IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
JUDGMENT
Not Reportable
Case no: 2025-008257
In the matter between:
RORY GEORGE GILDENHUYS First Applicant
CHLOE BRUNA GILDENHUYS Second Applicant
and
MICHAEL JAMES WIGGETT First Respondent
HENDRIK AND FLORIPES SEAFOOD Second Respondent
RESTAURANT CC trading as Madeiras
Bar and Bistro
Neutral citation:
Coram: MGENGWANA AJ
2
Heard: 6 November 2025
Delivered electronically: The judgment is handed down electronically
by circulating to the parties or legal representatives by email. The date for
the handing down of the judgment is deemed to be 27 February 2026.
Summary: Cessation of membership based on unfairly prejudicial conduct
– Section 36 read with section 49 of the Close Corporation Act 69 of 1984 -
Onus.
ORDER
[1] In the result, I grant the following order:
(a) First and Second Applicant’s application in terms of paragraphs 4 –
8 of Notice of Motion is granted.
(b) First Respondent is to pay First and Second Applicant’s costs on a
party-party scale including costs of counsel on Scale B inclusive of
the costs of the application of 5 May 2025.
JUDGMENT
MGENGWANA AJ:
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Introduction
[1] This is an application in which the Applicants seek the following relief:
1. An order di recting the First Respondent to cease to be a member of the Second
Respondent in terms of section 36 and 49 of the Act; and
2. An order in terms of section 49(2) directing the Second Respondent to acquire First
Respondent’s member’s interest in the Second Respondent, alternatively, directing
First Respondent to sell his member’s interest in the Second Respondent to the First
Applicant at a fair value.
[2] The relief sought above is based on the First Respondent’s oppressive
conduct which is unfairly prejudicial and disregards First Applicant’s interest
as a member in the Second Respondent.
Background
[3] During 2019 First Respondent expressed an interest in establishing a
restaurant business with the Applicants. This expression of interest came out
naturally from the First Respondent as the Applicants , the First Respondent
and his wife (Janine) had socially known each other for a number of years.
The expression of interest culminated in a meeting that took place in the
middle of 2019 between the parties mentioned above. The purpose of this
meeting was to discuss prospects of entering into a business relationship with
one another.
[4] It was then agreed in the aforementioned meeting that a business
opportunity wherein the First Respondent would inject the capital would be
sought. It was also agreed at this meeting that the aforementioned business
would be run by the First and Second Applicant (“the Applicants”).
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[5] This plan materialized i n late 2019 when the First Applicant and the
First Respondent took joint control of a Close Corporation called Hendrik and
Floripes Seafood Restaurant CC trading as Madeiras (“the Second
Respondent”). The First Applicant and First Respondent acquired a 50%
member’s interest each in the Second Respondent.
[6] The understanding between the First Applicant and First Respondent
was that the First Respondent would be a silent partner since he had injected
the full capital into this business venture however, he would be entitled to a
50% share of the nett profits whilst the Applicants would be in control of the
restaurant enterprise with Janine in control of the financial operations of the
Second Respondent’s business. At this point, the Second Applicant was
earning a salary from the Second Respondent.
[7] When Covid kicked in in 2020, the Applicants, First Respondent and
Janine agreed to use this period to effect renovations to the restaurant. It was
also agreed that these renovations would be financed by the First Respondent.
It was also agreed that the amounts paid on renovations would be repaid by
the Second Respondent when it was able to do so.
[8] The First Respondent’s investment in Second Respondent and the
renovations that were done in 2020 were repaid to the First Respondent in full
and neither the First Applicant nor the First Respondent have a loan account
with the Second Respondent.
[9] On 1 March 2023, the Applicant s and First Respondent entered into a
Partnership Agreement (“the agreement”) on, inter alia, the following terms:
“That Mike (First Respondent) and Rory (First Applicant) are currently each 50%
shareholders of Gillet Ventures CC, registration number 2008/141804/23 which purchased
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a restaurant known as Madeiras Bar & Bistro, 161 Main Road, Bergvliet (hereinafter
referred to as “Madeiras”).
