IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
JUDGMENT
Not Reportable
Case no: 1 9726 /2023
In the matter between:
DR PIETER FRANCOIS MELCHOIR BRIERS FIRST APPLICANT
DR PR ANAV RAMKILAWAN SECOND APPLICANT
and
DR J BRUWER AND ASSOCIATES NO 78 INC FIRST RESPONDENT
DR ANDRE JACOBUS MAREE SECOND RESPONDENT
DR ELSKE MARGUERITE FERREIRA THIRD RESPONDENT
DR JASPER MICHAEL SMIT FOURTH RESPONDENT
DR MARSHA HERMANUS FIFTH RESPONDENT
DR SHARMISTHA HEERALAL SIXTH RESPONDENT
DR REINETTE VAN DER WESTHUIZEN SEVENTH RESPONDENT
DR SEAN DANIEL EIGHTH RESPONDENT
DR YOLANDA VINK NINTH RESPONDENT
THE COMPANIES AND INTELLECTUAL
PROP ERTY COMMISSION TENTH RESPONDENT
Neutral citation: Dr Bri ers and Another v Dr J Bruwer and Associates No. 78 Inc and
Others (Case no 19726/2023 ) [202 5] ZAWCHC 223 (27 MAY 2025 )
Coram: NUKU J
Heard : 12 February 2025
Delivered : 27 MAY 2025
Summary: Compan ies – Oppressive conduct - remed ies under s 163 of the
Companies Act 71 of 2008 available to a former shareholder claiming loss
of shares through alleged oppressive conduct
ORDER
1. Part B of the application is dismissed.
2. The first applicant is directed to pay the costs of the respondents in opposing the
separation application as per scale C.
3. The applicants jointly and severally, the one paying the other to be absolved, are
directed to pay the costs of the opposition of the respondents of part B of the
application as per scale C .
JUDGMENT
Nuku J
Introduction
[1] The controversy in this matter relates to two decision s taken by the shareholders
of Dr J Bruwer and Associates No. 78 Inc (first respondent) to terminate consultancy
agreements that the first respondent had concluded with Dr Pieter Francois Melchoir
Briers (first applicant) and Dr Pranav Ramkilawan (second applicant) and who are
collectively referred to as the applicant s.
[2] The applicants contend that Dr Jasper Michael Smit (fourth respondent) , who has
largely been enabled and supported by the other shareholders of the first respondent,
has abused his position as the sole director of the first respondent, and has thereby
acted, and carried on the business of the first re spondent, in a manner that is
oppressive and unfairly prejudicial to, and/or that unfairly disregards their interests as
minority shareholders . As a result, the applicants seek relief in terms of section 163 of
the Companies Act 71 of 2008 .
[3] The primar y relief that the applicants sought was the setting aside of the
termination of the consultancy agreements. However, having regard to the personal
nature of the relationship between them and the other shareholders of the first
respondent, the applicants do not persist with the primary relief and are content with the
alternative relief that they receive compensation for their shares in the first respondent
based on fair market value thereof.
[4] The application is opposed by the second to fourth as well as sixth to ninth
respondents who were all shareholders of the first respondent at the time that the
dispute arose and they are collectively referred to as the respondents. The fifth and
tenth responde nts have not participated in this application.
[5] The respondents oppose the application, essentially on two grounds . The first is
that the applicants do not have the locus standi to claim relief in terms of section 163 of
the Companies Act . The second i s that the applicants have not establish the
requirements for relief under of section 163 of the Companies Act .
[6] The claim that the applicants lack the locus standi to seek relief under section
163 of the Co mpanies Act , is based on the notion that the applicants are no longer
shareholders of the first respondent as the termination of their consultancy agreements
triggered a forced sale of their shares.
[7] As to the merits, the respondents’ case is that the consultancy agreements with
the applicants were lawfully terminated in accordance with the provisions contained
therein and that th e applicants have not provided evidence in support of their claim that
the fourth respondent acted in a manner that was oppressive and u nfairly prejudicial to,
and/or that unfairly disregard ed their interests.
[8] It is necessary to provide a brief factual background before considering the
dispute between the parties and to which I turn.
Factual background
[9] The first respondent was incorporated for the purposes of conducting a medical
practice at the premises situated at 95 Blaauw berg Road, Table View, Cape Town. Its
shareholding is limited to practitioners who are registered in terms of the Health
Professions Ac t No 56 of 1974 (Health Professions Act) and who practice the profession
of a medical practitioner, dentist , psychologist or a supplementary health service
contemplated in section 32 of the Health Professions Act. In terms of its Memorandum
of Incorporatio n (MoI), i t has a maximum of 1000 (One Thousand) ordinary shares with
a par value of R1.00 each.
[10] A practitioner who desires to acquire shares in the first respondent is required to
first conclude a con sultancy agreement with the first respondent. The consultancy
agreement regulates the acquisition and loss of shares in the first respondent under
certain circumstances.
