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[2017] ZAKZDHC 3
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Harilal v Rajman and Others (1633/2016) [2017] ZAKZDHC 3; [2017] 2 All SA 188 (KZD) (11 January 2017)
IN
THE HIGH COURT OF SOUTH KWAZULU-NATAL LOCAL
AFRICA
DIVISION, DURBAN
CASE
NO: 1633/2016
In
the matter between
:
ANITHA
HARILAL APPLICANT
and
VIKASH
RAJMAN FIRST
RESPONDENT
ARBINDRANATH
ROOPANAND SECOND
RESPONDENT
VIKASH
RAJMAN N.O. in his capacity as a
Trustee
of the
l
shwar
Family
Trust THIRD
RESPONDENT
ARBINDRANATH
ROOPANAND N.O.
in
his capacity
as
a Trustee of the Veraisha
Trust FOURTH
RESPONDENT
AFRO
PULSE 46 (PTY) LIMITED T A POWER
STATIONARY
FIFTH
RESPONDENT
JUDGMENT
NXUSANI
AJ:
[1]
This
is an
application brought in terms of Section 163 of
the
New Companies
71
of 2008
(the
Companies Act
)
,
in terms
whereof
the
Applicant
seeks an order directing the First to
the
Fourth Respondents
to
purchase
her shareholding and loan account
in
the Fifth
Respondent.
[2]
The Applicant has
also sought other ancillary relief relat
in
g
to
the
determinat
i
on
of the price of her shareholding
.
She wants an agreed
Chartered Accountant to
valuate
her
shares and
failing that for the South African Institute
o
f
Chartered
Accountants
to
appoint a
valuator.
[3]
The order sought
also provided for the
powers
of the valuator and
the procedure which
he/she
may
be
directed
to follow
to arrive at an appropriate valuation of the shares. In the
alternative the Applicant sought a final
'just
and equitable'
wind
i
ng
up of the Fifth Respondent.
[4]
The Applicant is
married
to
one
Mr
Anesh
Harilal ('Anesh
Harilal')
.
The Fifth Respondent
issued
share
capital of
100
shares and an
authorised share capital of one
thousand
shares
.
Initially the
shareholders of
the
Fifth Respondent
comprised
of
one Mitchell Beshe ('Beshe'). He held 25 shares.
Anesh
Harilal held
25
shares.
The
lshwar
Rajman Family Trust
held 25 shares and the Veraisha Trust held
the
remaining 25
shares
.
The
shareholders entered into
the
agreement
on
9 April 2008.
It
is in
dispute
whether the shareholders Agreement is enforceable
.
[5]
Beshe sold his shares
in
terms
of the
shareholders agreement. When Beshe disposed of
his
shares on 18 August
2011- some of his shares were allocated
to
Anesh
Harilal
,
nine
(9)
shares of which
were
registered
in
the name of the
Applicant.
Nine (9)
shares were
purchased by lshwar Rajman for
his
son
V
i
kash
Rajman
the
First Respondent
,
Mr Arbindranath
Roopanand purchased six
(6)
shares.
The
lshwar
Rajman Family
Trust and Anesh Harilal each purchased
three
eighths
of
the
remaining share and
Roopanand purchased a quarter of that share which
was
to
be held
in
the name of
lshwar
Rajman as a nom
i
nee.
[6]
Following
upon
his
conv
i
ction
for
tax
evasion
,
Anesh
Harilal
transferred
his
shareholding in the
Fifth Respondent to
his
wife Anitha Harilal
the
Applicant.
Later on 27 March 2013 Anesh Harilal
resigned
as a Director
.
His
wife
the
Applicant was
then
appointed
as a Director. There is no
evidence
that
she ever
performed any duties as a
director
.
[7]
The effect of
the
aforegoing
was
that the
Applicant
came to hold
34
shares in
the
Fifth
Respondent.
[8]
The shareholders agreement contained an elaborate procedure for
the
disposition
of
the
respective
shareholding
.
It provides for
giving
of
three
month's
prior
written
notice
of a sale.
In it the
seller
was
required to specify
the number of shares
intended
for sale
,
the
price
sought and
the
terms
of payment which
had
to
include
the rate
of
interest sought for
the
payment
of
any balance not
paid
immediately. The company
'
s
secretary was required to dispatch a copy of the notice of sale to
the shareholders and
to
the
auditor of
the
company
.
The
shareholders were entitled to purchase
the
shares of
the
seller in proportion to
their shareholding and if that was not acceptable they were entitled
to purchase it at a price to be fixed
by the company
'
s
auditor
.
The
shareholders had to
indicate
their
intentions
to
accept the sale
within two weeks from the notice of sale or from the date when the
company
'
s
auditors
fixed
the
price
.
If
there were more
than
one shareholder
seeking to acquire the shares they were entitled
to
purchase the shares
in proportion to
the
agreement reached by
them.
In
the
absence of any agreement the sale had to
take
place
in
proportion
to
their
shareholding
in the
company.
It
is
only
in the event that none
of
the shareholders are
willing to purchase
the
shares that the
seller becomes entitled to offer
these
shares to any third
party on no more favourable
terms
than those set out
in
the
notice of sale.
[9]
A Director wishing to dispose of her shareholding is obl
i
ged
to
resign
as a Director. The secretary of the company
is
entitled to refuse
to
register
the transfer of shares so sold by a Director until the Director has
tendered her
resignation
in
writing
.
[10]
The
company
auditors are required to take the following factors into account in
fixing the price of the shares on sale
:
-
[a]
the
value
of the assets of
the
company;
[b]
the
company
'
s
viability
as
a commercial undertak
i
ng;
[c]
any goodwill possessed by the company;
[d]
the
number
of shares offered for
the
sale
;
[e]
the benefits
of
any long term
contract
enjoyed by the
residual
value
attaching to any
lease of equipment or vehicle which the company had concluded
;
[f]
the
market
value
of
the
immovable property owned by
the
company; and
[g]
all other matters
and factors generally taking
into
account by
the
auditor when called
upon
to
value
the shares or a limited
liability
company.
[11]
The shareholding agreement also contains a
dispute
resolution
procedure.
All disputes are required to be
referred
to arbitration. Two
arbitrators must be appointed one of
whom
must
be a silk
practising at
the
Durban Bar and the
other an accountant.
[12]
The procedure
to be
adopted
is
informal
and is
required
to
complete
w
i
thin
twenty
one
(21)
days.
The arbitrators are granted extremely wide powers including the power
to
make
contracts
,
to
cancel the shareholder agreement, to order costs and their order
i
s
final and binding.
[13]
The shareholders agreement contains a
'
Shifren
'
clause requir
i
ng
all amendments
,
consensual
extensions
,
waivers
,
relaxations
suspensio
n
s
t
o
be
i
n
writing and signed by all the parties to the agreement.
[14]
The parties have furthermore undertaken in terms of the agreement to
promote and maintain the best interests of the company
,
to exercise good
f
aith
t
owards
each other
,
not
to misinform each other
,
not to
w
ithhold
material information in re
l
ation
to the affa
i
rs
of the company or any matter over which the compa
n
y
ma
y
have
an
i
nteres
t
i
nc
lu
d
i
ng
misconduct by
i
ts
employees
,
associates
,
debtors
,
creditors or
cus
t
omers.
[15]
After h
i
s
conviction
,
Anesh
Harilal was not entitled to rema
i
n
as a D
i
rec
t
o
r
.
I
n
order to transact its business the Fifth Respondent began hold
i
ng
shareholders meetings
.
Anesh Harilal
continued to work for the F
i
fth
Respondent b
u
t
w
as
then s
t
y
l
ed
as
it'
s
Market
i
ng
Manager. He attended the shareholders meeting on behalf of t
h
e
App
li
can
t
in terms of a proxy
.
