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[2012] ZAFSHC 160
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Knipe and Others v Kameelhoek (Pty) Ltd t/a Schaapplaats 978 (Pty) Ltd and Another (A252/2011) [2012] ZAFSHC 160 (30 August 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Appeal No.: A252/2011
In the matter between:-
MOIRA ELIZABETH
KNIPE & 17 OTHERS
.............................
Appellants
and
KAMEELHOEK
(PTY) LTD/
SCHAAPPLAATS 978
(PTY) LTD
....................................
1
st
Respondent
THE MASTER OF THE
FREE STATE
HIGH COURT
...................................................................
2
nd
Respondent
_____________________________________________________
CORAM:
EBRAHIM, J
et
VAN DER MERWE, J
et
MOLEFE, AJ
_____________________________________________________
HEARD ON:
23 JULY 2012
_____________________________________________________
JUDGMENT BY:
VAN DER MERWE, J
_____________________________________________________
DELIVERED ON:
30 AUGUST 2012
_____________________________________________________
[1]
By agreement separate applications for the liquidation of Kameelhoek
(Pty) Ltd (Kameelhoek) and Schaapplaats 978 (Pty) Ltd (Schaapplaats)
were simultaneously argued before the court
a quo
. That court
delivered one judgment in terms of which both applications were
dismissed with costs. The court
a quo
however granted leave to
appeal to the full court in respect of both applications. This
judgment therefore deals with both appeals.
[2]
Mr Henry Bazzett Louis John Knipe (the deceased) passed away on 28
June 2007. The deceased clearly possessed good business acumen.
At
the time of his death he had accumulated a considerable estate,
inter
alia
consisting of interests in various entities.
[3]
At the heart of this matter lies disharmony that exists between the
remaining members of the family of the deceased. These are
his wife,
Moira Elizabeth Knipe (Mrs Knipe) and their five children, Robert
Petrus Jansen Knipe (Pieter), Carol Jessie Cathleen
Lotz (Carol),
Jacqueline Moira Deborah Vigne (Jacqueline) and the twins, John
Douglas Jansen Knipe (John) and André Bazzett
Jansen Knipe
(André).
[4]
At the time of his death the deceased was the sole director of both
Kameelhoek and Schaapplaats (the companies). The shares
in the
companies were held by family trusts of which the deceased and Mrs
Knipe were the trustees. Their five children were the
equal
beneficiaries of the trusts.
[5]
Kameelhoek owns the farm Kameelhoek and Schaapplaats owns the farm
Langeberg. Kameelhoek and Langeberg (the farms) are adjacent
to each
other and are for all intents and purposes one farm. The farms are
9597,6323 hectares in extent and worth approximately
R60 million.
Whether the cattle and game on the farms are the property of the
companies, is in dispute and will be dealt with below.
[6]
Mrs Knipe is the duly appointed executrix of the estate of the
deceased. On or about 18 November 2008 Mrs Knipe was appointed
as the
sole director of the companies. She was also the sole remaining
trustee of the trusts that held the shares in the companies.
In this
capacity Mrs Knipe on 21 August 2009 resolved to dissolve the trusts
and instructed an attorney to transfer the shares
in both companies
in equal proportions to her five children. Such transfer was
registered on or about 1 October 2009. Although
Mrs Knipe
subsequently changed her mind and liquidation is pending in another
court in this regard, counsel for the appellants
correctly accepted
that the appeal should be decided on the basis that each of the five
Knipe children holds 20% of the shareholding
in each of the
companies. It must be added that even on the evidence of Mrs Knipe in
this regard, which is not necessary to discuss
in detail, it is clear
that it is intended that the shares in the company will eventually at
least be transferred to Carol, Jacqueline,
John and André.
[7]
As a result of resolutions taken at a meeting of shareholders of the
companies that took place on 27 August 2010, Mrs Knipe
was removed as
director of the companies and André, John and Jacqueline were
appointed as the directors of the companies.
It is common cause that
André, John and Jacqueline subsequently took control of the
companies.
[8]
There were no less than 18 applicants in each application and
therefore 18 appellants in each appeal. The first to fourteenth
appellants are Mrs Knipe in various capacities, namely in her
personal capacity, in her capacity as executrix of the estate of
the
deceased and in the alleged capacity of director of the companies and
trustee of the trusts. Carol is the fourteenth appellant.
The
fifteenth to eighteenth appellants are Carol’s children. All
the appellants alleged that they are creditors of the companies
and
in that capacity they rely thereon that the companies are unable to
pay their debts and that it is just and equitable to liquidate
the
companies. Carol in her admitted capacity as shareholder also relies
thereon that it is just and equitable to wind up the companies.
