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2012
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[2012] ZAECELLC 6
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Jafte v Ilifu Trading 330 CC (EL 1259/11, ECD 2092/11) [2012] ZAECELLC 6 (5 April 2012)
23
IN
THE HIGH COURT OF SOUTH AFRICA
(EAST
LONDON CIRCUIT LOCAL DIVISION)
CASE NO. EL 1259/11
ECD 2092/11
In
the matter between
ZUKISWA
JAFTA
…...............................................................................
Applicant
and
ILIFU
TRADING 330 CC
…................................................................
Respondent
JUDGMENT
The applicant, a
member and creditor of the respondent, seeks an order placing it
under provisional winding-up on the “
just and equitable
”
ground contemplated by section 68(d) of the Close Corporations Act,
No. 69 of 1984 (“The Act”).
The respondent
conducts business as a seller and supplier of carpeting and other
flooring and also owns immovable property.
Since 23 June 2005
the applicant, together with
Marcelle Anne Godfrey
and
Grant
Godfrey
have each held a thirty percent member’s interest
in the second respondent, with the remaining 10% being held by
Clint
Ernest Du Plessis
.
The applicant
alleges that the relationship between her and her co-members has
“
been
dysfunctional
”
for
some time now and that, as long ago as early 2007,
she
was approached to disclose the terms upon which she would resign as
a member.
1
She made various
proposals in this regard which were rejected out of hand.
2
When she and her
co-members could not reach agreement on the terms upon which she
would transfer her member’s interest to
them,
they launched an
application in this court under case number EL 801/2008 in which
they sought an order terminating her membership
of the respondent
pursuant to the provisions of section 36 of the Act.
The applicant rides
on the fact that,
even
then,
the
section 36 application was justified on the basis that the
inter-member relationships had broken down to the extent that a
continuation of their association, through the respondent, was
untenable. (In the section 36 application the court held it to
be
“
common
cause that the relationship being the applicants on the one hand
(
the
applicant’s co-members),
and
the first respondent’s husband
(the
applicant’s spouse
)
... on the other hand, has soured to the extent that its
continuation is untenable.”
Commenting
with concern upon this tenuous relationship, the court noted that
“
Mr
Madasa,
(the
applicant’s spouse),
who
is not a member, seems to be the dominant figure who makes vital
decisions with significant consequences and influences matters
without incurring any risk as a member
.”)
3
Although she failed
to make any reference whatsoever to the contentious involvement of
her spouse in the respondent at the time
– plainly abundant
from the judgment aforesaid which was annexed to her founding
affidavit “
for the sake of completeness
” - the
applicant submits that the prior litigation was properly motivated
on the basis that the extent of the disagreement
between her and her
fellow members was of such a nature that any further co-operation
between them was impossible. She is careful
to point out, however,
that she opposed the application on the basis that the consideration
tendered for her member’s interest
was inadequate and not
properly motivated or calculated. In this regard she had been
offered only R40 000.00 at the time, an
amount limited to what she
had in actual fact advanced on loan to the respondent.
The application was
dismissed with costs after the court found that the applicant’s
co-members had not placed sufficient
particularity before the court
so as to place it in a position to make an appropriate order in
terms of section 36(2) of the
Act.
In May 2008 the
applicant obtained a valuation of the respondent’s worth from
Messrs
Birch
Bruce
,
a firm of chartered accountants, which led her to believe that the
value of her member’s interest was in the sum of R641
551.00.
After delivery of
the court’s judgment in the section 36 application, on 12 June
2008, a copy of this valuation was provided
to her co-members and
proposals made as to the terms upon which she would dispose of her
interest.
4
Despite repeated
requests for a response to the offer none was forthcoming,
and to date nothing
further has happened.