[16]
Clause 19 of the Memorandum of Incorporation ma
k
es
pro
v
ision
for shares to be registered in the names of a person for the
benefic
i
a
l
i
n
t
eres
t
o
f
anothe
r.
[17]
The Respondents ha
v
e
contended that the true owner of
t
he
s
h
ares
w
as
Anesh Har
il
a
l;
that he made all the
decisions
;
that
he purported to se
ll
th
e s
h
a
r
es
to the remaining shareholders and thereafter caused a third party
fi
rm
of chartered accou
n
tan
t
s
,
lnvictus
,
to attempt to
purchase the remaining shares in
t
he
Fifth Respondent. I deal with th
i
s
dispute later on herein
.
[18]
During the
i
r
Annual General Meet
i
ng
in June 2015 the offic
i
a
l
s
of the F
i
fth
Responde
n
t
discussed the escalation in
t
he
marketing and delive
ry
e
x
pe
n
ses
for
t
he
t
a
x
year. I
t
had
i
ncreased
from R18 million to R69 million
.
The Applican
t'
s
h
usba
n
d
was also present at this meeting
.
It was then agreed
that the F
i
fth
Respo
n
de
nt'
s
a
u
d
i
to
r
s
w
ould
employ a forensic in
v
estigato
r
to investigate the
matter
.
The
A
pp
l
ican
t
has den
i
ed
that
t
here
were an
y
red
flags
.
According
to her the
t
urnove
r
fo
r
th
e ta
x
y
ear had
i
ncrease
d
by almost R150
m
i
llion
and that he
r
husband
had been req
u
es
t
ed
t
o
ma
k
e
p
a
ym
ent
o
f
'
commiss
i
ons
for consultants
' w
ho
had s
t
r
u
ctured
and
pu
t
t
ogethe
r
ce
rt
ain
tender documentation
.
[19]
The Fifth
Respondent
then employed a
company to perform a forensic
investig
at
i
on.
[20]
The Fifth
Respondent's
officials
suspected
that Anesh Harilal
was acqu
i
ring
high end assets which
appeared
to exceed the
earnings
that
he
derived from the Fifth Respondent. They laid criminal charges against
him.
[21]
What
emerged
from the forensic
investigation was that Anesh Harilal was
collabora
ting
with two entities
which issued
fraudulent
invoices and the
funds
pa
i
d
out of the Fifth Respondent's account were diverted to the Applicant
,
her husband Anesh
Harilal
and other
third
parties for
their benefit.
[22]
On 15
December
2015 the forensic
investigator ('Kasaval')
,
the
company
auditor and a police official one Mthethwa met with the Applicant's
husband. He
initi
all
y
indicated that he
had
not authorised
an
investigation
.
He agreed to only
speak
to
the forensic investigator
and
the police official.
[23]
Anesh Harilal
admitted to using the
entities
in
question
to
take
some
R
1
O
million from
the
Fifth Respondent.
The forensic
.
investigator
had
obtained bank
statements
from
the entity described as
'M
&
H'. He
prepared a schedule demonstrating
that
the Fifth Respondent
had paid over to M &
H
a
sum
in
excess of R31
million.
Kasaval
was
able to
iden
tify
payments in the sum
of R27 651 976
,
71
which were
made
by M
&
H for
the
benefit
of the Applicant and her husband
.
There
was
a second schedule.
The forensic investigator prepared this schedule from extracts from
th
e
bank statements of
the
second entity
described as 'Tlou'
.
The Fifth Respondent
had paid over the sum of R44 900 233
,
16.
Of that
sum
the
forensic investigator was able to identify an amount of
R42
925 233
,
16
as
payments
made
by Tlou for the benefit
of
the
Applicant
and her husband. He showed Anesh Harilal these schedules. When
confronted
with
these figures he told the forensic investigator that he had
taken
R20 million
from
the
Fifth
Respondent.
[24]
Anesh Harilal then began to
'
horse
trade
'
.
He tried
to
make
overtures to the forensic
investigator
about a
mechan
ism
to avoid full
detection. The Fifth Respondent dec
i
ded
to
place
him on suspension pending
a
disciplinary
enquiry
.
Thereafter
he
suggested
that if he were allowed to continue working he
could
offset
his
div
i
dends
aga
i
nst
the
sum
of R20 million. He wanted
to
use the estimated
div
i
dend
of
R600
000
,
00
to
repay
the R20 million
.
The
forensic
investigator told him that it
would
ta
k
e
some twenty
years
to
r
ecover
the R20 million
and
that this
would
not
be
acceptable. Anesh
Ha
ri
lal
then
suggested
that he could sell his shares
(with
an estimated value
of R35 million) to the other shareholders for R15 million and he
could then resign
.
[25]
The First, Second
,
Th
i
rd
and Fourth Respondents were
not
willing to accept
the proposal. They indicated that
they
would be prepared
to
resolve the dispute
on the condition that Anesh Harilal was willing
to
transfer his shares
and pay an additional sum of R20 million
.
This was not
accepted by Anesh Harilal. It was then
that
Anesh Harilal agreed
to
a
counter
-
proposal.
In effect he agreed to transfer
his
shares and pay an
additional sum of R10 million together with a
sum
of R500
,
000,00
for the forens
i
c
investigation. The First
to
Fourth Respondent
accepted the counter-proposal.
[26]
The Fifth
Respondent
'
s
auditor
then drew
what has
been
described as an
authority for the
transfer
of shares
.
It does
not
properly
reflect
the actual shares
transferred to
each
.
[27]
It is
necessary
to
quote
from the document in
question
.
/
,
the undersigned,
Anitha
Harilal,
do
hereby
agree
and authorise the transfer
secretary
of
Afro
Pulse
46
(Pty)
Limited
Co
.
Reg No
.
20051043432107
to transfer
my
entire shareholdings
in
Afro
Pulse
46
(Pty)
Ltd
as
follows
:
·
lshwar Rajman
Family Trust
-
30
shares
·
Vikash Rajman
-
3 shares
·
Arbindranath
Roopanand
-
33
shares
I
,
Anesh
Harilal,
do
hereby
agree
to the abo
v
e
Transfer
.
Signed
at Verulam on
this
15
1
day
of
December
2015.
Anitha
Harilal'
Anesh
Harilaf"
[28]
Anesh Harilal signed
the authority. He also wrote a
letter
tendering
his
resignation with immediate effect as
well
as a letter
in
his own hand
agreeing
to
hand
over the 34 shares held by Anitha and agreed
to
pay an
amount
of R10 million for
which
plans
would follow
.
[29]
Anesh Harilal
then
told
the company
offic
i
als
that they
could
accompany him
to
his home where the
Appl
i
cant
was
i
n
order for
her
to
sign
the
agreement.
He
drove
them
in
his vehicle
.
When they arrived
at
his home he
first
went
into
his
house
and
thereafter
called
the
forensic
investigator
and
the policeman to join him.
[30]
After Anesh Harilal gave the letter in question to the Applica
n
t,
the forens
i
c
invest
i
gator
asked her whether she
was
aware of the
import
of the document.
A
n
esh
indicated
that
she
was aware of its
contents
.
The
Applicant read
through
th
e
documen
t
and
then
signed
i
t.
[31]
Anesh Harilal then returned
with
Kasaval and Mtheth
w
a
to
t
he
company
'
s
prem
i
ses
.
It was intended that
the
F
i
fth
Respondent's attorneys
would
p
r
epare
a comprehensi
v
e
agreement to deal with the method to secure payment.
