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[2016] ZAFSHC 193
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Knipe v Kameelhoek (Pty) Ltd and Others (2120/2016) [2016] ZAFSHC 193 (10 November 2016)
STATE
HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF
SOUTH AFRICA
Case
No.: 2120/2016
In
the matter between:
ANDRE
BAZZETT JANSEN KNIPE
Applicant
and
KAMEELHOEK
(PTY) LTD
1
st
Respondent
SCHAAPPLAATS 978
(PTY) LTD
(in
liquidation)
2
nd
Respondent
COMPANIES AND
INTELLECTUAL
PROPERTIES
COMMISSION
3
rd
Respondent
JUDGMENT:
HANCKE,
J
HEARD
ON:
3
NOVEMBER 2016
DELIVERED
ON:
10
NOVEMBER 2016
[1]
This is an application in terms of section 131(1) of the Companies
Act, 71 of 2008 (herein later referred to as “the Act”)
for an order placing the first and second respondents under
supervision and in business rescue proceedings (“BR”).
[2]
A provisional liquidation order was issued by Van der Merwe J on 30
August 2012. On the extended return day, 23 May 2013,
the
matter was argued and a final order of liquidation was issued by
Daffue J, on 27 June 2013.
[3]
It is important to note that the said order was issued in terms of
section 81(1)(b) of the Act, on the ground that it was just
and
equitable that the companies be liquidated.
[4]
In giving judgment, Van der Merwe J stated the following:
“
[15]
The category in respect of small domestic companies deals with the
case with a small domestic private company
in which the cause some
arrangement or understanding a particular personal relationship of
confidence and trust between the shareholders,
similar to that that
should exist between partners in a partnership, is contemplated.
An understanding of contemplation suffices.”
He
proceeded as follows:
“
As
a determining factor is the destruction or impossibility of the
contemplated personal relationship of mutual co-operation, trust
and
confidence, it matters not that that is no actual voting deadlock,
that conduct relied upon was not wrongful but allowed by
the articles
of an association of the company, nor that the conduct in question is
not in connection with a company’s business.”
[5]
Daffue J, when granting the final order, stated the following:
“
[12]
It is apparent that members of the Knipe family are at logger heads
with each other and that a family feud
of tremendous proportions
exists which will not be terminated, whether or not final orders are
granted herein… The
company’s counsel submitted
that there are wide ranging and bitter disputes between the members
of the Knipe family, of a
magnitude seldom seen. It is also
common cause that prior to the provisional winding up order, André,
Johnny and Jackie
managed the affairs of the companies to the
exclusion of Carrol and Peter, and, to be able to do so, they had to
remove the sole
director, Mrs Knipe, the one person who as trustee of
the various trusts resolved those trusts and allocated the shares to
her
five children in equal proportions. No meaningful dialogue
between the parties is possible. They cannot approach any
issue
with open minds and in good faith. The children want to harvest
the wealth which has been created by their late father
with the
financial and other support of Mrs Knipe.”
[6]
Application was made for leave to appeal against the final winding-up
order and leave was refused on 25
th
September 2013. Thereafter application was made to the Supreme
Court of Appeal for leave to appeal which was refused on 5
February
2014.
[7]
The applicant himself summarises the relationship between members of
the Knipe family as follows in his founding affidavit:
“
[18]
The liquidation applications were based on allegations that it would
be just and equitable to liquidate these
companies because of the
family feud which had ensued between the five children and our
mother. It serves no purpose to refer
to the many disputes
which arose between the said parties. In more than one judgment
delivered in this court it has been
found that the five children
cannot work together. I should explain that we are basically
divided into two factions.
The one faction is made up of my
brother, Johnny Knipe, my sister Jackie Vigne and I. My late
mother and my sister, Carrol
formed the other faction. My
eldest Peter Knipe has often take an independent stance but, in other
times he has supported
the views adopted by my mother and Carrol.
[19]
The crux of the aforegoing is that we do not get along. We all
hold different views of what our
late father intended with his
companies and how he wanted to provide us.”
[8]
In his replying affidavit, he stated that he had secured the support
of his brother, Peter, sister Jackie and other brother.