Aside from this,
the applicant vaguely asserts that for some years now she has been
excluded by her co-members from participation
in any form in the
management and business of the respondent and that she is in the
dark as to its financial circumstances. As
an example of this she
mentions that the last financial statements that were provided to
her was a draft annual financial statement/management
account for
the year ending 28 February 2007. Her co-members are all employed by
the respondent at salaries unknown to her. Decisions
relating to the
conduct of the respondent’s business have been taken without
reference to her, and no meetings of members
have been convened.
She suggests
further that her co-members have ignored the corporate identity of
the respondent and “
use it to advance their personal
interests
”. In this regard she “
suspects
”
that all the profits of the respondent’s business are being
consumed in salaries and other personal benefits to
them. When she
made her investment in the respondent and took up her interest it
was on the basis that she could expect a benefit
from it, but to
date this had not materialised. Thus she had confidently provided a
deed of suretyship for the mortgage loan
utilised for the purchase
of the respondent’s immovable property, but her “
entitlements
”
are presently being ignored and frustrated by her co-members in
preference to their own. She claims that as a result all
confidence
between her and her co-members has now been lost.
The true reason for
the applicant wanting to wind-up, however, appears to relate to her
inability to dispose of her member’s
interest in the
respondent on her terms. This is apparent from the following
assertion in her founding affidavit:
“
In
as far as all efforts on my part to reach agreement with my fellow
members as to the terms and conditions upon which I would
cease to be
a member of Respondent have floundered, for being frustrated by my
fellow members, there is no other alternative available
to me other
than to seek the winding-up of Respondent that I might realise my
interest therein and terminate my relationship with
my fellow
members.”
That such is the
driving force behind the application is further evident from the
consequences which she says she hopes to attract
by the winding-
up of the
respondent. These are that the respondent’s assets will be
realised by an impartial liquidator; that her loan
account will be
paid;
5
she will be
released from her suretyship in respect of the mortgage loan
agreement and the appointed liquidator will be in a position
to
investigate the conduct of the respondent’s business during
the period that she has been excluded from it by way of
interrogation or otherwise, which process will enable her to address
any undue preferences or voidable dispositions made by her
fellow
members during the period that they have excluded her from the
conduct of the respondent’s business.
The respondent
opposes the application on the basis that considerations of justice
and equity are against the granting of the
application for
winding-up, and that there are other remedies at the applicant’s
disposal to achieve her selfish interests.
Whilst admitting to
an impasse, it attributes this to the deadlock which arose when the
other members were not prepared to accept
the applicant’s
insistence that she be represented as member by
Madasa,
rather
than to any other conduct
inter
-members. This position, it
asserts, is wholly of her own creation.
The respondent
submits that the particular arrangements made concerning the basis
of the applicant’s membership at the onset
of the respondent’s
formation colour the whole matter. In this regard the applicant was
to be represented by her husband,
Gcinuhlanga Chanty Madasa
,
although his involvement would not be active. He was to provide
access to certain potential contracts flowing particularly from
his
BEE accreditation and to assist with the management of the business
and its financial affairs. The applicant’s main
purpose
through her membership was to provide an investment. No association
agreement was signed and a formal resolution proposed
by her
nominating
Madasa
to formally represent her in all matters
was not adopted. A fall out between the other members and
Madasa
ensued, culminating with a meeting on 6 December 2006 in which the
applicant continued to insist that she be represented by him.
The
other members would not agree to this.
Madasa’s
contribution to the
respondent was minimal. He saw to the purchase of the shelf close
corporation and to the registration of the
new CK 2 founding
statement. He also obtained an accounting officer. He initially took
some part in the management of the respondent
and erratically took
minutes of meetings. Contrary to his anticipated undertaking, he
ultimately failed to secure any business
for the respondent.
On the contrary,
his involvement
turned out to be a liability for the respondent. It alleges that,
at the time of the
purchase of its immovable property,
Madasa
represented to its
managing member
Marcelle
Godfrey
that
the premises were zoned for business purposes,
but
this turned out not to be the case. This necessitated an application
for rezoning granted on 20 April 2006, requiring an unexpected
payment of R85 365.45 as a contribution towards road network
improvements. Ultimately working with
Madasa
became impossible.
