision’s business which carried on as
usual.
[28]
Garry denied that he had arranged for a newspaper reporter to
interview Norma and said that it
had nothing to do with the running
of One Vision. Garry agreed that he had returned the birthday
and Christmas presents sent
by Renae to Norma, because she had not
visited Norma for two years prior to her death, and thought that
Renae ought to visit Norma
and give her the presents personally.
He denied giving instructions to Norma’s carers that Renae
should not be allowed
to speak to Norma on the telephone. What
he had done was the day before Norma died, he told the carers that if
anyone wanted
to speak to Norma on the telephone, they were to
telephone either him or Rowan’s wife. Norma died at 08h30
on 11 January
2018 and the carer was requested to refer people to him
or Rowan’s wife. He referred to the fact that Renae had
insisted
that neither he or Rowan should communicate other than in
relation to One Vision and the Bob and Norma Rieger Trust matters.
He accordingly denied abusing Renae in this respect.
[29]
With regard to the letter he wrote concerning clearing of the bush
and the possibility of selling
the plots by auction, Garry said that
the clearing was necessary in order to avoid squatters moving onto
the property and to make
the plots more saleable. Security was
also necessary because of an increase in break-ins. He said
that in the last
six months only seven plots have been sold to one
purchaser and that it takes years to sell the plots. Garry said
he was
aware that a special resolution was required if One Vision was
to sell the majority of its assets. He regarded the request
for
an undertaking as ridiculous because his letter had merely indicated
that there was a possibility of selling the plots by public
auction.
No decision was taken to sell the plots by auction and such an
auction would have to be approved by the directors.
There was no
threat of disposing of the assets and the marketing and sale of the
plots had continued as normal.
Discussion
[30]
The case of
Thunder Cats Investments 92 (Pty) Ltd and Another v
Nkonjane Economic Prospecting & Investment (Pty) Ltd and Others
2014 (5) SA 1
(SCA) concerned a similar application. In
considering the words “otherwise just and equitable” in s
81 (1) (d)
(iii) of the Act, Malan JA said the following at
paragraphs [15] to [17] (footnotes omitted):
'Otherwise
just and equitable'
[15] Section
344(h) of the 1973 Act provides that a company may be wound up by the
court when it is 'just and equitable' to do so.
A winding-up on this
basis 'postulates not facts but only a broad conclusion of law,
justice and equity, as a ground for winding-up'.
The subsection
is not confined to cases which were analogous to the grounds
mentioned in other parts of the section. Nor
can any general rule be
laid down as to the nature of the circumstances that had to be
considered to ascertain whether a case came
within the phrase. There
is no fixed category of circumstances which may provide a basis for a
winding-up on the just and equitable
ground. In
Sweet v Finbain
it was said:
'The
ground is to be widely construed; it confers a wide judicial
discretion, and it is not to be interpreted so as to exclude matters
which are not
ejusdem
generis
with the other grounds specified in s 344. The fact that the Courts
have evolved certain principles as guides in particular cases,
or
examples of situations where the discretion to grant a
winding-up order will be exercised, does not require or entitle
the
Court to cut down the generality of the words "just and
equitable".'
Section 344
(h)
gave the court a wide discretion in the exercise of which certain
other sections of the Act had to be taken into account.
[16] Some of the
categories that have been identified are the disappearance of a
company's substratum; illegality of the objects
of the company and
fraud connected in relation to it; a deadlock; oppression; and
grounds similar to the dissolution of a partnership.
A 'deadlock'
which, because of a divided voting power at both the board and
general meetings, affected the management of the company
could also
found a liquidation order on this ground. No doubt these categories
remain under the new Act and may be extended.
[17] 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'.
The
'superimposition of equitable considerations' in such a case may
justify the dissolution of such a company under the just and
equitable provision.”
[31]
In my view the arrangement between the co-owners of the farm appears
to be that of a partnership.
The tax expert was apparently of
the opinion that the relationship between the co-owners in relation
to the farm was that of a
partnership. The nature of the
affairs of the farm, namely the selling off of subdivided portions,
the trading name, the
reference to “partners” and a
“business”, the distribution of the profits amongst all
the co-owners, and
generally the contents of the various documents
referred to by Renae in her replying affidavit in the liquidation
application,
strongly indicate the existence of a partnership.
Garry himself, with reference to the settlement agreement, said that
part
of the payment to Renae was her loan account. The tax
expert referred to the sellers’ loan accounts (see paragraph
[6] above). It is difficult to understand a reference to loan
accounts if the relationship was merely one of co-ownership.
[32]
It follows, in my view, that the formation of One Vision was linked
to and an extension of the
business of “Riegerton Farms”
and that although it was a juristic person, the relationship between
the directors and
shareholders was that of partners in a family
context which had endured for many years.
[33]
It is apparent that the relationship between the siblings,
particularly between Garry and Renae,
has irretrievably broken down
and that communication between them is not possible. This
conclusion is supported by Garry’s
failure to inform Renae, his
sister, of their mother’s death. Garry’s response
to the allegations relating to
the prevention of contact between
Renae and Norma was instructive. He did not deny them and his
explanation for his conduct
was unpersuasive. He did not dispel
a scenario of an intention on his part to prevent such contact.