That Chloè (Second Applicant) is considered an equal share business partner she is actively
involved with the running of Madeiras.
That Rory is no longer involved in the business on any level whatsoever but undertakes to
sign certain documents where required and hands all power over to Chloè with regards to
ownership and the benefits thereof.
That Mike agrees that Chloè is his 50/50 partner in the business and undertakes to sign all
and any documents required in respect of her position at the business.
That “the partners” means Michael James Wiggett and Chloè Ogden or any of them as the
context may require;
That “the partnership” means the partnership constituted on the effective date between
the parties, the terms of which are recorded in this agreement.
That the partnership will commence on the Effective Date and shall continue indefinitely
subject to the right of any partner to withdraw from the Partnership by giving not less than
90 (Ninety) days written notice to the other partner.
That the partners agree that proper books and records of the partnership and/or business
purchased by them will be kept in a suitable manner and form and be made available to the
parties at all times.
That Mike will be Managing Director and he will head the acquisitions in any manner or
form and maintain relationships with suppliers and investors as required:
That Chloè will be Operations Director and head all of the operations of Madeiras including
kitchen controls, stock controls, cash control, staff and any other activities required for the
business to run effectively and profitably during trading hours;
That each will take guidance from the other as and when required.
That once the month end expenses have been covered, including all loans due, only then will
profit or loss be able to be calculated, which will be metered out equally and fairly according
to the Participation Ratios.
to the Participation Ratios.
That the parties agree that re-investment into the business is necessary from time to time to
ensure growth and that this might affect profits/loss share from time to time.
Each of the partners shall owe to the other a duty of the utmost good faith and be obliged to
devote himself/herself to the progress and welfare of the partnership.”
[10] What is common cause from the agreement is the following:
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a. That it was entered into by the Applicants and the First
Respondent.
b. That the role s that were going to be played by each party to the
agreement were clearly defined.
c. That the First Respondent ceased to be a “silent partner” and was
expected to be actively involved in the running of the business.
d. That the Second Applicant was considered an equal share business
partner in the Second Respondent as she was actively involved in the
running of the business of Second Respondent.
e. That Janine was never party to the agreement and that no role was
set out for her in the business of the Second Respondent in terms
thereof.
Events leading to a deadlock from Applicants’ perspective
[11] The First Applicant averred that the following are incidents that led to
a deadlock between the Applicants and the First Respondent:
11.1 T he First Respondent had limited success in securing supplier
deals for the benefit of the Second Respondent.
11.2 The First Respondent’s continued involvement in and
contribution in terms of effort to the Second Respondent waned to a
point where, not only was he failing to carry out his responsibilities, but
he no longer associated himself with the progress and welfare of the
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Second Respondent and thereby undermined the Second Respondent’s
commercial interests and directly prejudiced its profitability.
11.3 The First Respondent started to interfere with the defined roles
of the Second Applicant and in the process undermined her authority
and thereby sowing discord among staff. This had the effect of
destabilising the operations of the business of the Second Respondent.
For an example, when the Second Applicant sought to admonish the
First Respondent’s daughter (“Josie”), who was employed as a General
Manager by the Second Respondent for consuming intoxicating liquor
while on duty, and for generally being rude to fellow employees, the
First Respondent and Janine cal led Josie aside and left with her in the
middle of her duty on a busy Friday evening and thereby allowed a
situation detrimental to the business of the Second Respondent to
continue.
11.4 The First Respondent frustrated the process of instituting
disciplinary proceedings against Josie for her unbecoming
behaviour at work by persuading the Second Respondent’s labour
consultant to find procedural flaws in the way the proceedings were
handled by the Second Applicant and thereby acted contrary to Second
Respondent’s interest.