6
Mr
Paterson
(who appeared for the respondent) pointed out that nowhere in the
Act is any provision made for the representation of a member
by an
outsider, as the applicant wishes for. Therefore, in the absence of
any provision in an association agreement, or an oral
agreement
between the parties, she could not insist upon her rights
qua
member being exercised by
Madasa
. The conclusion follows
therefore that the remaining members were entitled to resist her
insistence on him representing her as
the effective member of the
respondent on the basis that this would undermine the personal
element essential for membership of
a close corporation. It was the
applicant herself, so it is submitted, who bears the fiduciary
duties towards the respondent
described in section 42 of the Act to
“
exercise such powers as … (
she
) may have to
manage or represent the corporation in the interest and for the
benefit of the corporation”.
Her insistence at the time on
being represented by
Madasa
was not in the circumstances in
the interest and for the benefit of the Respondent.
The applicant’s
loan account of R40 000.00 and her contingent liability arising from
the suretyship are admitted. The respondent
clarifies in respect of
the latter liability that each of the members stood surety in
respect of the mortgage bond registered
over the respondent’s
immovable property, which account was opened as an “
access
bond
”
.
In the latter regard Mr
Paterson
pointed out that
the applicant had freely entered into the suretyship even in the
knowledge that her real involvement in the respondent
was intended
to be through
Madasa
.
7
Insofar as the
affairs of the respondent are concerned, each of the members bear
the same contingent liability for the whole of
the debt, each being
jointly and severally liable
in
solidum
as
surety and co-principal debtor. The final liability resting upon the
applicant would only be determined after her right to
division
against the other sureties had been exercised. In this regard Mr
Paterson
submits that there
is no reasonable prospect of the suretyship being called up. Further
and in any event, there is no basis upon
which to speculate that if
approached to substitute a new member as surety the mortgager would
reject a consensual substitution
in order to discharge the applicant
from her obligations in this regard.
As for the loan
account, the loan was part of the original agreement between the
members and stands on a different legal footing
from their members’
interest or any rights of the applicant
qua
members. Further
and in any event she has not contested in reply the respondent’s
assertion that there has been no demand
for the repayment thereof.
Recovery of the loan, together with reasonable interest, would meet
her objective if this was her
concern without the need to wind up
the respondent.
The respondent
denies that there has been any deliberate exclusion of the applicant
from the affairs of the respondent. On the
contrary, it is the
applicant who, for example, refused to sign financial statements on
an occasion which resulted in it losing
a contract.
The respondent also
denies that no meetings have been convened, but contends that after
the breakdown of relationships with
Madasa
, there was no
point in informing the applicant of these in any event.
It submits further
that there are several ways in which the applicant’s
complaints against the respondent can be ameliorated
without resort
to the winding up of the close corporation. In this regard
Mr
Paterson
submitted that she might, for example, invoke the
statutory remedy provided for in section 48 to convene a meeting and
to deal
with her position formally. The machinery provided for by
section 49 affords her the right to complain that the affairs of the
close corporation are being conducted in a manner unfairly
prejudicial, unjust or inequitable to her and to apply to court for
wide discretionary relief. The issue of her representation through
Madasa
could, therefore, have been dealt with in a manner
short of the present winding up sought by her.
Further, and
notwithstanding the co-members’ failed application in terms of
section 36, there is no reason why the applicant
herself should not
seek to withdraw from the respondent on the basis provided for in
that section. Inasmuch as she contends that
she does not have access
to the required information, she has the remedies of the Act arising
from her membership at her disposal
to obtain the facts and
financial information such as she may need. In any event the
assertion that she has asked for such information
and that it has
been refused is conspicuously absent from her founding affidavit.