[11] The terms of the consultancy agreement that is concluded with each practitioner
are similar . Of relevance to the se proceedings are clause s dealing with the subscription
for shares, the duration and termination of the consultancy agreement as well as some
of the consequences of termination of the consultancy agreement . These are clauses 4,
5.1 and 5. 3.4, respectively in the consultancy agreement concluded with the first
applicant and clauses 5, 6.1 and 6.4.4 respectively in the consultancy agreement
concluded with the second applicant. These clauses are identical, and I only set o ut the
ones contained in the consultancy agreement that was concluded with first applicant .
[12] Clause 4 provides that ‘ The Consultant hereby subscribes for 1 (One) ordinary
share in the share capital of the Company at the par value thereof and the Company
hereby agrees to a llot and issue to the Consultant as soon as possible after the
signature of this agreement and in any event prior to the payment of any consideration
by the Company to the Consultant. ’
[13] Clause 5.1 deals with the right of each party to terminate the consultancy
agreement and reads ‘Notwithstanding the date of signature hereof this Agreement shall
be deemed to have commenced on the effective d ate and shall continue in full force and
effect indefinitely subject to the right of either party to terminate this agreement by giving
to the other party 30 ( Thirty) days written notice of termination. ’
[14] Clause 5.3.4 which deals wit h some of the consequences of the termination of
the consultancy agreement reads ‘On termination of this Agreement the Consultant
shall forthwith be deemed to have sold his/her share in the Company to any other
shareholder nominated by the director/s of the Company for a purchase price of R1.00
(One Rand). For the purposes of the sale, the Consultant hereby nominates, constitutes
and appoints any director of the company, with the power of substitution, to be his/her
lawful attorney and agent in his/her name, place and stead to sign any document
necessary to procure the transfer of the share including but not limited to the signature
of a share transfer form.’
[15] The ac quisition of shares in the first respondent was regulated as follows in
respect of its first shareholders: the first respondent concluded a sale and purchase
agreement with each practitioner in terms of which the first respondent s old to each
practitioner what is referred to as ‘the drawing power ’ in the first respondent’s business.
The drawing power includes goodwill, a patient base , reputation and a practice site. The
conclusion of the sale and purchase agreement was followed by the conclusio n of the
consultancy agreement with each practitioner . As already stated, the terms of the
consultancy agreement are, to a large extent, the same. The conclusion of the
consultancy agreement was followed by allotment of shares in the first respondent.
[16] A practitioner who terminates the consultancy agreement is able to sell the
drawing power subject to certain conditions that are not relevant to this application. In
that event, the practitioner receives payment from the purchaser of such drawing power
and the first respondent’s obligation is to conclude a consultancy agreement with the
purchaser of such drawing power. Importantly, the purchaser of the said drawing power
pays no consideration to the first respondent for the acquisition of th e 1 (One) sh are that
is allotted to him or her pursuant to concluding the consultancy agreement.
[17] In the event of death of a practitioner, the executor/executrix of his or her estate
is also able to sell the drawing power that had been purchased by the deceased
practitioner, also subject to certain conditions not relevant for the present purposes.
Similarly , the executor/executrix receives payment from the purchaser of such drawing
power and the first respondent’s obligation is to conclude a consultancy agreement with
the purchaser of such drawing power. Also, the purchaser of the said drawing power
pays no consideration to the firs t respondent for the acquisition of the 1 (One) share that
is allotted to him or her pursuant to concluding the consultancy agreement.
[18] The first applicant concluded a sale and purchase agreement with the first
respondent on 11 October 2007 in terms of which he purchased the drawing power from
the first respondent for the sum of R210 000.00 and further undertook to enter into a
consultancy agreement with the first respondent . In line with the aforesaid undertaking,
he signed the consultancy agreement on 27 February 2008 pursuant to which he was
allotted 1 (One) ordinary share in the share capital of the first respondent. The first
applicant paid the sum of R210 000.00 in respe ct of the purchase of the drawing power
to the first respondent. He paid no separate consideration in respect of the allotment of
the 1 (One) ordinary share in the share capital of the first respondent.
[19] The second applicant concluded a sale of practi ce agreement with an executrix
of the estate of the late Doctor Pierre Rosso uw (the late Dr Rossouw) on 5 February
2021. The late Dr Rosso uw, during his lifetime, was one of the first respondent’s
shareholders and consultants. In terms of this sale of practice agreement, the second
applicant acquired the drawing power that had been purchased by the late Dr Rossouw
from the first respondent . The purchase consideration was the sum of R300 000.00
which the second applicant paid to the executrix of the estate of the late Dr Rosso uw.
Thereafter, the second applicant concluded the consultancy agreement with the first
respondent on 24 August 2021 , and pursuant thereto he was allotted 1 (One) ordinary
share in the share capital of the first respondent. The second applicant paid no
consideration to the first respondent for the allotment of the 1 (One) ordinary share.
[20] On 1 March 2022, the first re spondent’s board of directors resolved to allot 9
(Nine) ordinary shares to each of its consultants including the applicants . As the fourth
respondent explains in the answering affidavit, this was done for administrative
purposes . This would, for example e nable the first respondent to allocate the shares of
a practitioner who had terminate d his consultancy agreement to the remaining
practitioners .