11.5 The First Respondent refused to take a step back from the
business of the Second Respondent even though he had been diagnosed
with Post Traumatic Stress Disorder (“PTSD”). His emotional health
status was revealed by Janine who simultaneously advised that she
would be taking over from the First Respondent as he is contemplating
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retirement. Instead of retiring, he frequented the business premises of
the Second Respondent where he would lay bare intimate personal
secrets of some staff members in the presence of the patrons of the
business of the Second Respondent to such an extent that staff members
would be uncomfortable when he is around.
11.6 T he First Respondent also started making himself guilty of
unfairly prejudicial conduct by unilaterally assuming benefits from the
business of Second Respondent to the prejudice of the business and
the Applicants by taking large quantities of alcohol from the
business without paying for same and granting complimentary meals to
friends thereby depleting the assets of the Second Respondent.
11.7 The First Respondent and Janine unjustifiably assaulted the
Second Applicant verbally for inviting her Facebook friends over to the
business of the Second Respondent for celebratory drinks to celebrate
the five-year milestone of the business of the Second Respondent.
11.8 The First Respondent spoke condescendingly about the First
Applicant. His behaviour was meant to demean and humiliate the
Applicants.
11.9 The First Respondent allowed Janine to inappropriately
involve herself in the affairs of the Second Respondent even though she
had no powers to. For an example, Janine had written to the
accountants of the Second Respondent and instructed them not to share
information relating to the business of the Second Respondent with the
Second Applicant even though she was a director of operations and a
partner in the Second Respondent. Janine also falsely suggested to the
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accountants that the First Applicant had resigned from the Second
Respondent and thereby misrepresenting the membership structure
which constitutes oppressive conduct to the First Applicant and
prejudicial to the proprietary rights of the Second Respondent.
11.10 The First Respondent boasted about getting 50% of the nett
profits of the business of the Second Respondent at the end of each
month knowing very well that he does not deserve any of that as he was
not contributing at all to the development and continued welfare of the
business of the Second Respondent.
11.11 That when a proposal to cease to be a member of the Second
Respondent and sell his interest to the Second Applicant was put to the
First Respondent, he refused even though he knew that the relationship
between himself and the Applicants had gone “pear-shape”.
[12] According to the Applicants, the above incidents resulted in the business
relationship of the Applicants and the First Respondent becoming quickly
toxic and intolerable. This, in turn, led to the Applicants becoming deeply
concerned about the impact the rapid deterioration of the relationship is
having on the successful business operations of the Second Respondent.
[13] As a result of the above, the Applicants aver that they consulted their
attorney of record towards the end of 2024. Applicants’ attorney of record
sent a letter to the First Respondent wherein he made the following broad
proposals after advising that his instructions are that the business relationship
between the Applicants and the First Respondent in relation to the Second
Respondent has broken down irretrievably and that all parties recognise that
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this breakdown is incompatible with the continued joint ownership and
management of the businesses by the parties through the Second Respondent:
13.1 That either of the Applicants will purchase First Respondent’s
members interest in the Second Respondent based on a figure to be
obtained from a suitably qualified business valuator.
13.2 That the Applicants are amenable to a round table meeting being
held at the offices of the Applicants’ attorneys of record to discuss the
above.
[14] The Applicants further aver that the first proposal was never reverted
to and the proposed round table never took place between the parties.
First Respondent’s response to Applicants averments
[15] The First Respondent foregrounded his response to the averments made
by the First Applicant in his Founding Affidavit by averring that the averments
made by the First Applicant have not been articulated with sufficient
particularity and that this has resulted in him having trouble with responding
thereto meaningfully other than to deny the contents thereof.
[16] Thereafter he made the following averments:
16.1 He admitted that the Second Applicant plays a key role in
conducting the business of the Second Respondent, but that she does so
in order to usurp the control he and Janine have over the Second
Respondent and conducts herself contrary to their wishes and the best
interest of the business.
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16.2 He admits that there is a deadlock caused by the dispute between
the Applicants and themselves (ie. First Respondent and Janine) which
prevents the Second Respondent from functioning in a beneficial
manner.
16.3 He denies that it was their intention that the Second Respondent’s
restaurant would be “run principally” by the Second Applicant and him
as the restaurant would be run principally by Janine and himself.