He went
on to say that:
“
The
holders of 80% of the issued share capital in both companies support
a business rescue application. It is only Carrol,
who seems to
be willing to lose everything as a result of a strong dislike of her
siblings, who does not support the business rescue
application.”
[9]
It appears from the application that the companies in liquidation
were finally wound up by order of this court as far back as
27 June
2013. On 12 May 2016, that is three years later, the present
application was filed with the registrar of the High
Court.
[10]
During 2014, there was another application to place the first and
second respondents under supervision and BR proceedings.
This
application was brought by the applicant (as second applicant), which
application was dismissed with costs.
[11]
The first issue to be decided is whether BR is an appropriate remedy,
given the fact that the companies were wound-up on the
basis of it
being just and equitable to do so, in view of the fact that the
siblings/shareholders of the two private property owning
companies
being unable to work together due to on-going family feuds and
acrimonious litigation.
[12]
The essential requirements for an application of this kind are to be
found in section 131 of the Act, which provides in relevant
part:
“
(1)
Unless a company has adopted a resolution contemplated in section
129, [which provides for voluntary business rescue proceedings],
an
affected person may apply to a court at any time for an order placing
the company under supervision and commencing business
rescue
proceedings.
…
(4) After considering an application
in terms of subsection (1), the court may-
(a) make an order
placing the company under supervision and commencing business rescue
proceedings, if the court
is satisfied that-
(i) the company is
financially distressed;
(ii) the company has
failed to pay over any amount in terms of an obligation under or in
terms of a public regulation,
or contract, with respect to
employment-related matters; or
(iii) it is otherwise just and
equitable to do so for financial reasons, and there is a reasonable
prospect for rescuing the
company; or
(b)
dismissing the application, together with any further
necessary and appropriate order, ...”
[13]
Section 7 of the Act provides for
“
(k)
… the efficient rescue and recovery of financially distressed
companies, in a manner that balances the rights and interests
of all
relevant stakeholders;”
[14]
It is therefore necessary to consider the impact on
all
stakeholders involved and whether as not the support of all
stakeholders would be achieved in seeking BR.
[15]
It is trite law that small domestic companies which are designed to
operate on a basis of trust and confidence between the
shareholders,
akin to a partnership agreement, are treated differently.
[16]
The judgment of Van der Merwe J (
supra
)
of the full bench made this clear when granting the provisional
winding-up orders herein.
[17]
Mr Halgryn, counsel for the 4
th
intervening party submitted that BR cannot be an appropriate remedy
in the event of small, solvent non-trading and purely property
owning
companies which have been wound-up by reason of the fact that it was
just and equitable to do so due to infighting between
the shareholder
members. I agree with his submission.
[18]
The scenario is even worse if the winding-up on the basis of it just
and equitable to do so was
inter
alia
due to the plethora of acrimonious on-going litigation between the
shareholders, the continued deadlock and distrust which exist
between
them, and their complete and absolute inability to co-operate in
harmony with each other, and the undeniable fact that
they will never
be able to do so.
[19]
The onus is on the applicant to make out a case that there is a
reasonable prospect of the BR being successful. In the
present
circumstances I am of the view that BR cannot, and was not designed
to remedy the ailment which caused the rot in the companies
in
liquidation, i.e. deadlock
[1]
,
distrust and bitter infighting and litigation between the
shareholders.
[20]
Mr Vorster, counsel for the applicant, argued that four of the five
shareholders representing 80% of the share capital in each
of the
companies support the current BR application and it is only the
fourth intervening party. Carole Lotz who remains
unwilling to
work with her siblings; therefore the suggestion that BR will
automatically fail as a result of the family strife,
is incorrect.
[21]
It is, however, important to have regard to the nature of the
winding-up orders, which were granted due to the fact that the
siblings/shareholders cannot work together in what was meant to be
small domesticated companies in which all the siblings were
supposed
to participate equally in their management.
[22]
In this regard Van der Merwe J stated the following in [18]:
“
I
am satisfied that the companies were intended by the deceased to be
family companies wherein all his children would be entitled
to
participate equally on the basis of mutual trust and confidence.