Finally the
respondent suggests that there is no reason why the co-members would
not consent to someone buying her out. Indeed
it makes business
sense that the substitution of her for another business partner
would be welcomed by them.
The deponent to the
answering affidavit has given some insight into the respondent’s
financial affairs and furnished copies
of financial statements for
the financial years ending 28 February 2009 and 2010 respectively.
In 2009 the
respondent recorded a gross profit of R1 296 955.00 but once
expenditure and tax was taken into account the net profit
was R32
954.00. In 2010 the gross profit from sales recorded was R831 292.00
but the final position was a loss of R215 292.00.
Financial
statements for 2011 were not to hand at the time of deposing to the
respondent’s answering affidavit, but it
was proffered that
its position was expected to have improved over that of the previous
year.
The respondent also
listed details of its employees and salaries.
Marcelle
Godfrey
is
employed as managing manager.
8
She was paid R301
500.00 in 2009 and R200 975.00 in 2010.
Du
Plessis
received
R117 00.00 in 2009 and R132 403.00 in the 2010 year as a salary
respectively. It denies that there is anything untoward
in these
payments.
Grant
Godfrey
is
not employed by the respondent.
Additionally the
respondent employs one Mrs
Kleynhans
as a salesperson earning
a basic salary of R3 000.00 per month, a motor vehicle allowance of
R3 500.00 and average commission
of R4 000.00 per month. She is
alleged to be a single mother with two children. The respondent
further employs one Mr
Nodongwane
as its administrative
assistant who supports two children and his parents. He earns
“
R600.00
” (sic). Finally, the work of installing
carpets and flooring is performed on a sub-contracting basis by one
Mr
Elliot Present
who supports four children, and Mr
Ivan
Ruiters
, who supports two children. Each earns between R900.00
to R3 000.00 per week. These sub-contracting fees are reflected in
the
financial statements. In 2009 these were in the sum of R266
946.00 and in 2010 R132 904.00 respectively.
The respondent
managed to trade through the recession which, according to its
managing member is an indication of its “
firm position in
the local market
”. The growth of the business such as
there has been is attributed to the contribution of the members
other than the applicant.
Conversely the respondent alleges that it
has experienced no difficulty in successfully running its business
despite the absence
of any input from the applicant or
Madasa
.
The business is
conducted from the respondent’s owned premises, valued by the
municipality at R1.5 million. The market value
is estimated to be in
the sum of R1.8 million. The respondent does not concede the
valuation of
Bruce
at R2 million which
it says is not supported by any documentation or methodology.
9
The mortgage bond
in respect of which each of the members stood surety is an access
bond and its funds are employed as operating
capital.
The respondent
avers that a forced sale would be detrimental to all concerned. In
any event the applicant has failed to justify
the benefit arising
from the sale of its immovable property which is effectively the
only asset of the business capable of realisation.
Such a sale would
probably result in the termination of employment for those of the
respondent’s employees (and loss of
opportunity for the
sub-contractors whose “
employment
” falls outside
of the scope of section 197 of the Labour Relations Act, No. 66 of
1965) and members would risk exposure
arising from their suretyship
agreements.
As for the
allegations that the applicant’s co-members have ignored the
corporation of the respondent and used it to deny
her personal
interest, the deponent on behalf of the respondent correctly notes
that no factual basis for this statement is advanced.
Similarly
lacking in any factual foundation is the suggestion that the
respondent’s profits are being consumed in salaries
and other
personal benefits to the applicant’s co-members. In any event
the respondent denies that the applicant’s
entitlements have
been ignored in preference for those of the other members. Indeed
none of the other members have thus far benefited
from their
member’s interest in the respondent. To the extent that the
respondent might make a profit and the applicant’s
member’s
interest is realisable, it concedes that she is entitled to benefit
from her investment.
The respondent
submits finally that the applicant has made out no case whatsoever
that an investigation into “
improper conduct
” or
undue preferences or voidable dispositions is required by a
liquidator or that any such advantage would flow from a
winding-up
order.