16.4 He further averred that Second Applicant wa s an Operation s
Director of the business of the Second Respondent whose input was
welcome however , she had no authority over the conducting of the
Second Respondent’s business whatsoever, as any decision pertaining
to Second Respondent would have to meet with his approval as its
Managing Director.
16.5 He denied that he never devoted himself to the business of the
Second Respondent and avers instead that he has always complied
with his duties.
16.6 He admits to being diagnosed with PTSD but avers that his stress
and anxiety is caused by the Second Applicant’s conduct.
16.7 He admits to having made disparaging remarks about the First
Respondent and to swearing a lot.
16.8 He denies seeking to micromanage the Second Applicant and
instead avers that the Second Applicant ignores all forms of requests
and instructions and does so with the intent to undermine and usurp his
authority. He further avers that the stratagem of the Applicants is to
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forcibly remove Janine and him from the business in order to take
control thereof.
16.8 He admits that no agreement was reached in relation to the
dissolution of the partnership.
16.9 He averred that the Applicants opportunistically and most
disconcertingly regard his health as means to capitalize upon by
usurping Janine and his role in the Second Respondent.
16.10 He also denied that Josie conducted herself in the manner
complained of, he instead avers that the Second Applicant targeted her
by raising the most insignificant and miniscule complaints against her
so as to render his involvement in the business of the Second
Respondent as invidious as possible.
16.11 He admits to removing Josie from the business of the Second
Respondent as he was of the opinion that she is being targeted, the
Second Applicant was both rude and confrontational towards her.
16.12 He averred that his intention to retire does not equate to an
intention on his part to sell his interest in the Second Respondent.
16.13 He admitted the existence of palpable acrimony which eventually
led to an impasse between the Applicants and themselves but avers that
this was a result of the Second Applicant’s intention to usurp his role in
the business of the Second Respondent.
16.14 He averred that the employees of the Second Respondent who
filed Confirmatory Affidavits in support of the Applicants’ application
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did so because they were ultimately financially rewarded, in plain
language, they were bribed by the Applicants.
16.15 He averred that the taking of alcohol from the business of the
Second Respondent without paying for it was part and parcel of his
perks as member with interest in the Second Respondent.
[17] Besides First Respondent ’s lamentations that the Applicants have
failed to set out the allegations made in the Founding Affidavit with sufficient
particularity, he also averred in his answering affidavit that the Applicants
have failed to support their allegations with any form of evidence and/ or
factual basis to justify the invocation of section 36 and 49 of the Act read
together with section 163 of the Companies Act 71 of 2008 (“the Companies
Act”). This averment was made despite the fact that the Founding Affidavit
deposed to by the First Applicant, contents whereof has been confirmed by
the Second Applicant has numerous electronic mails, WhatsApp messages
and Confirmatory Affidavits attached thereto.
[18] First Respondent also avers that he has advanced both factual and legal
grounds as a basis of his opposition to the application and in so doing, has
established numerous material factual disputes. This averment is made despite
the First Respondent attaching only a Confirmatory Affidavit deposed to by
Janine to his Answering Affidavit.
Issues for determination
[19] Based on the averments made by the Applicants and the First
Respondent, t his court is therefore enjoined to make a determination on
whether:
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(a) There are indeed factual disputes in the matter.
(b) There is indeed a complete breakdown of the working relationship
between the Applicants and the First Respondent.
(c) The breakdown is a result of a conduct that is unfairly prejudicial,
unjust or inequitable effect to the Applicants and Second
Respondent.