[21] The consultancy agreement concluded with the second applicant made provision
for him to be remunerated on a sliding scale based on the aggregate monthly fees
charged by the first respondent in respect of medical services he rendered to the first
respondent’s patients . In terms of this remuneration structure (the original remuneration
structure) the second applicant was to be remunerated as follows :
21.1 35% of the aggregate monthly fees that are less than R114 080.94 ; or
21.2 40% of the aggregate monthly fees that are equal to or more than R114
080.94 but less than R136 897 .56; or
21.3 45% of the aggregate monthly fees that are equal to or more than R136
897.56 but less than R180 251.36 ; or
21.4 48% of the aggregate monthly fees that are equal to or more than R 180
251.36 but less than R 228 164. 10; or
21.5 50% of the aggregate monthly fees that are equal to or more than R 228
164.10 but less than R 319 430.61.
21.6 60% of aggregate monthly fees in excess of R319 430.61.
21.7 50% of the first respondent’s gross monthly profit in respect of materials,
consumables and injections used by the second applicant,
21.8 70% of aggregate monthly fees in respect of theatre procedures
conducted in a Medicross registered theatre , and
21.9 50% of the aggregate monthly fees in respect of theatre procedures
conducted in other registered theatre s
[22] The original remuneration structure was amended when the applicant and the
first respondent concluded an addendum on the same date of the sign ature of the
consultancy agreement . In terms of the amended remuneration structure, which was to
apply until 28 March 2022 , the second applicant was to be remunerated at a flat rate of
50% of the aggregate monthly fees charged by the first respondent in respect of
medical services he rendered to the first respondent’s patients . The second applicant’s
remuneration would revert to the original remuneration structure from 1 March 2022.
[23] The second applicant’s remuneration , however, continued based on the
amended remuneration structure beyond 28 February 2022. According to the first
applicant, the second applicant’s remuneration and that of D octor Nizaam van der
Schyff (Dr van der Schyff) were amended to a less favourable sliding -scale structure
which differs materially from the remuneration structure that applied to the other
shareholders . This is, however, denied by the fourth respondent who points out that the
remuner ation of the second applicant was not amended during 2023 but that it was
agreed upfront that the second applicant would be remunerated on a sliding -scale other
than for the period that the amended remuneration structure applied, that is until 28
February 2022.
[24] Further, according to the first applicant, the amendment of the remuneration
structure applicable to the second respondent was a unilateral decision that was made
by the first respondent through the fourth respondent. And that this was notwith standing
the fact that the second applicant had negotiated an addendum to his consultancy
agreement which had the effect that he was remunerated on a scale equal to the other
shareholders. Again, this is denied by the fourth respondent who points out that the
original remuneration structure was agreed upfront and was to apply from 1 March
2022, as per the addendum to the consultancy agreement.
[25] When the first respondent became aware of the ov ersight relating to the
remuneration of the second applicant during June 2023, the second applicant was
advised that his remuneration would revert to the original remuneration structure.
According to the first applicant, the second applicant queried the motives and reasons
for his and Dr van der Schyff’s remuneration structure being less favourable than the
other shareholders but was told not to ask questions.
[26] According to the first applicant Dr van der Schyff terminated his consultancy
agreement and sold his shares in the first respondent to a third party for an amount of
R800 000.00 and that this was because of the oppressive behaviour by the first
respondent. The fourth respondent, however, denies that Dr van der Schyff sold any
shares he held in th e first respondent. Instead, Dr van der Schyff terminated the
consultancy agreement in terms of its provisions and sold his participating drawing
power as he was entitled to after having terminated the consultancy agreement. In
short, his exit was done in compliance with the provisions of the consultancy
agreement.
[27] According to the first applicant , he together with the second applicant realised
that an Annual General Meeting (AGM) of the first respondent had not been ca lled.
Notwithstanding this, the fourth respondent had circulated minutes of an AGM
ostensibly held on 31 March 2023 . This is disputed by the fourth respondent who states
that the AGM was conducted by way of a round robin process due to the conduct of the
second respondent.
[28] On 13 August 2023 , TS Law Inc attorneys , acting on behalf of the applicants,
addressed a letter , to Medicross Healthcare Group (Pty) Ltd and the first respondent
raising a number of issues that were of concern to the applicants and suggest ed a
meeting for the purposes of attempting to resolve the aforesaid issues.
[29] The letter referred to above raised the following issues relating to the second
applicant:
29.1 that the second ap plicant had received an email on or about 1 August
2023 from the fi rst respondent claiming that the second applicant was
owing some monies;
29.2 that the second applicant placed on record that the agreed remuneration
structure had been unilaterally changed despite the initial understanding
and agreement that the amended remuneration structure would apply;
29.3 that the second respondent had made various at tempts to have the issue
of the remuneration structure remedied so that the amended remuneration
structure continues to apply;
29.4 that the second applica nt had been paid R20 000 short for the period
between June and July 2023, without any valid reason ;
29.5 that the first respondent had advised that it did not remunerate the
consultants uniformly and that it had failed to accede to the second
applicant’s requests to have the remuneration of the consultants
standardised;
29.6 that the second applicant was of the view that the remuneration structure
is designed to disadvantage only certain shareholders which the second
applicant considered to be highly unethical ; and
29.7 that the second applicant intended to institute a claim to recover all
monies that were due to him by the first respondent.