It is trite that in
opposed motion proceedings the determination of
bona
fide
disputes
of fact is to be effected by favouring the respondent’s
version.
10
In this instance
the applicant’s reply was largely directed at making
observations and submissions, with the result that
the respondent’s
version stands uncontested.
A corporation may
be wound up by a court, if,
inter
alia
,
“
it
appears on application to the court that it is just and equitable
that the corporation be wound up”
11
.
This is the only
basis upon which the applicant seeks the present relief.
Section 68(d) of
the Act contemplates a conclusion of law founded on justice and
equity. The justice and equity are those between
the competing
interests of all concerned.
12
The court’s
reaching of the conclusion that winding-up would be just and
equitable involves the exercise, not of discretion,
but of judgment
on the facts found by the court to be relevant. Once such conclusion
is reached, however, the making of the order
for winding-up does
involve the exercise of a discretion, which must be exercised
judicially, taking into account all relevant
circumstances.
13
In
Rand
Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd
14
Coetzee J
noted
that the “
just
and equitable ground
”
is
not some kind of “
catch-all
ground
”
,
but rather a special ground under which only certain features of the
way in which a company is being run or conducted can be
questioned
to the point of requesting the court to wind it up. It is, for
example, not just and equitable to wind up a commercially
solvent
corporation at the instance of a member (who is also a creditor
thereof) simply because such member is in the minority,
or
unjustifiably finds fault with the internal management thereof when
it is acting properly and within its powers.
In
this instance the respondent is functioning exactly as the members
expected and agreed at its formation, with the exception
that
Madasa’s
involvement on the
basis the applicant wished for could not be sustained.
Similarly, the mere
suggestion as a ground for winding up under the just and equitable
provision that a corporation should have
its affairs investigated
(especially without any adequate grounds for such intervention being
mentioned) must be one of those
further categories which do not lie
“
within
the general line of thrust of legislative intention as interpreted
by the Courts here and in England.”
15
Among the kinds of
things that can properly be complained of under the just and
equitable provision, however, are two categories
of relevance. The
first is a lack of confidence in the conduct and management of the
affairs of the business, and the second
is a deadlock in the
management which,
in
an analogous situation, would lead to the dissolution of a
partnership.
16
With regard to the
first, I am in agreement with Mr
Paterson’s
submission
that there is no substance in the applicant’s misgivings and
lack of confidence in the conduct of the business
of the respondent.
The applicant cannot dispute that the respondent has been operating
successfully without her involvement.
The only criticism which she
purports to level at the respondent’s business (now that she
has had insight into the financial
statements) is that the balance
of the mortgage loan has increased since she last took note, and
that gross sales have fallen.
These are, in my view, not
considerations which raise any alarm. Further, the suggestion that
she has been excluded from participation
in the respondent’s
business is not deliberate on its part. Even on her version, her
being “
on the fringe
” appears to be merely an
incident of the fall out when the co-members would not agree to
Madasa’s
formal representation of her in the
respondent, and she withdraw herself. Finally, whilst the respondent
concedes that the applicant
has not been invited to meetings, the
applicant appears to have accepted this state of affairs over a
lengthy period without
any demur.
As to the second, I
accept that there are circumstances where it would be just and
equitable to wind up a corporate entity with
a small membership in
order to resolve the impossibility of its continued existence
because of internal relationships and that
the analogous principles
applicable to the dissolution of partnerships would be of
application. Mr
Paterson’s
submission,
however, that a close corporation is not a partnership in disguise
is one that particularly commends itself to me.
A
balance has to be found between the corporate identity of the close
corporation and the particular internal relationship between
the
members. The particular nature of membership of a corporation is
apparent from several provisions in the Act. In this regard
membership is generally limited to natural persons and excludes
representation except in limited circumstances.