[32]
Instead on 17 December 2015 the forensic investigato
r
te
l
ephoned
Anes
h
Hari
l
al
to discuss how the sum of R10 500 000
,
00
could be repaid. Anesh
Harilal
agreed
t
o
pay R150 000,00 per month
over
a
two
year period
.
It
w
as
then
agreed
that
th
ey
w
ould
assemble at the company
'
s
premises at 2 p
.
m.
[33]
The forensic
investigator
did not arr
iv
e
on
time.
Anesh
Ha
ril
al
te
l
ephoned
him
to
advise
him
that
he
had been to the company premises on
two
occasions
on
ly
to find
t
hat
th
e
forensic investigator
was
not
present.
The
_
forens
i
c
investigator
then
arrived and noticed Anesh Harilal driving away from the prem
i
ses.
He then
saw
the forens
i
c
investigator and returned to hold the meeting
.
[34]
Further discussion took place
in
the
Fifth
Respondent
'
s
boardroom
.
Anesh
Har
il
a
l
agreed to pay a sum
of R500 000
,
00
at the e
n
d
o
f
December
and
thereafter
R150 000,00 per
month o
v
e
r
a two
year
period
.
He
was
asked about a R5
mil
li
on
Liberty Life Policy. According to Anesh Harilal this sum
had
been used to
prov
i
de
security to the bank
for credit facilit
i
es
for Mand
l
a
'
s
Statione
ry
CC
('M
andla
'
s
').
Mandla
'
s
was an entity previously owned by the
Applicant
and
her
husband. He transferred
h
i
s
shares to the Applicant.
[35]
It
was
then
agreed
that further meet
i
ngs
w
ould
t
a
ke
p
l
ace
between
the
F
ifth
Respondent's
attorne
y
s
and Anesh Harilal. These came to
nought.
[36]
It would appear
that
by 21 December 20
1
5
the
Appl
i
ca
n
t
and
/
o
r
her
hu
sband
had engaged the serv
i
ces
of their present attorney one Emlyn Co
llin
s
('
Coll
in
s
'
)
of Hu
lley
& Associates Inc
.
He
wanted
a copy of
the
draft agreemen
t
so
h
e
could
advise
t
he
Applicant
and her husband
.
Thereafter Collins
sought
information
on
how
th
e
capi
t
al
amounts were arri
v
ed
at. He
wanted
a
copy of the
forensic
report and details
of
th
e
criminal investigation
.
Collins
,
it
would
seem wanted
to
s
hi
eld
the
Applicant's
husband
from any criminal
prosecution
.
He
insisted that such a clause be inserted
i
n
t
he
agreement. This was not acceptable to the Fifth Respondent's
attorneys
.
It
was agreed that the parties wou
l
d
meet on 23 December 20
1
5
to discuss the matter further
.
[37]
The meeting that was scheduled for 23 December 2015 did not take
p
l
ace.
I
nstead
the Applicant's husband telephoned the investigator to say that he
wanted to stand by his undertaking but was rece
i
v
i
ng
poor advice
.
He
wanted an assurance that the
r
e
would be no criminal prosecution. This assurance was a
l
so
sought by Coll
i
ns
later than day. The Fifth Respondent's attorneys told Collins
i
t
wou
l
d
be unlawfu
l
to
prov
i
de
for such a provision
.
[38]
What then tra
n
spired
was that Collins sought to re-negotiate the terms of the agreement.
It was he who contended that the shares shou
l
d
be valued and that the amount of R10 million should be pa
i
d
from the value of the shares
.
Coll
i
ns
then sought an undertaking that the Respondents would not cause the
Applicant
t
o
be arrested as she was leav
i
ng
on a holiday and was travelling abroad
.
Collins further
spoke to
t
he
Respondents' attorneys and complained
t
hat
they were not acti
n
g
reasonably
.
[39]
During the early part of January 2016
t
he
Fifth Responden
t
launched
applicat
i
ons
to w
i
nd
up an entity known as Rap
t
oscore
(
Pty
)
Limited
u
nder
case number 13465-2015. The Fifth Respondent also brought a similar
application aga
i
nst
Mandla
'
s
Stat
i
onery
CC
.
The
parties were agreed that I cou
l
d
peruse these papers
.
[40]
I noted tha
t
i
n
the Founding Affidav
it
in the Raptoscore
matter the First Responden
t
deposed to an
Affi
d
avit.
He stated that the Applicant was a 34
%
shareholder
i
n
the Fifth Respondent. He also made reference to the properties which
t
he
App
l
icant
an
d
her
husband had acquired
.
The deponent
i
n
the Raptoscore Aff
i
davit
,
one Hariperssad
Hari
l
al
i
s
Anesh Harilal
'
s
brother
.
He
stated under oath
(
at
paragraph 17 thereof) that according to the App
l
icant
the two sectional t
i
t
l
e
units purchased at the Seasons Court in Umhlanga were acquired by he
r
and her husband from
private
r
esources
.
It
i
s
alleged that they sold Go
l
d
Coast Convenience Store CC for R850 000
,
00
some four years ago and that these
f
unds
,
augmented by the
dividends pa
i
d
to the Applicant and other f
u
nds
accumulated
,
were
used to pu
r
chase
the properties in question
.
[41]
He also stated in his Affidavit
(
at
paragraph 20 thereof) that
t
he
sec
ti
onal
t
i
t
l
e
at The Executive in Umhlanga had been acquired on 4 September 2012
for a purchase price o
f
R4
.
3
mi
ll
ion
and was funded by a bond from Standard Ban
k
of some R3
.
5
million
.
He
furthermore stated that
the
Mercedes
Benz AMG
vehicle
had
been
acquired
by the Applicant from her private
resources
and
not
those
of
the Fifth
Respondent.
[42]
It is
alleged
by the
Applicant
in
the application to
wind
up
Mandla's
Stationery CC that
the
Fifth
Respondent's
attorneys
had threatened to
cause
her
arrest at
the
airport before
leaving
for
holiday during December
2015.
[43]
The
Applicant
has
,
in
her
Replying
Affidavit
not denied
that
the
assertions
were
incorrect. She said
that threats
were
made by the forensic
investigator
.
[44]
In
her
Answering
Affidavit
(in
case number
13466/2015) the
Applicant
stated
that
"
the
Applicant's attorney threatened
to
have me and my
husband
a
r
rested
at
the
airport
"
.
She also stated
that
the two
sectional
title units were
purchased in April
20
1
3
,
that
the
sectional title unit at The Executive
was
purchased in
Sep
te
mber
2012 and
that
s
h
e
and
her husband
purchased the vehicle
from
their own
funds
and
that these did not
emanate from the
Fifth Respondent.
[45]
On
6
December
2015
the
Applicant
instructed
her
attorney to
wri
te
a with pre
j
udice
letter
alleging
that
she was
a
34%
shareholder
in the
Fifth
Respondent
and that
as
a
result of the
winding
up
application brought
against
Mandla
'
s
Stat
i
onery
CC
and
"
other
reasons"
she
was
prepared
to dispose of her shareho
ldin
g
in
the
Fifth
Respondent for
a
sum of R34 million
or
34%
of
a
fair evaluation of
the Fifth Respondent.
The
Respondents did
not
react
to the letter.
They
took the view
that the Applicant
had
disposed
of
her shares and
was
consequently
no
lon
ger
a
shareho
l
de
r
.
The Respondents
also
took the
stance
in
the papers that the
Applicant did
not
have the requisite
locus
standi
to
bring
the
application
because
s
he
was
not
at
th
at
stage a shareholder.
[46]
I return to deal
with
this issue
later
hereon
.
[47]
In her Replying
Affidavit
the
Applicant alleged
that t
he
forensic
i
nv
est
ig
ator
and
the police
official made
"a
ll
sorts of
threats
against
Anesh
".