[30] The letter also raised some issues relating to Dr Gouws, who it appears, was
employed by the first applicant as a locum. The first applicant was concerned with the
first respondent’s attempts to employ Dr Gouws essentially poaching Dr Gouws away
from him.
[31] According to the first applicant, the second applicant attempted, on 16 August
2023, to discuss the matter with the fourth respondent who refused to engage
meaningfully other than indicating that he would terminate the second applicant’s
consultancy agreement.
[32] On 18 August 2023, the second applicant was served with a thirty -day notice of
the termination of the consultancy agreement and was advised that the effective date
for the termination of the consultancy agreement would be 17 September 202 3.
[33] On 8 September 2023, Lizette Smit (Ms Smit) of Parker Attorneys addressed a
letter to the respondents’ legal representatives requesting the first respondent’s MoI as
well as the resolution in terms of which th e consultancy agreement with the first
respondent was terminated. The letter further reques ted an extension of the effective
date of the termination of the consultancy agreement in order to afford the second
applicant time to consider his rights so that he could make an informed decision.
[34] The respondents’ attorneys responded on 11 September advising that the
second applicant’s tenure would not be extended and that a ‘forced sale of shares ’, a
reference to clause 6.4.4 of the consultancy agreement concluded with the second
applicant , had been triggered through the termination of the consultancy agreement.
[35] Ms Smit responded on 1 3 September 2023 advising that the second applicant
would not accept payment of R300 000, a reference to the amount that the second
applicant had paid when he purchased the late Dr Rossouw’s drawing power. Instead,
Ms Smit advised that the second applicant would accept payment of the sum of R800
000, an amount based on what Dr van der Schyff, who had also been one of the first
respondent’s consultan ts and shareholders , had sold his drawing power in the first
respondent .
[36] In response, the respondents’ attorneys advised that (a) the first respondent had
made no offer to pay R300 000 , (b) the counter -offer of R800 000 by the second
applicant was rejected , (c) the consultancy agreement provides that R1.00 is payable
upon termination, and (d) the first respondent did not consent to the second applicant
finding an alternative consultant to acquire his share from him.
[37] On 3 October 2023, the applicants’ attorneys of record addressed a demand for
a shareholders ’ meeting in terms of section 61(3) of the Companies Act to the
respondents’ attorneys . The demand listed the following issues to be deliberated upon
at the said meeting ; namely:
37.1 the different classifications of the current issued share capital of the
Practice and the consequences for shareholders;
37.2 the inconsistencies between the deeming provisions in the Practice’s MoI
and consultancy agreements pertaining to termination and deemed offer
and/or sale of shares;
37.3 the appointment of an independent valuer to obtain the value of each
shareholder’s shareholding in the Practice, to determine the purchase
price when a shareholder’s consultancy agreement is termin ated;
37.4 the amendment of the MoI by special resolution to classify the Practice as
having one class of ordinary non -par value shares to bring it consistent
with the Practice’s conduct and in compliance with the Companies Act;
37.5 the amendment of the MoI by special resolution to allow a shareholder to
appoint any other person as a proxy as provided for in the Companies Act;
and
37.6 the amendment of the MoI by special resolution to provide for the Practice
to have at least 3 (Three) directors who are also shareholders and
practitioners of the Practice
[38] On 19 October 202 3, the first applicant was served with a thirty -day notice of the
termination of the consultancy agreement and was advised that the effective date of the
termination of the consultancy agreement would be 1 8 November 2023.
[39] On 1 November 2023, the applicants’ att orneys wrote to the respondents’
attorneys following up on the demand for a shareholders ’ meeting. The respondents’
attorneys reverted on the same day advising that the pro visions of the consultancy
agreement relating to forced sale had been triggered and that the first applicant no
longer had a legal standing to insists upon any shareholder meetings. The applicants’
attorneys were also requested to provide the banking details into which to pay the
amounts due to applicants .
[40] The above response from the respondents’ attorneys prompted the present
application which had two parts. Part A was an urgent interdictory relief which was
heard on 17 November 2023 and which was directed at preventing the respondents
from implementing the dec ision to terminate the consultancy agreement with the first
applicant as well as implementing the ‘forced sale of shares ’ triggered by the
termination of the consultancy agreements concluded with the applicants , pending the
relief sought in Part B. Part A of the application was dismissed, and it is Part B that
came before me. There were, however, some interloc utory proceedings that took place
before the hearing of Part B that I need to deal with.
Litigation history
[41] As already stated , the application was launched during November 2023 for
hearing of Part A on 17 November 2023. The relief sought in Part A was refused and
the respondents filed their supplementary answering affidavit on 11 April 2024.