17
Further, members
themselves bear the fiduciary responsibility to involve themselves
in the management of the corporation unless
otherwise provided for
by agreement between them.
18
In this respect
there is nothing onerous in expecting the applicant herself to
personally exercise her member interest in the
interest and for the
benefit of the respondent.
An impassable
breakdown of relationships may well be a factor to be taken into
account in the light of all the circumstances of
a case, but a
deadlock does not
per
se
justify
a winding-up of the corporation on the grounds that it is just and
equitable to do so. Such an approach would lead to
an abdication by
the court of its discretionary powers.
Leon
J
dealt
with this explicitly in
Emphy
supra
19
as follows:
“
I
am satisfied that the mere existence of a deadlock does not per se
entitle an applicant to a winding up order under the just and
equitable provision. What requires to be emphasised is that the Court
is concerned with what is just and equitable and not with
whether
there is a deadlock or not. The existence of a deadlock is one
example of what might be regarded in a proper case as just
and
equitable but a Court must always have regard to all the
circumstances of the case.”
Further, where a
deadlock is alleged to exist, the cause thereof is critical. The
doctrine of clean hands applies. Leon J dealt
with this in
Emphy
as follows:
“…
(A)
petitioner
who relies on the just and equitable clause must come to Court with
clean hands : if the breakdown between him and the
other parties to
the dispute appears to have been due to his misconduct he cannot
insist on the company being wound up if they
wish it to continue.
What was said by Lord CROSS appears to me to be consistent with the
statement in Lindley on Partnership (supra)
that the impossibility
must not be caused by the person seeking to take advantage of it.
That statement was expressly referred
to with approval by BROOME JP
in Marshall’s case supra and by MURRAY J in Lawrence’s
case supra. In the judgment in
Moosa’s case supra the reference
to justifiable lack of confidence as well as the furtherance to the
relationship being destroyed
by one or more of the members makes it
clear, I think, that an applicant who relies upon the just and
equitable provision, must
not have been wrongfully responsible for
the situation which has arisen.
”
20
In this regard two
aspects are of significance. The first is that the applicant was not
prepared to rescind
Madasa’s
representation of her in
the respondent. Her conduct in insisting on being represented by him
was what stoked the fire in the
first place. Evidently it was his
involvement in the respondent which made for an unworkable and
untenable relationship
viz a viz
the legitimate members. The
applicant could easily have offered to remove
Madasa
from the
picture. In my view a shift in attitude and an acceptance of the
reality that she was not entitled to foist him on the
co-members
might well have brought a resolve of the impasse.
Further, some time
has lapsed since the “
deadlock
” around this issue
emerged, yet the applicant has seemingly made no meaningful attempt
since then to renew her involvement
in the business on a personal
basis as she ought, effectively choosing to abandon her interest in
the respondent. Her present
focus is in reality aimed at seeking her
exit from the respondent as member on terms acceptable to her. In
the result her assertion
in her replying affidavit that all that is
important is the admitted fact that the relationships are
irreconcilable is opportunistic.
Against this background it cannot
be said that the applicant has approached the court with the
necessary clean hands.
Equity further
demands consideration not only of the position of the applicant –
which at best is transparently self serving
- but also of the other
members of the business. It is not only her position, therefore, but
also those of the other members
of the respondent which must be
taken into account. In
Ebrahimi
v Westbourne Galary Limited and Others
21
Lord Wilberforce
expressed the test as follows:
“
The
‘just and equitable’ provision does not, as the
respondents suggest, entitle one party to disregard the obligation
he
assumes by entering a company, nor the court to dispense him from it.
It does, as equity always does, enable the court to subject
the
exercise of legal rights to equitable considerations; considerations,
that is, of a personal character arising between one
individual and
another, which may make it unjust, or inequitable, to insist on legal
rights, or to exercise them in a particular
way.”