[9]
André filed answering affidavits purportedly on behalf of the
companies. He was in this regard supported by a confirmatory
affidavit by John. They alleged that the companies took resolutions
to oppose the applications, but did not produce such resolutions.
Counsel for the appellants attempted to make much of the absence of
such resolutions and/or of supporting affidavits by Pieter
and
Jacqueline. In my view not much turns on this at present. The
appellants did not avail themselves of the provisions of rule
7(1) as
envisaged in
UNLAWFUL OCCUPIERS, SCHOOL SITE v
CITY OF JOHANNESBURG
2005 (4) SA 199
(SCA)
at 206 – 207
para [13] – [16] and it is rightly accepted that André
and John are entitled to oppose in their
capacities as shareholders
of the companies.
[10]
The appellants ask that in the event of the appeal succeeding, final
liquidation orders should be made and only in the alternative
that
provisional liquidation orders should be granted. In my judgment
there is no reason to depart from the longstanding practice
of this
court to grant provisional liquidation orders in order to afford all
interested parties an opportunity to respond to the
application. It
follows that the question is whether any of the appellants made out a
prima facie
case for liquidation
orders and that in the event of factual disputes in this regard, a
prima facie
case is established
on a balance of probabilities on the papers. See
KALIL
v DECOTEX (PTY) LTD AND ANOTHER
1988 (1) SA 943
(AD) at 975 J
– 980 A.
[11] The court
a quo
found that the appellants either on their own showing are not
creditors of the companies or that that was disputed on
bona fide
and reasonable grounds. It suffices to say that we are not convinced
that it erred in this regard.
[12] It must therefore be
considered whether Carol’s application as shareholder should
have been granted. Carol’s case
is that the companies are
domestic family companies akin to partnerships where a relationship
of mutual trust and confidence between
shareholders is contemplated
and, as such a relationship is not reasonably possible, it is just
and equitable that the companies
be wound up.
[13] The application was
launched after the date of commencement of the Companies Act 71 of
2008 (the Act). In my judgment a company
is solvent, even though
illiquid, if its assets, fairly valued, exceed its actual
liabilities. It is clear on the papers that on
any view the companies
are solvent. It follows that Carol’s application is brought in
terms of section 81(1)(d)(iii) of the
Act.
[14] It has often been
stated in respect of the predecessors of the Act that the wide
discretion to liquidate a company on the ground
that it is just and
equitable to do so, rests on a broad conclusion of law, justice and
equity and as a ground for liquidation
is not an
eiusdem generis
with the other grounds of liquidation. Over the years a number of
categories of cases have been developed in this regard, although
courts have been at pains to point out that these categories do not
constitute a
numerus clausus
. These categories include cases
of disappearance of the substratum of the company, illegality of
objects and fraudulent purpose,
deadlock in administration of the
company, fraud, misconduct and oppression and the case of domestic
companies. Save that an actual
deadlock in the administration of a
company is now an independent ground of liquidation in terms of
either section 81(1)(d)(i)
or (ii), I do not think that the position
in terms of section 81(1)(d)(iii) is any different to what it was
before promulgation
of the Act.
[15] The category in
respect of small domestic companies deals with the case of a small
domestic private company in which because
of 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
or contemplation suffices. Unless
the destruction or impossibility of
existence of such relationship was wrongfully brought about by the
person seeking the winding-up,
the court may wind the company up on
the ground that is just and equitable. This is a recognition of the
fact that
“
a limited
company is more than a mere judicial entity, with a personality in
law of its own; that there is room in company law for
recognition of
the fact that behind it, or amongst it, there are individuals, with
rights, expectations and obligations
inter
se
which are not necessarily submerged in the company structure”.
(Per Lord Wilberforce in
EBRAHIMI
v WESTBOURNE GALLERIES LTD
1973 AC 360.)
As the determining factor
is the destruction or impossibility of the contemplated personal
relationship of mutual co-operation,
trust and confidence, it matters
not that there is no actual voting deadlock, that the conduct relied
upon was not wrongful but
allowed by the articles of association of
the company, nor that the conduct in question is not in connection
with the company’s
business. In this regard the court
a quo
erred in finding that the discord and disputes in respect of the
cattle and game are irrelevant because on Carol’s version
the
cattle and game do not belong to the companies. In
LAWRENCE v
LAWRICH MOTORS (PTY) LTD
1948 (2) SA 1029
(W), for instance,
the breakdown in relationship was caused by the fact that the one
director of the company had committed adultery
with the other
director’s wife. The onus is on the applicant to show that he
or she is entitled to the relief and that onus
in my judgment
includes showing that the applicant is not wrongfully responsible for
the situation relied upon. See
MOOSA, NO v MAVJEE BHAWAN (PTY)
LTD AND ANOTHER
1967 (3) SA 131
(T) at 136 G – 138 H
and 152 A – C;
EMPHY AND ANOTHER v PACER PROPERTIES (PTY)
LTD
1979 (3) SA 363
(D)