She
alleged
that on the
15
December
2015
the
forensic
investigator
"
barked
at
Anesh
accusing
him of
theft".
Even though
Anesh
sought
legal
representation the
pol
ic
e
official remained
present
"
near
enough
as
though
he posed
a
physical threat" to Anesh. Anesh
was
not offered
the
opportunity to
consider
the matter
.
He
was
told
that
h
e
would be charged for
fraud and money laundering
,
theft
and
that he would
be
i
mprison
ed.
It
is
alleged that the
fo
r
e
n
s
ic
investigator told
Anesh
Har
i
lal
that the Fifth
Resp
ondent's
attorney was a
notorious
attorney
"
who
always got his man"
.
The forensic
investigator
apparently mentioned
the names of the Applicant's three daughters. He to
l
d
Anesh that his daughters would never see him save through jail bars
and that this went on for some twelve hours. Anesh then
"began
to crack
"
.
He then signed the
letter
of
resignation
,
the
letter
agreeing to hand
over the 34% shares held
in
the Applicant's name
and
to
pay
R10 million; that he was his wife's proxy; and; finally the authority
for the
transfer
of
the shares in the Fifth Respondent which the Applicant also signed.
[48]
She also alleges that when her husband arrived at
her
home on
15
December 2015 he was
in the presence of the forensic investigator and the
police
officials. Her
husband
"simply
placed the authority
for the transfer of the shares and told her
to
sign without
question"
.
[49]
In
the
Founding Affidavit the Applicant stated that
two
unknown
men
arrived
with
her
husband and
"they
threatened to have
her husband arrested and
locked
up if she did not
relinquish her shareholding in
the
company
"
.
[50]
She alleged that the
threats and
"
other
unlawful
conduct
"
continued
.
She alleges that the
forensic investigator and the Fifth Respondent's attorney Mr Nepaul
"
directly
or indirectly
threatened
"
to have her husband
and her
arrested if
she d
i
d
not relinquish
her
shareholding in the
company.
She
and
her fami
l
y
had
planned
to
leave
on
23 December 2015. The Fifth Respondent's attorney
had
e-mai
l
ed
an agreement to her attorney and
insisted
that she sign
it.
It
carried
an
"innuendo
"
that
if
she did
not
sign
the agreement her husband and she would be arrested at
the
airport. She
refused
to sign the
agreement.
[51]
On the morning of
23
December
2015
the
forensic
investigator
telephoned
her
husband
and directed him to
ensure
that
the
Applicant
signed the
agreement by
13h00
or else she
would
arrested at the
airport. She says that
the
Fifth Respondent's
attorney was
"high-handed
and arrogant
"
and refused to make
a hard
copy
of
the
agreemen
t
or the audit report
available. However she
was
not arrested. She
went on vacation
.
She returned on 2
January
2016. On
29
December 2015 the Fifth Responden
t'
s
attorney issued urgent winding up papers
against
Mandla
'
s
Stat
i
onery
CC and caused
the
matter to be
set
down
for
hearing on
6
January 2016.
[52]
Her husband attended
Court
to
discuss
the Applican
t'
s
shareho
l
ding
with the
First to
Fourth
Respondents
but
they
left
the Court
precinct.
[53]
She states that it became clear to her that the remaining
shareholders were
"determined
to get rid of her as
a shareholder" and she
instructed
her
legal
representatives to discuss a
'
parting
of ways' from the Fifth Respondent. The Respondents had brought a
contrived winding up application against
Mandla's
Stationery CC. She
had
"no
trust
in the co-shareho
l
ders".
She had
"
no
relat
i
onship
with the Fifth Respondent" and was
"
not
on speaking terms with them
".
They sought to
"extort"
her into disposing
of her shareholding and the Respondents had
"conducted
themselves
oppressively towards her and prejudicially
".
She thus sought a
just
and
equitable order from this Court to compel them to purchase her shares
alternatively to wind up the company.
[54]
She did not want to wind up the company because it was a successfu
l
business having a
lucrative
business
employing a large number of people rely
i
ng
upon
the
company
to maintain themselves and their family
.
She
was
doing so as a
l
ast
resort.
[55]
The first issue that I am required to determine is
whether
the Applicant has
the
necessary
locus standi to
bring the
application. This
in
turn depends on the
validity
of
the transfer
.
The
transfer has become mired in controversy
.
If there was duress
the
agreement
could be voided
.
[56]
The allegations necessary
to
rely upon duress are
not pleaded and
I
am
unable
to
determine this issue on these papers.
[57]
There are however disquieting features about the Applicant
'
s
allegations.
It is
strange that they
never told the forensic investigator that the two sectional tit
l
es
which
are
registered in their name were obtained from private
resources.
It
would
have
been
the
simplest thing to
tell
the
forensic investigator that they sold a business Go
l
d
Coast Convenience Store CC for R850 000
,
00;
that they augmented these funds from dividends paid to the Applicant
and with other funds
that
they
had
accumulated
they
purchased the
properties
in
question
.
One
would
have expected Anesh
Harila
l
to
have said to the investigator
that
the sectional title
purchased at
The
Executive
was
purchased in terms
of a bond and that the motor
vehicle
in quest
i
on
had been purchased by the
Applicant from her own
funds. Secondly
, if
he had been
required
to
draw monies with
the full knowledge of the Respondents for onward
transmission
to consultants and
other intermediaries for services that
they
rendered
on beha
l
f
of
the
Fifth
Respondent, Anesh Harilal did not make this assertion
in
their presence nor
in the
meetings
with
the
Kasaval and Mthethwa. And
Anesh
Ha
ril
al
did not provide
,
even
in
this application
,
a reasonable
plausible explanation for
t
he
large sums
which
were
siphoned
from the Fifth Respondent to the Applicant's business. Thirdly, Anesh
Harilal has not himself put up an Affidavit setting
out what
transpired
on
15
December
2015 at the company's premises nor what transpired on 17 December
2015. A person
who
has been unlawfully
threatened and
who
is
innocent
would
have proceeded to
the police station on 16 December 2015 to
lodge
a compla
i
nt.
There
i
s
a deafen
in
g
silence about what the Applicant and her husband did on the 16
December 2015. Fourthly
,
when the Applicant
and her husband made contact
with
their
attorney
they
either secreted the
truth from him or if they told him it is stra
.
nge
that
he
did not at any stage record that the Applicant had been induced
to
give
up
the shares and
that
threats were
directed at them.
I
noted from details
annexed to the criminal charge sheet that Mr E. Collins represented
the Applicant's husband during
his
criminal
proceedings
.
Fifthly
,
Anesh Harilal spoke
to the investigator to tell him that he
wanted
to abide by
the
earlier agreement
and was being given bad advice. This
is
hardly
consistent
with
any
threats or duress
.
Sixthly
,
the Applicant and
her husband went on holiday
without
seeking to recall
the agreement.
It
is
clear that the Applicant and her
husband
would
have been
amenable to an agreement which effectively insulated
them
from any cr
imin
a
l
investigation and
prosecution
.
Her
husband had recently been convicted of
tax
evasion and it is
likely that any subsequent conviction could resu
l
t
in
his
i
mprisonment.
Finally
,
when
the Applicant
'
s
attorney wrote the letter of 6 January 2015
in
which
he sought the
disposal of the shares for R34 million he did not say
therein
that the Respondents
had behaved in a manner which was oppressive or unfa
irly
pre
j
udic
i
al
nor oppress
iv
e
.
The letter said that
the
reason
for the offer
was
because
the
Fifth Respondent
had
sought to wind up
her company. He did admittedly say that
there
were
«
other
reasons"
.