[42] On 1 8 April 2024, the applicants filed an application for leave to amend the notice
of motion which was opposed by the respondents. The application for leave to amend
came before Cloete J on 24 April 2024 who delivered her judgment on 30 May 2024
granting the first applicant leave to amend the notice of motion and refusing it in re spect
of the second applicant.
[43] On 14 June 202 4, the applicant s filed an amended notice of motion as well as an
application for leave to appeal . On 25 July 2024, the first applicant filed an application in
terms of Rule 10 (5) of the Uniform Rules of Court to separate the hearing of his
application from that of the second applicant (separation application) .
[44] The respondents opposed the separation application and was set down for
hearing on 20 November 2024. On 5 November 2024, Cloete J made an order granting
the second applicant leave to amend and this appears to have been based on an
agreement between the parties.
[45] On 6 November 2024, the first applica nt withdrew the separation application with
costs standing over for later determination. Thus, one of the issues to be determined in
this application are the costs in relation to the separation application.
The Applicants’ case
[46] The applicants say that they have approached the Court as minority
shareholders each holding 10% of the issued shares in the first respondent . They
contend that the fourth respondent has abused his position as the sole director of the
first respondent, and has thereby acted, and carried on the business of the first
respondent, in a manner that is oppressive and unfairly prejudicial to, and/or that
unfairly disregards their interests as minority shareholders. The remaining shareholders ,
so the argument goes, have largely enabled and/or supported the fourth respondent’s
conduct.
[47] The applicants argue that their rights to practice as consultants in the first
respondent in terms of their consultancy agreements , were unilaterally terminated by
the first resp ondent under the control and on the initiative of the fourth respondent , upon
thirty days’ notice. At the heart of the relief sought they seek , is their contention that
such termination followed as a direct result of their querying the treatment of the sec ond
applicant , as well as their requests and demands addressed to the fourth respondent to
hold an annual general meeting and/or shareholders’ meeting in order to re -elect a
director for the first respondent and to address certain concerns regarding the fo urth
respondent’ s autocratic governance of the first respondent. They argue that they were
not given an opportunity to defend themselves and make representations in an effort to
avoid their membership of and participation in the first respondent being voided. The
unilateral and summary termination of the ir consultancy agreements, it was submitted,
constitutes glaringly oppressive and prejudicial conduct.
[48] Regarding the term ination of the second applicant’s consultancy agreement, the
applicants argue that his consultancy agreement was unilaterally amended d uring 2023
by way of an addendum , which in effect introduced a six-month period during which his
commission structure was set at a less favourable sliding -scale structure than
applicable to other shareholders. The y point out that the respondents’ explanation for
this, that was intended to afford the second respondent six months to “find his feet” and
that it was negotiated with him , does not detract from the fact that he was treated
differently.
[49] The other factor relied upon by the applicants , is the response that the second
respondent received when he queried the motives and reasons for th e unilateral
amendment of his remuneration structure, namely that he was told not to ask questions.
The applicants then refer to the case of Dr Van der Schyff who terminated his
consultancy agreement as a result of similar treatment that he received and so ld his
right to practise in the first respondent for an amount of R800 000.
[50] The applicants then refer to the failure to hold an annual general meeting of
which notice was given for 31 March 2023 to other shareholders but not to them, which
prompted the second applicant to request the convening of a formal shareholders
meeting in order to raise their concerns which the fourth respondent refused to do.
Regarding the fourth respondent’s response, the applicants argue that the fourth
respondent does not a ddress the averment that the applicants were not notified of the
meeting and i t was submitted that this conduct was not only patently unfair, but in fact
unlawful.
[51] With regard to the reasons provided for the termination of the second applicant’s
cons ultancy agreement, it was submitted that i t is abundantly evident that the reason for
terminating the second applicant ’s right to practise in the first respondent , was his
dissatisfaction with the remuneration structure as recorded in his consultancy
agree ment as well as the various other issues which he had sought to raise with the first
respondent and its administrator. Astonishingly, it was emphasised, the decision to
terminate the second applicant’s consultancy agreement was taken at a meeting to
which he was not invited and without affording him an opportunity to protest or defend
himself.
[52] Lastly, the applicants refer to the fourth respondent’s response, in his answering
affidavit, wherein he confirms tha t the decision to terminate the second applicant’ s
consultancy agreement was arrived at during the meeting between shareholders,
followed by the following remark:
‘I confirm that the termination is in terms of clause 6.1 of that consultancy
agreement and that such termination has been fulfilled. To this end, no further
engagement on this issue is required .’
[53] The applicants accept that it is so that clause 5.1 of first applicant’s c onsultancy
agreement and clause 6. 1 of the second applicant’s c onsultancy agreement provide for
the “ right of either party to terminate this agreement by giving to the other party 30
(thirty) days written notice of termination” . However, so it is submitted, such right to
termination by the first responde nt is subject to the legal principles relating to section
163 of the Companies Act, and the principles of good faith in the law of contract .