Further, the
applicable cases
22
indicate that
winding up of a corporation must of necessity be a remedy of last
resort and that other remedies must be considered
before such a
serious step is justified. In this regard the point is well taken
that the winding up of the respondent will bear
extremely harshly on
the applicant’s co-members who have contributed their effort
and expertise to the respondent and grown
it into a successful and
flourishing concern versus the applicant’s minimal
contribution and deliberate lack of participation
since the fallout
with
Madase
.
The onus of proving
the presence of other available remedies rests on the party seeking
to avoid the winding up. In addition,
the applicant must be shown to
be acting unreasonably by not pursuing the alternative remedies open
to her.
The question which
arises then is whether there are other remedies open to the
applicant and if she has acted unreasonably in
not pursuing these.
Mr
Paterson’s
submissions above concerning what options
are indeed open to her are not without merit. There are simple
measures which she can
take. Firstly she can call up her loan
account if that is the real bother. She can discuss with the members
the possibility of
approaching the creditor to release her from her
obligations under the mortgage loan. She can involve herself again
in the respondent’s
business. She has now had sight of such of
the financial statements as are available and can request whatever
she needs to be
informed and kept privy with the respondent’s
affairs. She can invoke her statutory remedy to convene meetings and
to deal
with her position formally. If she has reason to complain
that the affairs of the respondent are being conducted in a manner
unfairly prejudicial, unjust or inequitable to her she can apply to
court for discretionary relief in terms of section 49 of the
Act.
There is also the
most obvious remedy available to her in terms of section 36 (1) of
the Act,
23
the precise purpose
of which is to empower the court to dissolve the association between
members without winding up the corporation.
In
De
Franca v Exhaust Pro CC (De Franca Intervening)
24
Nepgen J noted that
it was “
highly
probable
”
by
enacting the section that one of the purposes of the legislature was
“
to
create a mechanism whereby the inevitability of winding-up can be
avoided where a ‘deadlock’ situation exists between
members.
”
He
remarked that even if this was not the specific intention of the
legislature, section 36 of the Act “
clearly
has such result
.”
I align myself with this view.
Whilst there is
absolutely nothing untoward about the applicant wanting out, the
manner in which she has gone about it is particularly
significant
and in my view another reason to conclude that she has not
approached the court with clean hands.
All that has
happened since the earlier litigation is that she has presented a
single offer to her co-members which represents
the terms acceptable
to “
her
”. The offer, ostensibly in the sum of
R641 551.00 apparently represents “
fair market value
”
but the court is left to speculate as to whether it is reasonable or
not, or why the applicant feels that her co-members’
failure
to take it up is unreasonable in the circumstances. As indicated
above the applicant has failed to take the court into
her confidence
at all as to the precise details of the offer.
Somewhat
ironically, whilst on the one hand contending that she is bereft of
detail and information concerning the respondent
and is not privy to
its dealings so as to make an informed decision concerning its worth
and consequently her interest therein,
she is absolutely insistent
that her co-members have cocked a snook at an offer which in her
view represents a fair value of
her interest in the respondent. In
addition she has indicated that she sees no purpose in revisiting
the offer or revising her
member’s interest value at present
date because she has “
attempted this exercise once only to
be frustrated by
(her)
fellow members
(and sees)
no
purpose in attempting it again
”. This smacks of a harrying
approach. The cessation of her member’s interest will either
be secured on her terms
on the basis of a once only offer, or the
winding-up of the respondent must result. It is not difficult to
appreciate, on the
limited information available to the court
concerning the respondent’s financial affairs, that the
alleged value of the
applicant’s stand alone member’s
interest has been overstated. Further, several years have elapsed
since she obtained
it. Common sense dictates that there should be a
revision of that offer and that subsequent financial statements,
which have
since been provided, should properly be taken into
account. The applicant has adopted such a limp-wristed and one-sided
approach
in attempting to negotiate a settlement that she can hardly
avail herself of a “
last resort
” plea.
In the premises, I
am not satisfied that it is just and equitable that the respondent
be wound up.