He also did not
contend
that
the
Applicant was not bound by the shareholders agreement because the
Respondents had repudiated
it.
Th
i
s
defence only surfaced conveniently
when
the point was taken
.
I have no doubt that
this stance was an afterthought.
[58]
The version of the Applicant does not in my
view
ha
v
e
a
ring
of
tru
th
to
it. The distinc
t
impression that
Igained was that the Applicant and her
husband
had
second thoughts
about their decision to transfer their shares
when
the Fifth Respondent
refused to agree to withdraw the criminal proceedings against
her
husband.
[59]
The Applicant
knew
that
there
would
be a dispute
on
this
issue. She knew that the issue would not be capable of any final
determination
on
these papers
.
Yet
,
she chose to launch
application proceedings knowing this to be the case
.
It cannot
behove an
Applicant
seeking final relief to move motion proceedings when the very issue
alleged to constitute the oppression is in dispute
.
[60]
The Respondents went to great lengths to demonstrate how large sums
of money were s
i
phoned
from the Fifth Respondent into the account of Tlou Business
Solutions. For example on 17 September 2013 an amount of R800
000,00
was paid from the Fifth Respondent to Tlou Business Solutions. On the
18 September 2013 an amount of R24 697
,
00
was paid to the Applicant's husband in respect of one of the
sect
i
onal
tit
l
e
units at the Seasons Court. An addit
i
ona
l
payment was made to
the Appl
i
cant
'
s
husband in the sum of R755 303
,
00
in respect of the second of the two sect
i
ona
l
title units at the
Seasons Court
.
Thereafter on 17
October 2013 an amoun
t
of R2 million was
siphoned from the Fifth Respondent
'
s
account. On the 18 October 2013 Tlou Business Solutions paid an
amount of R844 000
,
00
to Anesh and the annotat
i
on
i
n
the bank records referred to the first o
f
the two sectional
titles which the Applicant and her husband owned at the Seasons
Court
.
The
ba
l
ance
of the R2 m
i
llion
was d
i
spersed
to the Applicant's business
.
The sum was R23
1
000
,
00
.
The remaining amount
was paid to the Applicant
'
s
husband
.
It
was for an amount of R895 000,00 and the annotation relates to the
Applicant's sectional title unit at The E
x
ecut
i
ve
.
These payments
continued unabated
.
The
"
Consultants
"
are nameless and
t
here
are no names save that of the ANC. The Payments are all in cash
.
They are for
extreme
l
y
large amounts
.
There
are no invoices. These are not consistent with lawful t
r
ansactions
of the Fifth Respondent.
[61]
On 5 February 2015 a sum of R5 000 000
,
00
was siphoned from the Fifth Respondent's account. Tlou Business
Solutions pa
i
d
an amount of R823 000
,
00
to NMI Durban South in respect of the Mercedes Benz veh
i
cle
refer
r
ed
to in the papers
.
[62]
The R5 million wh
i
ch
had been paid to Tlou Business Solutions was paid over to the
Applicant and/or her husband on 23 February 2015
.
These
f
unds
were used to obtain a Liberty Life Insurance Policy
.
[63
]
The bank statements
of M & H Suppliers CC shows that there were at least
t
hree
payments made for and on behalf of
t
he
Applicant's husband
.
The first payment
was made on 3 April 2013
.
An amount of R1 850
697
,
91
had been deposited into the account of M & H Suppliers. These
were drawn from the F
i
fth
Respondent
'
s
account. An amount of R
1
,
5
millio
n
was
pa
i
d
to the App
li
can
t'
s
business
.
On
the same day an amount of R350 697
,
00
was paid to
t
he
Applican
t'
s
husband and the annota
ti
on
reflects that th
i
s
was in respect of the two apartments at the Seasons Court
i
n
Umhlanga
.
There
was an addi
t
ional
payment to Anesh in the sum of R30 000
,
00
in respect of the sectional tit
l
e
un
it
at
The Executive
.
Thereafter on
1
4
February 2014 an amount of R500 000,00 was drawn down from the F
i
fth
Responden
t'
s
account. On the follow
i
ng
day M & H Suppliers made a payment to the Applicant
i
n
the sum of R500 000
,
00
.
On the 11 April 2014
a further sum of R250 000
,
00
was drawn from the F
i
fth
Respondent. M & H Suppl
i
ers
then made a payment to
t
he
Appl
i
cant
on
1
2
April 2014 in the sum
of
R238 000
,
00
.
[64]
During the ent
i
re
period
(
that
is from October 2013 to June 2015) Tlou Business Solutions paid to
the Applicant's business a sum of R18 476 000
,
00
.
During the same
per
i
od
monies
t
o
the tune of R3 730 450
,
00
were paid to the Applicant and her husband.
[65]
M & H Suppl
i
ers
CC paid the Applicant
'
s
business during
t
he
period June 2010 to December 2014 a total R36 148 646,44 and an
amount of R1 118 697
,
00
to
t
he
Appl
i
cant
'
s
credit.
[66]
Although there is a dispute of fact rela
t
ing
t
o
t
he
App
l
icant's
locus standi
,
I intend to
assume that she has the necessary
lo
c
us
standi
wi
t
hout
deciding the issue given the conclusion to which I have reached
here
i
n
.
[67]
I turn now
t
o
deal with the shareholders agreement. The Applicant d
i
d
not e
x
plain
why she did not comp
l
y
with the shareholders agreement in her Founding Affidavit. When
confronted with the point the App
l
icant
contended that the forensic investigator and the police official
,
acted on behalf of
the Respondent
,
and
as suc
h
the
Respondents repudiated the shareholders agreement. There is no merit
to the contention
.
[68]
The App
l
icant
bea
r
s
the onus of prov
i
ng
that the Respondents have repudiated the shareholders agreement
[1]
.
[69]
It was held in
Street
v Dublin 1961 (2)
SA
4 W a
t
10
that:
"the
test
as to
whether
co
nduct
amounts
to such
a
repudiation
is whether fairly
interpreted
it
exhibits
a
deliberate
and
unequivocal
intention
no longer to be
bound.
"
[2]
[70]
The doctrine of repudiation is of course
not
a panacea
for
one
or
minor
provisions
in a
shareholders agreement such as
was
binding
upon
the Applicant.
The
Court
must
look
at the nature of
the
shareholders
agreement
,
the
c
l
aim
made by
the
Applicant
and
of course
whether
the Respondents
intended
to cancel
the
shareholde
r
s
agreement and
the
import of
the
shareholders
agreement.
[71]
In
Rubel's
case the Court
said
:
"the
doctrine of
repudiation must of course be applied in
a
just and
reasonable
manner.
A
dispute
as
to
one or several minor provisions in an elaborate contract or
a
refusal
to
act upon
what
is
subsequently held to be the proper interpretation of such provisions
should not as
a
rule be deemed to
amount
to
a
repudiation
.
.
.
but
,
as
already
indicated
,
a
deliberate
breach of
a
single provision
in
a
co
ntract
may 11nder
special circumstances
,
and
particularly if the provision being important, amount to
a
repudiation of
the whole
bargain
...
In
every
case
the
question of repudiation must depend on the
character
of the
contract
the
number
and
weight of the wrongful act or assertions, the intention indicated by
such acts or
wo
rds
,
the
deliberation
or otherwise
with
which they
are
committed or
uttered
,
and
the
general
ci
r
cumstances
of the
case."
[72]
Shareholders who
have
struck
a
bargain
to use the procedures provided in
a
shareholders
agreement should as a rule
be
encouraged
to comply with
such
procedures
.
It
is said
to
avoid
"
the
expense
of money
and
spir
i
t
[3]
[73]
Here the Applicant's
main
complaint
for
not complying with
the
shareholder
agreement is
that
the Fifth
Respondent's auditor
has
aligned himself
with
the Respondents
.