Applicable law and legal principles
[20] The application which has been instituted by the Applicants is governed
by section 36 and section 49 the Close Corporations Act 69 of 1984. Section
36 of the Act reads as follows:
“(1) On application by any member of a corporation a Court may on any of the following
grounds order that any member shall cease to be a member of the corporation:
(a) Subject to the provisions of the association agreement (if any), that the member is
permanently incapable, because of unsound mind or any other reason, of
performing his or her part in the carrying on of the business of the corporation;
(b) that the member has been guilty of such conduct as taking into account the nature
of the corporation’s business, is likely to have a prejudicial effect on the carrying
on of the business;
(c) that the member so conducts himself or herself in matters relating to the
corporation’s business that it is not reasonably practicable for the other member
or members to carry on the business of the corporation with him or her; or
(d) that circumstances have arisen which render it just and equitable that such
member should cease to be a member of the corporation:
Provided that such application to a Court on any ground mentioned in paragraph (a) or
(d) may also be made by a member in respect of whom the order shall apply.
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(2) A Court granting an order in terms of subsection (1) may make such further orders as it
deems fit in regard to—
(a) the acquisition of the member’s interest concerned by the corporation or by
members other than the member concerned; or
(b) the amounts (if any) to be paid in respect of the member’s interest concerned or
the claims against the corporation of that member, the manner and times of such
payments and the persons to whom they shall be made; or
(c) any other matter regarding the cessation of membership which the Court deems
fit.”
[21] Section 49 of the same Act reads as follows:
“(1) Any member of a corporation who alleges that any particular act or omission of the
corporation or of one or more other members is unfairly prejudicial, unjust or
inequitable to him or her, or to some members including him or her, or that the
affairs of the corporation are being conducted in a manner unfairly prejudicial,
unjust or inequitable to him or her, or to some members including him or her, may
make an application to a Court for an order under this section.
(2) If on any such application it appears to the Court that the particular act or omission
is unfairly prejudicial, unjust or inequitable as contemplated in subsection (1), or
that the corporation’s affairs are being conducted as so contemplated, and if the
Court considers it just and equitable, the Court may with a view to settling the
dispute make such order as it thinks fit, whether for regulating the future conduct of
the affairs of the corporation or for the purchase of the interest of any member of
the corporation by other members thereof or by the corporation.
(3) When an order under this section makes any alteration or addition to the relevant
founding statement or association agreement, or replaces any association
agreement, the alteration or addition or replacement shall have effect as if it were
duly made by agreement of the members concerned.
(4) A copy of an order made under this section which—
(4) A copy of an order made under this section which—
(a) alters or adds to a founding statement shall within 28 days of the making
thereof be lodged by the corporation with the Registrar for registration; or
(b) alters or adds to or replaces any association agreement, shall be kept by the
corporation at its registered office where any member of the corporation
may inspect it.
(5) …”
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[22] Nepgen J stated the following when discussing the application of
section 49 in De Franca v Exhaust Pro CC (De Franca Intervening) 1997 (3)
SA 878 (SECLD):
“Section 49 deals with the situation where conduct (an act or an omission) of the close
corporation or one or more of its members, or where the manner in which the affairs of the
close corporation are being conducted, is unfairly prejudicial, unjust or inequitable to a
member of the close corporation. When this occurs such member may make an application
to the Court for an order that will have the effect of “settling the dispute” (s 252 of Act 61 of
1973 provides for an order having the effect of bringing an end to the matters complained
of”). As to what an applicant must establish, see Gatenby’s case (supra at 124B – G). The Court
has a wide discretion with regar d to the order that it decides to make to bring about the
required result (cf Gatenby’s case supra at 122F – 123J). Such order can, however, only be
made “if the Court considers it just and equitable” to do so.” 1
[23] Jones J extensively cited what was stated by Friedman J in Garden
Province Investment v Aleph (Pty) Ltd 2 and which is as follows before making
a finding as to the onus placed on the Applicant in a section 49 application:
“It seems to me that a minority shareholder seeking to invoke the provisions of section 252(1)
of the Companies Act must establish not only that a particular act or omission of the company
results in a state of affairs which is unfairly prejudicial , unjust or inequitable to him, but that
the particular act or omission itself was one which was unfair or unjust or inequitable.