[54] The conduct of the fourth respondent , it was submitted, was exacerbated by the
first respondent’s refusal to extend the termination period with an additional month to
enable the second applicant to consider his rights and make an informed decision and
the intransigent stance that a “forced sale of shares had been triggered”. A “… lack of
probity or fair dealing, or a violation of the conditions of fair play on which every
shareholder is entitled to rely ”, to use the words of Gamble J in Omar aptly describes
the fourth respondent’s conduct, ratified by the remaining shareholders, in terminating
the second applicant’s consultancy agreement without giving him the opportunity to
make representations in this regard.
[55] Regarding the termination of the first applicant’s consultancy agreement, the
applicants point out that the first applicant started practisin g as a consultant and
shareholder of the first respondent in 2007. He became acquainted with the second
applicant during 2021, and they became dissatisfied with the way in which the fourth
respondent conducted the affairs of the first respondent.
[56] The applicants refer to a partners ’ meeting which was called by t he fourth
respondent (to which the second applicant was not invited) which was held on 9
October 2023. At the meeting the first applicant learned that his request for a
shareholders meeting had not been communicated to other shareholders, and he
proceeded to hand the notice in terms of section 61 (3) of the Companies Act to the
other shareholders.
[57] As already stated he was served with the notice of termination on 19 October
2023, and the applicant argue that the reasons contained in the termination notice are
significant:
‘We record that the stakeholders of the company had a meeting on the 19th
Octo ber 2023, to discuss your dissatisfaction with the contracting of a locum as
well as various other issues which you have continuously sought to raise with the
company and its administrator.
You are hereby notified that during the meeting on the 19th Octobe r 2023 the
Company has resolved to terminate your consultancy agreement, as it is entitled
to do in terms of clause 5.1 of the agreement .’
[58] The applicants conten d that at the root of the first respondent’s behaviour, is the
fourth respondent’s (who i s in de facto control of the first respondent) misconceived
conception that the shares issued to applicants , hold no value and that the issuing of
shares to a shareholder , is nothing more than a mere administrative endeavour
undertaken by the first respond ent in order to conform to the prevailing legislation which
governs an entity within the medical professional realm. This, the applicants contend , is
incorrect, contrived and not only in conflict with the provisions of the first respondent’s
MoI but disreg ards the provisions of the Companies Act relevant to the rights and
obligations of shareholders of a company registered in terms of the Companies Act in
South Africa.
[59] The applicants further regarding the first respondent’s stance that the applicants
are not entitled to find consultants to replace them to be further manifestation of the
oppressive conduct. This, they say, is contrary to the provisions of their consultanc y
agreements which entitles them to do so.
[60] Lastly, the applicants rely on what is stated by the first applicant but denied by
the fourth respondent that “It has always been the understanding of the first and second
applicants that they would be allow ed to continue working as partners of the first
respondent until such time as they made themselves guilty of gross misconduct” in
support of their argument that t he conduct complained of is in violation of mutual
understanding among the shareholders of the first respondent. Ultimately it was
submitted that all of the above conduct is manifestly prejudicial, oppressively unfair,
unreasonable and unjust and liable to be remedied in terms of section 163 of the
Companies Act .
[61] The applicants submitted that each party should pay its own costs in relation to
the separation application which was withdrawn because the separation application was
withdrawn for no other reason than that it had become moot and that costs in such
circumstances are considered broadly on the same basis as the costs of a matter that
has been settled.
The respondent’s case
[62] As stated above, the respondents take the position that the relief in terms of
section 163 of the Companies Act is no longer available to the applicants after the
termination of their consultancy agreements . This issue is raised as both lack of locus
standi by the applicants as well as incompetence of the relief u nder section 163 of the
Companies Act in the circumstances.
[63] On the issue of the locus standi , the respondents’ argument is that the
applicants’ shares in the first respondents , have been transferred in terms of the
deeming provisions and as such the applicants are no longer shareholders of the first
respondent. The argument goes further that section 163 of the Companies Act does not
foreshadow that a past holder of shares may launch proceedings because the definition
of “shareholder” in the Companies Act makes it plain that such parties must be current
shareholders and not shareholders of past rights. The applicants re ferred this court to
the de cision of the Supreme Court of Appeal in Smyth1dealin g with a definition of
persons entitled to invoke section 252 of the Companies Act, 61 of 1973 .
[64] It was submitted further that the application was issued after the decisions to
terminate the consu ltancy agreements had been implemented and so was the
amendment that introduced the relief seeking the setting aside of the decisions to
terminate the consultancy agreements.
[65] On the competency of the relief under section 163 of the Companies Act, the
argument was that the facts relied upon by the applicants cannot sustain the relief they
seek. This is because the consultancy agreements were lawfully terminated in
compliance with their provisions and this was followed by the transfer of shares which
was also done in compliance with the provisions of the consultancy agreements. In
short, the consultancy agreements provided for termination by either party upon giving
of thirty days’ notice. The appl icants were given thirty days’ notice of termination and
that cannot be conduct that is oppressive, unfairly prejudicial to or unfairly disregard s
their interests.