However
the
Applicant
has
not
e
xp
lained
why the auditor
would be incapable of determining the price
of
the shares in
accordance with the principles stated in clause 4(j)
of
the shareholder
agreement. And
,
if
the Applicant were
d
i
ssatisfied
with the determination reached
by
the auditor she
would be entitled to thereafter refer that issue to arbitration
in
terms
of clause 11
of
the
agreement.
[74]
I am mindful of the fact that an arbitration clause cannot oust the
jurisdiction of a Court
.
The Respondents have
to
show
that
I should exercise my discretion
i
n
their
favour.
I
believe
that the Respondents have discharged that onus. I say so
inter
alia
for
the following reasons.
[75]
The
investigation into the alleged misappropriation of
the
Fifth
Respondent
'
s
funds and all the details of the beneficiaries has not as
yet
been
completed
.
I
also do
not
believe
that the Applicant has come to Court
with
clean
hands. This applies to a
winding
up
premised on the
just
and
equitable grounds and to an applicat
i
on
brought
in
terms of
Section
163 of the Companies Act. This fundamental principle permeates the
common
law
and
indeed it
is
consistent
with
the
purpose of the
Act.
One
of
the
purposes
of
the
Companies Act
is
to
encourage a high standard of corporate governance and compliance
with
the
Bill of Rights
.
The
tenets of fair
play
are
therefore
also
applicable to the instant case. This principle is expressed as
"
memo
ex
suo delicto
meliorem
suam
conditionem facere potest".
It
has
been translated
to
mean
that
no one is allowed
to
improve
her condition by her own
wrongdoing.
The
prima
facie
evidence
in
this case suggests that the
Applicant
has
benefited from
the
fraud
of
her
husband
.
It
would
in my
view
be
improper
to
permit
her
to simply
brush
the
shareholder agreement
aside
by
vague
and
general
statements
that
the
shareholders
agreement
has
been
repudiated
and that its auditor is biased
without
putting
up
any
evidence to that
effec
t.
[4]
[76]
Dealing with an application
for
winding
up based on
the
just
and
equitable pr
i
nciple
Leon J
in
Emphy
and Another v Pacer Properties
(Pty)
Limited 1979 (3)
SA
D&CLD said
that:
"an
Applicant relying on the just and equitable provisions
of
the
Companies
Act
must
come
to Court with clean hands and
if
the breakdown
in confidence appears to have been due to
his
misconduct
it
cannot insist
on the company being
wound
up
if
they wish
to
continue.
"
[77]
It follows therefore that the
Applicant
is
not entitled to
the
alternat
ive
relief of
a
winding
up
based on the just and equitable principle
.
During h
is
submissions
for
the
Applicant
Mr Kemp did not
press
the
issue.
This appears to
be
consistent
with
the
stance
taken
by the Applicant
in
the Founding
Affidavit where
she
says
that it
i
s
not her
in
tention
to
wind
the
company
up and would
only
seek
this
relief as a
last
resort
.
In my view
no
case
has
been
made out for
the winding up of the company
.
[78]
In
order
to
succeed
under Section
163
of
the
Companies
Act the Applicant must allege and prove that an act or omission of
the company or a shareholder has resu
l
ted
in oppression or unfair prejudice or that
it
has
unfairly
disregarded her
interests.
The
Applicant has not alleged that the business of the Fifth Respondent
is
or
has been carried out or conducted in a manner that is oppressive or
unfairly prejudicial or
that
it
unfairly
d
i
sregards
her interests. She has not
relied
on a claim that
the
powers of the
Director are being or has been e
x
ercised
in a manner that
is
oppressive or
unfairly prejudicial or unfairly disregards her interests
.
[79]
A perusal of the
founding
application
shows that she complains of oppressive and/or prejudicial conduct.
It
is
directed
at the threat of
arrest on 15 December 2015 and further alleged threats and
unspecified unlawful conduct at the instance of the
forensic
investigator and
the
Respondents
'
attorney
.
It is
also
directed at the
fact
that the Fifth
Respondent has sought to wind her company up
.
All of the
allegati
o
ns
are denied
.
[80]
The Applicant is
required to
demonstrate
that the relief
which she seeks would remedy her complaint and that in all the
circumstances
it is
just
and equitable
to grant the relief which she sought.
[81]
In his submission Mr Kemp accepted that there
were
disputes of facts
which he said could not be
resolved
on the papers. He
urged me
to
refer
the parties to trial
in
terms
of Section
163(2)(1) of the Companies Act.
[82]
The powers envisaged by Section 163 are wide and
flexible
.
Professor S
.
H
.I.
Cassim et al
in
Contemporary Company
Law 2 ED
(2012)
at
771 -
2
make
the
point that:
"
despite
the
wide
ambit
of
section 163
,
it must
be
borne
in mind
that the
conduct
of
the majority
s
hareholders
must be evaluated in fight of
the
fundamental
corporate
law
principle
that,
by
becoming
a
shareholder
,
one
undertakes
to
be
bound
by
the decisions
of the majority
shareholders
...
thus
not all acts
which
prejudicially
affect
shareholders
or director
s,
or
w
hich
disregard
their
interest
,
will
entitle
them to
relief
-
it
must
be
sho
w
n
that the
conduct
is
not
only
prejudicial or disregardful
but
also
that
it
is
unfairly
so
."
[83]
It is
the
r
efore
important for
the
Applicant
to
re
l
y
on
clear
evidence
in order to invoke the relief foreshadowed in Section 163
.
[84]
It was
said
in
Law and Others v Nel
2011 (2) SA 172
(SCA) at para 23:
"
An
Applicant
.
..
cannot
contend 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 had been 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 an
end
of
the
matters
complained
of,
·
and
that it is just and equitable that such relief be granted. Thus
,
the
Court
'
s
jurisdiction to make an order does not arise until the
speci
fied
statutory
criteria
has been
satisfied
[citations
omitted]
[5]
."
[85]
Oppressive connotes
conduct
that
is
"bu
rdensome
,
harsh
and wrongful
"
and
it
includes
lack
of
probity
or
good
faith and fair dealing in the affairs of a company to the prejudice
of some portion of
its
members
[6]
.
[86]
The Supreme
Court
of Appeal also went on to state in Grancy
[7]
that
Section
163
should
be applied
"
to
advance the remedy
...
ra
the
r
than
limit
it".
Such
an approach also gives effect to the purposes of
the
Act
set out in Section 7 of
the
Companies
Act. One of those
is
to
balance
the
rights
and
obligations of
shareholders
and
directors within the company and to encourage the efficient
and
responsible
management of companies.
[87]
In
my
view it would be prejudicial to the Respondents
if
I
were
to grant any of the
relief
foreshadowed in the
Notice of Motion in the present circumstances. In my judgment an
important
consideration is the
extent of the misappropriations
,
the
need
for
further
investigations and
remedies to ameliorate the clear wrong perpetrated against the Fifth
Respondent. It cannot behove the Applicant
to
simp
ly
say that the charges
have been
"
trumped
up
"
and that the
shareholders knew that monies were being channelled to
"Consul
tants
".
The evidence thus
far indicates
that
although M&H and
Tlou Business Solutions have
the
i
r
offices at 549 Servaas Street
,
Pretor
ia
these premises are
also
leased
by
the Applicant
'
s
business Mandia Stationery CC
.
Many
hundreds
of
thousands of rands were
cashed in Durban.
For
example on 27
January 2015 there was a cash withdrawal of R1
.2
million out of the
bank account of Tlou Business Solutions CC. Throughout February 2015
and mainly at the Briardene branch
the
encashment of
several million rands continued unabated.