The conclusion that a personal relationship of mutual
trust and
confidence between the shareholders was contemplated, is the logical
conclusion also if Andre (applicant) and John’s
case as they
correctly stated that their father did not intend Carol to be
preferred over his other children.”
and
“
[19]
… It is also common cause that Andre, John and Jacquiline are
managing the affairs
of the companies to the exclusion of Carol.”
[23]
It is also important to note what Daffue J stated in [15.7]:
“
The
members of the Knipe family are engaging in serious family feud and
it is not possible for Andre, Johnny, Jackie, Pieter and
Carol to
work together.”
[24]
In the present case, it is alleged by Lotz that nothing has changed
and that the acrimony, hatred and distrust continues.
She
regards them as bullies, common thugs and thieves who during their
parent’s lifetime made their life a living hell; of
which the
many family violence interdicts bear evidence.
[25]
Our courts will not force parties into any kind of relationship
against their will, in these circumstances. This is not
what
the legislature intended with BR and it is not what this court will
sanction.
[26]
As mentioned above, this is a second attempt to apply for BR.
Discussing the previous application, Wright AJ stated the
following:
“
[29]
But then again, the applicants waited for an inexplicably long time
to even approach this court for business
rescue … The
respondent appear to be correct in their contention that the
application for business rescue was merely
a way of further
frustrating the liquidation process.”
[2]
[27]
Mr Vorster argued that the inability of the shareholders to get
along, will not be an impediment for BR. According to
him the
business rescue proposals are sufficiently detailed to satisfy the
test enunciated in
Oakdene
Square Properties (Pty) Ltd v Farm Bothasfontein (Kyalami) (Pty) Ltd
2013 (4) SA 539
(SCA) and to address the conflict and rivalry between
the shareholders. Having regard to the history of the conflict
between
the siblings, I am not persuaded that BR is the appropriate
remedy in the circumstances.
[28]
Mr Rossouw, counsel for the first to third intervening parties,
submitted that the liquidators are by far the biggest creditors.
In view of the fact that the liquidators oppose the present
application, section 152 (2) of the Act (dealing with approval of a
BR) will not be satisfied. For approval of the proposed
business rescue plan on a preliminary basis, the section requires
the
support by the holders of more than 75% of the creditors’
voting interests that were voted, and at least 50% of the support
of
the independent creditors’ voting interests that were voted.
In view of the decision reached by me it is not necessary
to deal
with this aspect, and other issues raised by him.
[29]
It follows from the aforegoing that BR is not an appropriate remedy
in the event of small, solvent, non-trading an purely property
owning
companies which have been wound-up by reason of the fact that it was
just and equitable to do so due to the infighting between
the
shareholder members, mentioned above.
[30]
The application can therefore not succeed. In fact the
application is an abuse of process and warrants a special costs
order
on an attorney and own client scale.
[31]
The following orders are issued:
1.
The
application is dismissed.
2.
The
applicant is ordered to pay the costs on an attorney and own client
scale.
___________________
S.
P. B. HANCKE, J
On
behalf of the applicant: Adv. E. C. Labuschagne SC
Assisted
by Adv I. Vorster
Instructed
by:
Horn &
Van Rensburg Inc.
BLOEMFONTEIN
On
behalf of first to third
Intervening
parties:
Adv. P. Rossouw SC
Instructed
by:
Matsepes
Inc.
BLOEMFONTEIN
On
behalf of the fourth
Intervening
party:
Adv. L
Halgryn SC
Instructed
by:
Lovius
Block
BLOEMFONTEIN
/eb
[1]
Liquidation
has often been regarded as the most appropriate remedy to unravel
the deadlock in existence between directors/shareholders
Oakdene
Square Properties v Farm Bothasfontein
2012 (3) SA 273
at 289.
[2]
BR
proceedings, by their very nature, must be conducted with the
maximum possible expedition.
DH
Brothers Industries (Pty) Ltd v Gribnitz NO and Others
2014 (1) SA 103
(KZP) at [27];
Koen
v Wedgewood Village Golf Country Estate
2012 (2) SA 378
(WCC).