at
365 H – 368 H;
ERASMUS v PENTAMED
INVESTMENTS (PTY) LTD
1982 (1) SA 178
(W) at 181 B –
185 E.
[16] There is a balance
of probabilities on the papers that the cattle and game that were on
the farms when the deceased passed
away, do not belong to the
companies. I say this for the reasons that follow. On 15 April 2008 a
meeting took place that was attended
by all five of the Knipe
children, each represented by their own attorney, as well as
attorneys of the firm Duncan and Rothman,
then representing Mrs
Knipe. It is common cause that a comprehensive agreement was reached
at that meeting and that that agreement
is correctly reflected in a
letter by Duncan and Rothman dated 25 April 2008, directed to all
concerned. In terms of this agreement
the farms would be valued and
sold and the proceeds paid to the Knipe children in equal
proportions. The agreement reached in respect
of the cattle makes it
clear that all agreed that the cattle did not belong to the
companies. It was agreed that save for 20 heifers
belonging to Carol,
the cattle on the farms would be sold for the benefit of the heirs
thereof and that the estate would be liable
to the companies for
rental of the farms calculated at R50,00 per cow per month from date
of death of the deceased to the date
of sale of the cattle, to be
deducted from the proceeds of the cattle. In terms of his will the
deceased bequeathed all his cattle
to his grandchildren in equal
shares. Apart from legacies not now relevant, the deceased bequeathed
the residue of his estate to
Mrs Knipe. This residue includes the
game on the farms, with the exception of 26% of the eland to which
André and John is
entitled, as was specifically recorded in
the letter of 25 April 2008. That the cattle and game do not belong
to the companies
was common cause at least up to 7 April 2011, when
attorneys acting for André, John and Jacqueline and the
companies, in
a letter specifically recorded that the proceeds of the
cattle must be awarded by the executor to the deceased’s
grandchildren
and added that the cattle and game are held in
retention by the companies for a claim for arrear rent in respect
thereof.
[17] In this light the
attempt in the answering affidavits by André and John to say
that unspecified numbers of these cattle
and game were owned by the
companies, is most unconvincing. As far as indications emanating from
the deceased are concerned, they
rely on financial statements of the
aforesaid trusts as at 28 February 1983 and of Kameelhoek as at 28
February 1992 and 28 February
1996. That the trusts owned cattle and
gemsbok in 1983 can hardly be relevant in the circumstances. The
Kameelhoek 1996 financial
statements in fact indicate that the
company only owns the farm Kameelhoek, which is supported by the fact
that it is reflected
therein that there were sales of game during the
1995 financial year, but not during the financial year ending 28
February 1996.
On the other hand statements of personal assets and
liabilities made by the deceased on 15 October 2002, 24 November 2003
and 8
December 2004 indicate that he owned large numbers of cattle
and game. It is the evidence of Mrs Knipe that these included the
cattle and game on the farms. It is undisputed that Mrs Knipe and the
deceased had a very close personal and business relationship
and that
she assisted him especially in the farming operations.
[18] I am satisfied also
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 of the companies was contemplated, is the logical
conclusion also of André
and John’s case, as they
correctly state that their father did not intend Carol to be
preferred over his other children.
[19] The court
a
quo
found that there are serious disputes,
discord and lack of trust between at least some of the shareholders
of the companies and
that they are unable to work together. These
findings were rightly not contested before us. The papers abound with
proof thereof
that there is no reasonable possibility of the
establishment or existence between all the shareholders of the
contemplated personal
relationship. In fact, it is admitted that the
family is
“... extremely dysfunctional”
as
illustrated by
“... family feuds, disagreements, fights
disputes and litigation”
. It is also common cause
that André, John and Jacqueline are managing the affairs of
the companies to the exclusion of Carol.
[20] It follows that it
must be considered whether this situation was wrongfully caused by
Carol. The essential allegations of André
and John in this
regard are that Carol fabricated agreements in terms of which she
obtained exclusive rights of hunting, gaming
and tourism on the farms
(hunting rights) for no
quid pro quo
and that the whole purpose of the applications for
liquidation is to devise a way to enable Carol to continue to
exercise such rights.
Neither contention is however borne out by the
evidence.
[21] First, it cannot be
disputed that the deceased, who was then the sole director of the
companies and the sole owner of the game
on the farms, signed
documents (attached to the papers as “K7”) indicating
that hunting rights are unconditionally
granted to Carol for the
period of nine years from 2006 to 2015. Mrs Knipe says that she was
present when the documents were created
and signed by the deceased
and Carol. André and John’s bare denial hereof does not
create a real dispute of fact.