In
March 2015 there was
a payment
to
the
ANC and the reference given thereto
is
that of Anesh.
There was also a payment to one
'Mtete'
on 25 March 2015 in
the sum of R150 000,00. These payments
,
if
they
were legitimate payments
in
the ordinary course
of the Fifth Respondent's business should have been reflected as such
in their accounts and not
in
the accounts of
third parties. The cash withdrawals from
the
accounts of the
third parties are highly suspicious. These and many of the others
were simply fobbed off by the Applicant. She gave
a glib response
suggesting that she did not want
to
say
"much
more on this topic
"
.
[88]
When confronted with the overwhelming evidence Mr
Kemp
reminded me
that
the Applicant did
not make any admissions
.
However it is clear
from the Applicant's papers that although she took umbrage at being
described as a puppet of her husband
,
he made all the
major decisions in regard to
the
sharehold
i
ng.
There is
some
dispute about whether she attended any of the meetings of the
shareholders. The case which the Respondents sought to advance
was
that
the
Applicant was
in
effect a
nom
inee,
that she did not pay
any consideration for the
shares
and did
not
have any active
role
in
the
affairs of
the
Fifth Respondent.
Anesh Harilal represented
to
the
Respondents and
to third parties that he
was
the true owner of
the
shares.
This
was
amply
demonstrated in his attempt to sell the shares
·
during September
2013
.
After
his conviction the
Applicant's husband sought to
comply
w
i
th
the shareho
l
ders
agreement and gave notice of the sale of his shares
.
Although
the
heading in the
letter
referred
to
the proposed sale of shares held at Power Stationery by Mrs Anitha
Harilal
it
did
not have her signature thereon
.
He stated in the
letter
that
he had the right
to
offer
the
shares
to
outside
parties
if the
ex
isting
shareholders were
not
w
i
lling
to purchase
them
.
The Applicant
accepts that her husband not only held
himself
to be
the
de facto
owner
of the shares but that the Respondents
knew
and acknowledged
that
this
was
so.
According to her Anesh acted for the benefit of their
joint
estate
.
[89]
The importance of the aforegoing lies in the fact that the
Appl
i
cant
gave the
impress
i
on
,
in the founding
papers, that she had
an
ongoing relationsh
i
p
w
i
th
the co
-s
hareholders
;
that
the
relationship
had
broken
down
to a point
where
she
was no
longer
on
speaking
terms with them
and
that it was just
and
equitable
to
permit of a mechanism to part
ways
with the co-shareholders. In truth however
the
Applicant
d
i
d
n
ot
have an extant
relationship
with any of the co-shareholders. She was not in contact w
i
th
them
.
She
did not attend the shareholders meetings. She had no relationship
whatsoever
.
This
application was brought to recover stolen monies at the hands of her
husband. It was obvious that if he brought the application
he would
be confronted with the overwhelming evidence
.
[90]
In Visser Citrus (Pty) Limited v Goede Hoop Sitrus (Pty) Limited and
Others
[8]
Rogers remarked that:
"It
is not enough
for an Applicant to
show
that the
conduct of which he complains is
"
prejudicial"
to
him
or that it
"
disregards
"
his
interests
.
The Applicant
must show that that the prejudice or disregard has occurred
"
unfairly
".
"Oppression"
likewise
connotes
an
element at least of unfairness if not something
worse."
[91]
If there has been a breakdown of confidence between shareholders it
may be only but fair to permit the innocent parties investment
to be
returned to that party. This principle accords with
the
other
related principle of majoritar
i
anism
in company
law.
Where
however the unfairness can be laid squarely at the minor shareholder
she cannot be heard to complain. When a Court
is
faced
with such a situation
it
is
not fair nor permissible to
"
preside
over a protracted and expensive contest of virtue between the
shareholders and award the company to the winner
[9]
.
[92]
There are several disputes of fact which cannot be resolved on the
papers
.
However
the Applicant for the main put up bare denials without once seeking
to deal with any of the serious allegations directed
against her
husband and herself
.
She was
content
to
suggest that the
disputes should simply be referred to oral evidence
.
That is not the
proper approach.
[93]
The correct approach is that relief should only be granted in motion
proceedings when the facts set out
in
the
Applicant's Affidavit are admitted and in their
totality
those
put up by the Respondents permit the grant of such an order
[10]
.
It
is
not
correct to suggest
that
because
legis
la
tion
permits
the
l
aunch
of motion
proceedings
that
even
where there are anticipated disputes such a party can come to court
in the sure knowledge that they can contend that that they
have no
right to launch action
proceedings.
It
could
never
have been the
intention
of
the legislature to restrict the procedural r
i
ghts
of parties in this way. The Companies Act must therefore be
interpreted to mean that
motion
proceedings
are
permiss
i
ble
when there are no an
ti
cipated
disputes
of
fact
or these are easily determined by referral to trial.
[94]
The
Supreme
Court of Appeal has
reiterated
the
correct approach to disputes of fact in motion proceedings
.
It
has said that
"
a
real
,
genuine
and
bona
fide
dispute
of
fact
can exist only where the Court is satisfied that the party who
purports to raise the dispute has in his
Affidavit
seriously
and unambiguously addressed the facts said to be disputed
.
There
will off course be instances where a bare denial meets the
requirement because there is no other way open to
the
disputing
party and nothing more can
therefore
be
expected of him
.
But
even that may not be sufficient if the fact averred lies purely
w
i
thin
the knowledge of the aver
r
ing
party and no basis
i
s
l
aid
for disputing the veracity or
accuracy
of
the averments
.
When
the facts averred are such that the d
i
sputing
party must necessarily possess knowledge of them and be able to
provide an answer (or counter veiling ev
i
dence)
if they be not true or accurate but
,
instead
of doing so
,
rests
his case on a bare or ambiguous denial the Court will generally have
d
i
fficulty
in finding that
t
he
test
i
s
satisfied
.
I
say
"
gene
r
ally
"
because
factual averments seldom
stands
apart
from a broader matrix of circumstances all of which need to be borne
i
n
mind
when arriving at a de
c
ision.
A litigant may not necessarily understand the nuances of a bare or
general denia
l
as
aga
i
nst
a real attempt to grapple with all relevant factual allegations made
by the other party
.
But
when he signs the Answering Affidavit
,
he
commits
himself
t
o
i
ts
con
t
ents
,
inadequate
as they may be
,
and
will only in exceptional circumstances be permitted to disavow them
.
There
is
thus
a
serious duty
i
mposed
upon a
l
egal
adv
i
sor
who settles an
...
affidavit
to ascertain and engage with facts which
h
i
s
client disputes an
d
to
reflect such disputes fully and accurately in
t
he
Answer
i
ng
Affidavit. If that does not happen it should come as no surprise that
a Court
t
akes
a
robust
view
of the matter
[11]
:
[95]
A lit
i
gant
who therefore ant
i
cipates
or knows tha
t
there
is l
i
ke
l
y
to be a dispu
t
e
of fact and who nonetheless proceeds by way of motion proceedings
runs the real risk that a Court
,
i
n
the
e
x
ercise
of its discretion
,
part
i
cularly
if there is suspic
i
on
about that party
'
s
vers
i
on
,
may resu
l
t
in the applica
t
ion
b
e
ing
dismissed with
c
osts
.
[96]
Room Hire Co. (Pty) Limited v Jeppe Street Mansions (Pty) Limited
[12]
is authority for the proposition that it is not proper for a party to
commence proceedings by motion
"with
knowledge
of the probability of a protracted enquiry into disputes of fact not
capable of easy ascertainment
,
but
in the hope of
inducing
the
Court to apply [Rule 6] to what is essentially the subject of an
ordinary trial action"
.