[66] It was further submitted that the other complaints by the applicants relating to
alleg ed failure to hold an AGM, the failure to allow the applicants to sell their shares and
the failure to hold a shareholders’ meeting have no merit in that (a) the AGM was dealt
with by way of a round -robin, (b) the applicants would only have been entitled t o sell
their drawing powers, not their shares, and only if they were the ones who had
terminated the consultancy agreements, and (c) the issues that the applicants sought to
raise in the shareholder meetings that they wanted convened were all contractual
matters between each practitioner and the first respondent and thus not shareholder
issues as such.
[67] Regarding the costs of the separation application, it was submitted on behalf of
the respondents that these should be paid by the applicants . This is b ecause the normal
1 Smyth and Others v Investec and Another 2018 (1) SA 494 (SCA) at paras [41] to [45].
– default position – is that where a litigant withdraws an action, very sound reasons
must exist why a defendant or respondent should not be entitled to his costs2 and no
such very sound reason has been proffered by the first applicant.
[68] The respondents also distinguished the authorities relied upon by the first
applicant, Wildlife3on the basis that the Wildlife matter concerned public interest
litigation relating to environmental law whereas the first applicant here was seeking to
advance his claim when he launched the separation application. I consider each of th e
issues below.
Discussion
[69] The starting point must be the consideration of the locus standi issue. Central to
this application is the applicants’ dissatisfaction with the termination of their consultancy
agreements which, according to the respondents triggered the forced sale of the
applicants’ shares. It cannot be seriously suggested that the applicants do not have the
locus standi to seek a relief setting aside a decision to terminate the consultancy
agreements. And if that is the case it would not make sense to deprive them of locus
standi merely because of the applicants’ invocation of the provisions of section 163 of
the Companies Ac t.
[70] Whilst it may be so that the applicants are no longer shareholders of the first
respondent pursuant to the termination of their consultancy agreements, a successful
challenge to the decision to terminate the consultancy agreements would restore t heir
shareholding in the first respondent . In that case, it would be absurd to suggest that it
would only be from that point that they can pursue remedies under section 163 of the
Companies Act.
2 Germishuys v Douglas Besp roeiingsraad 1973 (3) SA 299 (NC) at 300 and Waste Products Utilisation
(Pty) Ltd v Wilkes (Biccari interested party) 2003 (2) SA 590 (W) at 596D -E and 597A -B.
3 Wildlife and Environmental Society of South Africa v MEC for Economic, Environment and Tourism ,
Eastern Cape and Others 2005 (6) SA 123 ( E).
[71] It is one thing for a person who has never been a shareholder of a company to
claim relief under section 163 of the Companies Act and it is another for a past
shareholder who seeks to challenge the decision to deprive him or her of such shares .
In my view, until the final resolution of a dispute relating to the applicants’ loss of shares
in the first applicant, the remedy under section 163 of the Companies Act remains
available to the applicants. To hold otherwise would result in the dilution of the
effecti veness of the remedies provided for in section 163 of the Companies Act.
[72] Sight should also not be lost of the fact that the provisions of section 163 of the
Companies Act, as their heading suggests, are directing at providing relief from
oppressive o r prejudicial conduct or from abuse of separate juristic personality of a
company. Where the loss of shares is caused by the oppressive or prejudicial conduct
or abuse, the provisions of section 163 would be undermined by non -suiting the victims
of such co nduct.
[73] As the Supreme Court of Appeal held section 163 of the Companies Act ‘must be
construed in a manner that will advance the remedy it provides rather than to limit it.
Such an approach is consonant with the objectives of s 7 of the Companies Act, which
include balancing the rights and obligations of shareholders and directors within the
company and encouraging the efficient and responsible management of companies.
Denying the remedy granted by legislation to an aggrieved shareholder would obviously
have a chilling effect on the Companies Act’s efforts to balance the rights and
obligations of all stakeholders. Insofar as it would negate the objects of that Act, it would
be wrong in law. ’4 This, in my view, disposes of the locus standi point and the applicants
have the necessary locus standi to seek relief under section 163 of the Comapanies
Act. I now turn to the merits of the application.
[74] The applicants, in my view, have not only misconstrued the basis upon which
they contracted with the first respondents but have in some instances misstated the
4 Parry v Dunn -Blatch and Others (394/2022) [2024] ZASCA 19 (28 February 2024) at para [33]
facts . In addition, some of the facts that they seek to rely on are seriously disputed by
the re spondents.
[75] For starters, the applicants state that they approach the court as holders of 10%
shares each in the first respondent. This, is however, not borne out by the evidence. As
set out above, the first respondent’s authorised share capital is 10 00 (One Thousand)
ordinary shares of R1.00 par value. At the commencement of this application each of
the consultants in the first respondent had 10 shares, that is, 1 (One) that was issued
after the conclusion of a consultancy agreement with each consulta nt and 9 (Nine) that
were issued during March 2022 for administrative purposes. It is thus, not correct that
the applicants each hold 10% of the first respondent’s issued share capital.