It is not disputed that Carol in fact
did exercise hunting rights during the lifetime of the deceased. It
similarly cannot be disputed
that Mrs Knipe, at the time when she was
the sole director of the companies and the executrix of the estate of
the deceased of
which the game on the farms form part, signed similar
documents (“K8”) in terms of which the hunting rights
were extended
to 2018.
[22] André and
John rely in this regard on an affidavit by Mr JL Viljoen deposed to
on 25 April 2011 in other litigation.
Mr Viljoen is an attorney who
acted for Mrs Knipe after the death of the deceased, but who has
since seen fit to side against her
in the same dispute. Mr Viljoen’s
assertions in respect of fraud or impropriety in respect of the
granting of the hunting
rights are not only legally unfounded, but
factually directly contrary to undisputed and unexplained letters
previously written
by him. In a letter dated 24 March 2009 directed
to Carol, Mr Viljoen, on behalf of Mrs Knipe, formally confirmed to
Carol the
existence of her hunting rights. The letter further states
inter alia
that the
letter of confirmation is given in order to assist Carol in any court
proceedings for the enforcement of her rights in
terms of the
agreement in respect of hunting rights and that the author is
prepared to assist Carol in case of violation of her
said rights by
obtaining an interdict and/or other legal remedy. Similarly, by
letter dated 16 April 2009, Mr Viljoen in rather
provocative terms
warned André not to interfere with Carol’s hunting
rights (
“geregistreerde jagregte (wat sy) hou al vir
baie jare”
). And in a letter to Carol dated 10
February 2010 Mr Viljoen admitted that the extension of the hunting
rights took place in his
presence. It is also not disputed that the
documents granting the extension of the hunting rights were certified
by Mr Viljoen
as true copies of the originals on 25 May 2009. In the
circumstances it is significant that in the aforesaid letter of 7
April
2011 Carol was notified that her hunting rights are revoked
with effect from 8 April 2011 (
“dat haar jagregte
beëindig is met effek van 8 April 2011”
).
[23] Second, it appears
from what I have said that on 15 April 2008 Carol agreed, as part of
a comprehensive settlement of the disputes
in the family, to the sale
of the farms and the game thereon. This is indicative of willingness
to relinquish the hunting rights
for the greater good. André
and John say that this agreement was not given effect to because Mrs
Knipe would not allow it.
Similarly Carol’s willingness, by way
of the applications for liquidation, to place the matter in the hands
of a liquidator,
is not consistent with
mala
fides
or an attempt to enforce non-existing
rights. Whilst I am sure that Carol is as much to blame as any of her
siblings for the absence
of a personal relationship of trust and
confidence between them, I am satisfied that she is not wrongfully
responsible for the
situation that she relies on for winding-up.
[24] In my judgment
therefore, the court
a quo
should
have ordered the provisional liquidation of the companies.
[25] The following orders
are issued:
1. Both appeals succeed
with costs.
2. The orders of the
court
a quo
are set aside and replaced with the following
order in each of applications 1936/2011 and 1937/2011:
“
1.
The respondent company is hereby placed under provisional liquidation
in the hands of the Master of the High Court.
A provisional order is
hereby issued calling upon all interested parties to show cause, if
any, to the Court on the 11
th
day of October 2012 at
09h30 why a final order of liquidation should not be granted against
the respondent company.
Service of this rule,
and a copy of the notice of motion and annexures must be effected on
the respondent company at its registered
office, or its principal
place of business within the court’s jurisdiction.
The order must, without
delay, be published in Die Volksblad and the Government Gazette.
A copy of the winding-up
order must served on:
Every registered trade
union that as far as the sheriff can reasonably ascertain,
represents any of the employees of the respondent
company;
The employees of the
respondent company by affixing a copy of the application and
provisional order on any notice board to which
the employees have
access inside the respondent company’s premises or if there
is no access to the premises by the employees,
by affixing a copy
to the front gate or front door of the premises from which the
respondent company conducted any business.
The South African
Revenue Services.
6. The sheriff must
ascertain whether the employees of the respondent are represented by
a trade union and whether there is a notice
board on the premises to
which the employees have access.”
________________________
C.H.G. VAN DER MERWE,
J
I concur.
_____________
S. EBRAHIM, J
I concur.
_______________
D.S. MOLEFE, AJ
On behalf of appellants:
Adv L Halgryn SC
Instructed by:
Symington & De Kok
BLOEMFONTEIN
On behalf of respondents:
Adv J W Steyn
Instructed by:
Christo Dippenaar
Attorneys
BLOEMFONTEIN
/sp