Similarly, looking at the second part of the section, where the complaint relates to the manner
of conduct of the business, it is the manner in which the affairs have been conducted as well
as the result of the conduct of the business in that manner which must be shown to be unfairly
as the result of the conduct of the business in that manner which must be shown to be unfairly
prejudicial, unjust or inequitable. …. When one looks at the second part of the section it is
stated explicitly that the manner in which the affairs of the company are being conducted
must be shown to be unfairly prejudicial, unjust or inequitable. This conclusion seems to me
also consistent with what has been said on a number of occasions with regard to the
1 De Franca v Exhaust Pro CC (De Franca Intervening) 1997 (3) SA 878 (SECLD) at 893 C - E
2 Garden Province Investment v Aleph (Pty) Ltd 1972 (2) SA 525 (D) at 531 C - G
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predecessor of this section, namely the previous 111 bis . Thus in the case of Livanos
Swartzberg and Others 1962 (4) SA 395 (W) Cillie J said at 399:
“In any event it is not the motive for the conduct that the Court must look at but the conduct
itself and the effect which it has on the other members of the company””
He then proceeded to conclude as follows:
“Section 49 places a similar onus upon a member of a close corporation who considers that
he is being unfairly prejudiced.”3
[24] Jali J held as follows in Kanakia v Ritzshelf 1004 CC t/a Passage to
India when discussing the application of section 36 of the Act and the onus
required for its invocation:
“The provisions of s 36 may be invoked by a member of the close corporation. A member who
makes the application under s 36(1) bears the onus of proving that he is entitled to the relief
which he seeks and it is incumbent upon him to place before the Court the necessary evidence
not only to enable the Court to decide whether it should grant an order in terms of s 36(1)(a),
(b), (c) or (d), but also to make any further order envisaged in s 36(2) (see Geaney v Portion
117 Kalkheuwel Properties CC and Others 1998 (1) SA 622 (T) at 631H-632A”4
[25] Preiss J held as follows in Donaldson Investment (Pty) Ltd and Others
v Anglo – Transvaal Collieries Ltd: SA Mutual Life Assurance Society and
Another Intervening with regards to onus:
“it seems to me that the new wording of s 25 2 means, at least , what was set out in some of
the cases dealing with the old s111 bis, where the requirement was placed at the less
stringent level. In my view, the application must establish a lack of probity or fair dealing, or
a visible departure from the standards of fair dealing, or a violation of the conditions of fair
play on which every shareholder is entitled to rely. ……. The emphasis is upon the unfair ness
of the conduct complained of. It must be the conduct which departs from the accepted
of the conduct complained of. It must be the conduct which departs from the accepted
standards of fair play, or which amounts to an unfair discrimination against the minority.” 5
3 Gatenby v Gatenby 1996 (3) SA 118 (ECD) at 124 G
4 Kanakia v Ritzshelf 1004 t/a Passage to India 2003 (2) SA 39 (D) at 48 E
5 Donaldson Investments v Anglo – Transvaal Collieries 1979 (3) SA 713 (WLD) at 722 E - G
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[26] Jones J also states the following with regards to the object of section 49
of the Act:
“The object of s 49 is to come to the relief of the victim of the oppressive conduct. The section
gives the Court the power to make orders “with a view to settling the dispute” between the
members of a close corporation if it is just and equitable to do so. To this end the Court is
given wide discretion. It may “make such order as it thinks fit”, within the framework of either
“regulating the future conduct of the affairs of the corporation” or “the purchase of the
interest of any member of the corporation by other members thereof or by the corporation”.
These are far -reaching powers. One member can be compelled to purchase the interest of
another at a fair price, whether he wants or not.”6
[27] Nepgen J also stated the following when discussing the application of
section 36 in De Franca v Exhaust Pro CC (De Franca Intervening):
“Section 36 of the Act also deals with an application to Court by a member of a close
corporation, but such member is not required to establish conduct of a nature referred to
above when discussing s 49 of the Act, namely conduct affecting him. It is the carrying on of
the business of the close corporation that must be affected, either by the existence of the
circumstances envisage by ss (1)(a) or by conduct as described in ss (1)(b) and (1)(c).