[76] The applicants’ case proceeds on the mistaken premise that the s econd
applicant’s remuneration structure was amended unilaterally during 2023. This is,
however, disproved by the consultancy agreement that was signed by the second
applicant when read with the addendum thereto. As I have set out above, t he second
applicant contracted on the basis of being remunerated on a sliding scale as per the
original remuneration structure, but this was immediately amended into the flat rate, for
a fixed period of six months in terms of the amended remuneration struc ture contained
in the addendum. It is thus, not factually correct to suggest that the second applicant’s
remuneration structure was unilaterally amended during 2023.
[77] The applicants also appear to treat the amounts they paid when they purchased
the dr awing power as if that was a payment for the acquisition of shares in the first
respondent. This, however, on close examination of the various agreements is not the
case. Whilst the purchase of the drawing power is the first transaction that ultimately
leads to the allotment of a share in the first respondent, the two are not the same and
no consideration is paid to the first respondent for the allotment of a share. This is aptly
demonstrated in the case of the second respondent who purchased the late Dr
Rossouw’s drawing power from the latter’s executrix and paid R300 000.00 not to the
first respondent but to the executrix of the late Dr Rosso uw’s estate.
[78] Having paid no consideration to the first respondent for the shares that were
allotted to him, th e second respondent would now have the first respondent or the
remaining shareholders paying him for the termination of the consultancy agreement.
That would, in my view, be unfair to the remaining shareholders of the first respondent
who must compensate t he second respondent in circumstances where they never
received any consideration from him.
[79] The consultancy agreements allowed each party to terminate on giving thirty -
days’ notice and this is what happened in respect of both applicants. The applican ts’
complaints, however, are that the termination was because of disagreements in relation
to the issues that they had raised. And they suggest that this was at the instance of the
fourth respondents.
[80] Whilst it is so that the termination of the applicants’ consultancy agreements
followed after the applicants had raised some issues, the deci sions to terminate were ,
however, made not by the fourth respondent as a director but by the other shareholders
of the first respondent. That this is so , is evidenced by the resolution that was annexed
to the papers filed. Thus, the decision to terminate the applicants’ consultancy
agreements is that of the shareholders and there is no suggestion that they were not
entitled to take such a decision.
[81] As to the claim that there was a violation of a mutual understanding, it is curious
that the applicants say that it was their understanding that they would be allowed to
continue working as partners until they made them selves guilty of gross misconduct,
without suggesting that the other shareholders were also of the same understanding.
This is in any event denied by the fourth respondent.
[82] The applicants have referred to a decision by this Court in Omar5 where it was
held that “an applicant applying for relief under s 163 must establish lack of probity or
5 Omar v Inhouse Venue Technical Management (Pty) Ltd and Others 2015 (3) SA 146 (WCC) at para 9.
fair dealing, or a violation of the conditions of fair play on which every shareholder is
entitled to rely”. The question that must be asked therefore i s whether the applicants
have established any of these requirements.
[83] Regarding the termination of their consultancy agreements, which is the main
issue if not the only issue, the applicants could not point to any violation of a condition of
fair play to which every shareholder is entitled to rely . This is because the termination of
all the first respondents’ consultants is subject to the termination upon giving of a thirty -
day notice. The applicants were at liberty to give thirty -day notice, as did Dr van der
Schyff, but they chose not to. Had they done, so they would have been able to sell their
drawing powers in the first respondent in the same manner as Dr van der Schyff.
[84] The evidence relating to Dr van der Schyff, if anything, demonstrates th e fairness
of the manner in which the provisions of the consultancy agreement operate in relation
to termination. The first respondent had to accept the thirty -day notice given by Dr van
der Schyff and the converse must also hold true. That the applicants were unable to sell
their drawing powers, is a function of the provisions of the consultancy agreement which
cannot be attributed to the fourth respondent .
[85] The applicants’ complaints about the failure to hold an AGM as well as
shareholders ’ meeting , cannot by themselves be evidence of any conduct that is
oppressive, prejudicial to or unfairly disregard the applicants’ interests . In my view, the
applicants have failed to establish the requirements for a relief under section 163 o f the
Act and the application must fail.
Costs
[86] The respondents have been successful and in my view the costs should follow
the result. The first applicant withdrew the separation application and other than relying
on the mootness of the relief, he ha s provided no cogent reason why he should not be
liable for the costs of the separation application.
Order
[87] In the result I make the following order:
87.1 Part B of the application is dismissed .
87.2 The first applicant is directed to pay the costs of the respondents in
opposing the separation application as per scale C.
87.3 The applicants jointly and severally, the one paying the other to be
absolved, are directed to pay the costs of the opposition of the
respondents of part B of the application as per scale C.
_____________________________
L G NUKU
JUDGE OF THE HIGH COURT
Appearances
For applicant s: C Joubert SC and G Potgieter
Instructed by: Van Zyl Scheepers Attorneys , Stellenbosch
Care of: Norman Wink Stephens Inc , Cape Town
For 1st to 9th respondent s: I L Posthumus
Instructed by: Whalley and Van Der Lith Inc , Randburg
Care of: Herold Gie Attorneys, Cape Town
For 10th respondent: No appearance