It was cynical,
to say the least, to rely on the terms of the
settlement agreement regarding communication between the siblings for
not informing
Renae of Norma’s death. Even if the
settlement agreement provides for communication between the siblings
in relation
to One Vision and the Bob and Norma Rieger Trust, it is
difficult to see how this term of the agreement could be put into
practice,
considering their personal relations. The breakdown
of the relationship is in my view also supported by the term in the
settlement
agreement that Garry and Rowan were not to abuse Renae
emotionally. Again Garry’s explanation for this term was
unpersuasive
to the point of being disingenuous.
[34]
Garry made much of the hurt caused to Norma by the High Court
application. However those
proceedings were not just against
Norma but against Garry and Rowan as well. They all needed to
be parties because they were
partners in the partnership. His
emphasis on the hurt caused to Norma was in my view an attempt to
distort the true position
and blame Renae for the breakdown.
With regard to his purported concern for Norma, his response to the
allegation that he
had arranged for a reporter to visit her, a bare
denial, is again instructive. Renae’s attorneys’
letter contained
details of questions asked by the reporter but
Garry’s attorneys’ letter in response avoided a direct
response, presumably
on Garry’s instructions. Garry was
in a position to respond much more specifically to this aspect but
failed to do
so. The result is that Renae’s allegation
can be accepted and it demonstrates manipulation by Garry of both
Norma and
Renae, which in turn relates to a poor relationship between
Garry and Renae.
[35]
The involvement of all the directors in the business of One Vision
seems to have come to a standstill.
There has not been a
directors meeting since 2014 and Renae has refused to sign the latest
financial statements. Correspondence
from Garry’s
attorneys and Garry addressed to Renae’s attorneys (see
paragraphs [15] and [17] above, indicate that
Garry and Rowan run One
Vision without reference to Renae. Instructive in this regard
is Garry’s statement that he
would provide information of One
Vision’s affairs to Renae within reason. This suggests,
prima facie
, that either he does not trust her with full
information to which she is entitled, or that he believes that he can
control what
information he should provide to a fellow director.
[36]
In this atmosphere it is difficult to see how One Vision can continue
its business as envisaged,
and for the benefit of the shareholders,
when the directors do not communicate and there is clearly immense
personal animosity
between them, and a lack of trust and confidence.
It is so that some of Renae’s allegations concerning Garry’s
and Rowan’s conduct in relation to One Vision were not properly
substantiated. However, in my view this does not detract
from
the fact of the breakdown in their relationship, and the lack of
trust and confidence.
[37]
Apco Africa (Pty) Ltd and Another v Apco Worldwide Inc
[2008] ZASCA 64
;
2008
(5) SA 615
(SCA) concerned an application for the winding up of the
first appellant on the grounds that it was just and equitable to do
so,
in terms of s 344 (h) of the Companies Act 61 of 1973.
Ponnan JA said the following at paragraph [30]:
“
It
suffices, on the analogy of partnership law, to state that the
company is now in a state which could not have been contemplated
by
the parties when it was formed and that it ought to be
terminated as soon as possible. It is, after all, contrary to the
good faith and essence of the agreement between the parties that the
state of things encountered here should be allowed to continue.
As it
was put in
In re Yenidje
Tobacco Co Ltd
(at 430):
In
those circumstances, supposing it had been a private partnership, an
ordinary partnership between two people having equal shares,
and
there being no other provision to terminate it, what would have been
the position? I think that it is quite clear under the
law of
partnership, as has been asserted in this court for many years and is
now laid down by the Partnership Act, that that state
of things might
be a ground for dissolution of the partnership and for the
reasons which are stated by Lord Lindley in his
book on
Partnership
. . . and which, I think, is quite justified by the authorities to
which he refers:
'Refusal
to meet on matters of business, continued quarrelling, and such a
state of animosity as precludes all reasonable hope of
reconciliation
and friendly co-operation have been held sufficient to justify
a dissolution. It is not necessary, in order
to induce the court to
interfere, to show personal rudeness on the part of one partner or
the other, or even any gross misconduct
as a partner. All that is
necessary is to satisfy the court that it is impossible for the
partners to place that confidence in
each other which each has a
right to expect, and that such impossibility has not been caused
by the person seeking to take
advantage of it.'”
[38]
In my view this passage fits the circumstances of the present
matter. I am satisfied that,
prima facie,
grounds have
been established that it is just and equitable that One Vision be
wound up.
[39]
The following order will issue:
[39.1] the first
respondent is placed under provisional liquidation in the hands of
the Master of the High Court, Grahamstown.
[39.2] a rule
nisi
is issued calling upon all persons interested to show cause, if
any, to the above Court on 05 February 2019:-
[39.2.1]
why the first respondent should not be place under final liquidation;
and
[39.2.2]
why the costs of the application should not be costs in the
liquidation.
[39.3] service of
the order is to be effected:-
[39.3.1]
by one publication in the Daily Dispatch newspaper;
[39.3.2]
by service on the South African Revenue Services, East London;
[39.3.3]
by service on the first respondent at its registered address being
Farm 800 Main Road, Gonubie,
East London;
[39.3.4]
by service on the employees of the first respondent, if any; and
[39.3.5]
by service on all registered trade unions, if any.
J
M ROBERSON
JUDGE
OF THE HIGH COURT
Appearances:
For the Applicants:
Adv L Olivier SC, instructed by Edward Nathan Sonnenbergs c/o Drake
Flemmer & Ormond Incorporated,
East London.
For the Respondents:
Adv S Cole, instructed by Cooper Conroy Bell & Richards
Incorporated, East London