In the result I
issue the following order:
The application is
dismissed with costs.
________________________
B C HARTLE
JUDGE OF THE HIGH
COURT
Date of hearing : 22
November 2011
Date judgment
delivered : 5 April 2012
Counsel for the
Applicant : Mr D H De La Harpe
Instructed by : Bax
Kaplan Inc.
Clevedon House
2 Clevedon Road
Selbourne
EAST LONDON
Ref : M
Botha/MAT4250
Counsel for the
Respondent : Mr T Paterson SC.
Instructed by :
Malusi & Co
Attorneys
14 St Matthews Road
Southernwood
EAST LONDON
Ref. Mr
Malusi/7403-j/civ
1
She
suggests that the reasons for this state of affairs is “
not
entirely relevant
”
to the
application, a rather startling submission in an application of this
nature where every nuance having a bearing on the
breakdown is
relevant to the conclusion which this court must reach and
ultimately the exercise of its discretion whether to
wind-up or not.
2
These
were not disclosed to the court.
3
The
applicant attached the judgment per
Revelas
J
in the section 36 application. In
her founding statement in the present application she makes
absolutely no reference whatsoever
to the fact that her husband
purported to represent her interest in the respondent or that this
caused consternation between
the members.
4
The
valuation was not disclosed to the court, neither the proposal made
for the acquisition by the other members of her interest.
The
contents thereof might have demonstrated the reasonableness or
otherwise of the tender.
5
She
advanced a sum of R40 000.00 in respect of which no terms as to
repayment were expressly agreed. The loan account is accordingly
payable upon demand.
6
Since
the applicant annexed the judgment in the prior litigation, the
respondent sought the incorporation of the founding affidavit
deposed to in that matter. This was attached as annexure “MG
11” without the original annexures thereto.
7
The
same could be said about the fact that the mortgage bond was an
access bond. The applicant must have appreciated the consequences
of
such a lending arrangement with its attendant risk.
8
This
was agreed to by the members at the formation of the respondent.
9
I
have already alluded elsewhere to the fact that the valuation was
not attached to the applicant’s papers.
10
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A).
11
Section
68 (d) of the Act.
12
Moosa
NO v Mavjee Bhawan (Pty) Ltd and Another
1967
(3) SA 131
(T) at 136.
Erasmus v
Pentamed Investments (Pty) Ltd
1982
(1) SA 178
(W) at 181;
Tjospomie
Boedery (Pty) Ltd v Drakensberg Botteliers (Pty) Ltd
1989
(4) SA 31
(T) at 42 – 43;
Cuninghame
v First Ready Development 249 (Association incorporated in terms of
section 21)
[2010] 1 All SA 473
(SCA)
at par 3.
13
Moosa
supra
;
Paarwater v South Sahara Investments (Pty) Ltd
[2005] 4 All SA 185
(SCA) and
Emphy and Another v Pacer
Properties (Pty) Ltd
1979 (3) SA 363
(D) at 369
14
1985
(2) SA 345
(W)
15
Rand
Air
supra
at
349 – 351.
16
See,
for example,
Apco Africa Incorporated v
Apco Worldwide (Pty) Ltd and another
[2008]
4 All SA 1
(SCA) which confirms the principle that the just and
equitable provision has application where there is in substance a
partnership,
in the form of a private company, and circumstances
exist which would justify the dissolution of the partnership in the
same
way that the winding up of a company under the just and
equitable provision is justified.
17
Section
29 and 32 (1) and (3).
18
Section
42.
19
at
369 A.
20
At
368 G.
21
[1972]
2 All ER H L 492 at 500 B – C
22
Moosa
supra
at 150 H
and 151 – 153.
23
Inasmuch
as the applicant suggested that the respondent itself could have
made a counter application in terms of section 36 (1),
it is to be
noted that such a remedy only avails a member.
24
1997
(3) SA 878
(SECLD) at 896