[97]
Mr Kemp, after readily accepting that there were disputes of fact
irresoluble on the papers
,
counted by saying
that the Applicant was mandated by the legislature to proceed by way
of application proceedings and that the legislature,
when it drafted
the Companies Act must be
taken
to
have
known the
difference
between application proceedings and trial proceedings
.
He added that the
Applicant had also sought a wind
i
ng
up order which could only
.
be
brougt on motion
.
He
did not advance any authority for the propositions
.
Mr Singh who appears
for the Respondents on the other hand argued that if a party knew or
anticipated a real dispute of fact it
would be
unwise
for that party to
proceed on motion to wind a company up
.
It would be
appropriate in those circumstances to first obtain a judgment and
then rely
thereon
to
wind the company up
.
In
regard
to the first point Mr Singh submitted that a party could proceed by
way of a declarator as to that parties
locus
standi
or in
appropriate
instances
set out the disputes
of
fact
and
identify the issues which ought to proceed to trial.
[98]
He called to aid the case of Kalil v Decotex
(Pty)
Limited and Another
1988 (1) SA 943
AD as authority for the proposition
that
where
in
an opposed
application for a winding up and
the
probabilities on the
Affidavit are equipoised a Court would gravitate towards the hearing
of oral evidence
.
However if
the
probab
i
lit
i
es
do not favour
the
Applicant a Court
would be
less
likely
to exercise
its
discretion in the
i
r
favour. The probabilities do not favour the Applicant. The Applicant
has not placed any material to exercise my discretion in
her favour.
[99]
As a norm a Court should not order the hearing of oral evidence where
the probabilities favour the Respondent.
[13]
This is a salutary approach
.
I
associate myself with such a
long
standing precept.
[100]
Motion proceedings are not as a rule designed to determine the
probabilities
.
Where
a parties version consists of bald or uncreditworthy denials or
raises fictitious disputes
of
fact which are palpably implausible
,
far-fetched
or so clearly untenable
it
is
permissible
to
reject them out of hand
[14]
.
[101]
In my judgment a
party
seeking relief
in
terms
of Section 163
of the Companies Act who knows that there are disputes which
cannot
be resolved
in
motion proceedings
is entitled
to
either set
those
disputes out in
the
Founding Affidavit
and
to
identify
the issues which should be dealt with in a trial and to seek an order
in terms of Section
163(2)(1)
of the Companies
Act. A Respondent faced with such an
application
would not be
entitled to resist such
a
procedure
.
Such a party would
also be entitled to bring a declarator that the disputes
i
n
question
,
properly identified
,
should
be
referred
to
trial.
Finally
,
it is open to such a
party to record
the
respective party
'
s
contentions and to cause
these
to be referred to
trial.
[102]
A party
who is
aware
that
there
are
likely to
be
serious conflicts of facts
is
also entitled to
proceed
by
way
of
action. The answer to any
defence
that the
legislature
has restricted the
remedy to mot
i
on
proceedings would be
that
the
factual
disputes
cannot
be
resolved on application
and
that the opposing
party
cannot
complain of
any
prejudice
.
A
Court
would
be
wrong
,
in
my
view
,
to dismiss
the
application
on
this
basis
.
Trial and
motion
proceedings
are
designed to
arrive
at
the
truth
and to do justice between
parties.
There
are clear
instances deve
l
oped
i
n
our
common law
when
a party
should
not
proceed
by
way
of
application
proceedings.
Beyond
these
clear
instances, a
party
is
entitled to
bring
application
proceedings
when there are no
disputes
of
fact.
But
he
cannot
do so knowing
that
there
are
factual
disputes
.
[103]
In
Garment
Workers Union
v
De
Vries
and
Others
[15]
Price
J issued the
following
caveat as far
back
as 1949
:
"
It
i
s
becoming
a
habit
to bring
appli
c
ations
to Court on
controver
s
ial
i
s
sues
and then to endeavour to turn them
into
trial
actions. Applicant
s
thereby
obtain
a
great
advantage over
litigants
who had proceeded by
way
of action and who may have to wait for many months
to
get
their
case
s
before the
Court
.
Such
applications
-
cum
-
trials interpose
themselves
,
occupying
the
time
of
judges
and
still
further
delaying the hearing
of
legitimate
trial
s
.
Appli
c
ations
for the
hearing
of viva voce
evidence
in
motion
proceedings
should be granted only where it is
essential
in
the
interests
of
justice.
"
[104]
The present application should never have been brought
in
t
he
hope
the
matter
would be
referred
to
oral evidence. A party
who
is
aware
of the dispute but who chooses
to
remain
silent
about them in the
founding papers and when confronted wi
t
h
evidence puts up a bare denial should expect that a Court
would
exercise it's
discretion against that party and dismiss the application
with
costs.
[105]
In
my
judgment this is not a proper case to
refer
to
trial
for the
hearing
of oral evidence.
[106]
In any event I can
conceive
of no
prejudice
to the Applicant.
Th
i
s
i
s
not
a
case where the Applicant is
likely
to suffer
irreparable harm if I were
to
dismiss the
application
w
i
th
costs.
I
am
deeply concerned
by the
conduct of
the Applicant. I would have
granted
a punitive costs order but
Mr
Singh did not press
the
issue.
[107]
Consequently I make the following
order:-
The
application
is
dismissed
with
costs
.
________________
NXUSANI
AJ
APPEARANCES
For
the Applicant: Adv KJ Kemp SC
with
I
P
i
llay
Instructed
By:
Hulley
&
Associates Inc
.
Su
i
te
7 Corporate Office
Park
11
Sinembe Crescent
La
Luc
i
a
Ridge
Umhlanga
Ref
:
E
Collins
Tel
:
031
584
7594
For
the
1
st
-
7
th
Respondents
:
Adv N
.
Singh SC
Instructed
by
:
Anand Nepaul
Attorneys
9
th
Floor
,
Royal Towers
30
Dorothy
Nyembe
Street
Durban
Date
of
H
eari
ng
:
31 October 2016
Judgment
handed down:
11 January
2017
[1]
In Re:Rubel Branz and Metal Co and Vos [1918] 1KB at page 322
[2]
See also lnrybelange (Edms) (Bpk) v Pretorius
1966 (2) SA 416
(A) at
427 and Van Rooyen v Minister Van Openbare Werke en Gemeenskapsbou
1978 (2) SA 835
(A) at 844 -846 where the test in Street's case was
approved as being a correct statement of our law.
[3]
Bayly v Knowles
2010 (4) SA 548
SCA at para 24
[4]
Wimbledon Lodge (Pty) Limited v Gore NO and Others
2003 (5) SA 315
at para 10
[5]
See Graney Property v Manala 2015 (3) SA 313
[6]
Graney supra at para 22, see also Scottish Co-operative Wholesale
Society Ltd v Meyer (1959] AC 324 ([1958]
3 ALL ER 66
(HL)) at 342
[7]
Supra at para 26
[8]
2014 (5) SA 179
(WCC) at para 55
[9]
Rea Company No. 006834 of 1988 Ex Parte Kremer
[1989] BCLC 365
(CHD)
at 368
[10]
Plascon-Evans Paints (Ltd) v Van Riebeeck Paints (Pty) Limited
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634 E - G
[11]
Wightman t/a JW Construction v Head Four (Pty) Limited and Another
2008 (3) SA 371SCA
at para 13
[12]
1949 (3) SA TPD at 1162
[13]
Decotex supra
[14]
National Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
at
para
[26]
. See also Wishard v Bleeden NO
2013 (6) SA 59
KZP at para
60
[15]
1949 (1) SA 1110
W at 1133