Subsection (1)(d), however, gives wide and virtually unlimited scope for the application of s
36 of the Act, the only limitation being the “just and equitable” requirement. The order that a
Court can make in terms of s 36(1) of the Act is circumscribed, namely an order that a member
shall cease to be a member of the close corporation. Once a Court decides that an order for
such cessation of membership should be made, it has a discretion to make further orders
referred to in s 36(2) of the Act. While a Court could, applying the provisions of s 49 of the
Act, make an order compelling one member to purchase the interest of another, which would
have the effect of such member’s membership in the close corporation ceasing, that which
would have to be established before this is done is quite different is quite different to what
would have to be established under s 36 of the Act.”7
[28] Bosielo J held as follows in Smyth and Another v Mew8:
6 Gatenby v Gatenby and Others 1996 (3) SA 118 (ECD) at 122 E-F
7 De Franca v Exhaust Pro CC (De Franca Intervening) 1997 (3) SA 878 (SECLD) at 893 F - I
8 2010 (6) SA 537 (SCA)
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“[25] It should be clear from the provisions of s 36(1) and (2), as quoted above, that the court
retains a discretion, firstly whether to grant an order for the cessation of a member's interest
in the corporation, and secondly as regards the disposition of such member's interest and the
terms and conditions under which such disposition should occur.
[26]… Such discretion can only be exercised if there is sufficient information before the court
to enable it to 'make such further orders as it deems fit' in regard to the matters referred to
in s 36(2): De Franca at 896H; Gearny at 631H-I. The member who makes the application in
terms of s 36(1) must place the necessary evidence before the court: see Gearney at 631 H
and Kanakia at 48E-F.”
[29] Turning to the question of whether there is a dispute of facts in this
application, it is prudent to focus our mind the case of Plascon -Evans Paints
v Van Riebeeck Paints 1984 (3) SA 623 (AD), which is regarded as a locus
classicus in setting out the approach to be adopted in determining matters
involving factual disputes, Corbett JA, as he then was held as follows:
“It is correct that, where in proceedings on notice of motion disputes of fact have arisen on
the affidavits, a final order, whether it be an interdict or some other form of relief, may be
granted if those facts averred in the applicant's affidavits which have been admitted by the
respondent, together with the facts alleged by the respondent, justify such an order. The
power of the court to give such final relief on the papers before it is, however, not confined to
such a situation. In certain instances the denial by respondent of a fact alleged by the
applicant may not be such as to raise a real, genuine or bona fide dispute of fact. (see in this
regard Room Hire Co. (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd, 1949 (3) SA 1155 (T), at
pp 1163-5; Da Mata v Otto, NO, 1972 (3) SA 585 (A), at p 882 D - H). If in such a case the
pp 1163-5; Da Mata v Otto, NO, 1972 (3) SA 585 (A), at p 882 D - H). If in such a case the
respondent has not availed himself of his right to apply for the deponents concerned to be
called for cross-examination under Rule 6(5)(g) of the Uniform Rules of Court (cf. Petersen v
Cuthbert & Co Ltd, 1945 AD 420, at p 428; Room Hire case, supra, at p 1164) and the court is
satisfied as to the inherent credibility of the applicant's factual averment, it may proceed on
the basis of the correctness thereof and include this fact among those upon which it
determines whether the applicant is entitled to the final relief which he seeks (see eg. Rikhoto
v East Rand Administration Board, 1983 (4) SA 278 (W), at p 283 E - H). Moreover, there may
be exceptions to this general rule, as, for example, where the allegations or denials of the
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respondent are so far-fetched or clearly untenable that the Court is justified in rejecting them
merely on the papers (see the remarks of BOTHA AJA in the Associated South African
Bakeries case, supra, at p 924 A)” 9
[30] Heher JA held as follows in Wightman t/a JW Construction v Headfour
(Pty) Ltd and Another 10 when dealing with dispute of fact:
“[13] A real, genuine and bona fide dispute of fact can exist only where the court is satisfied
that the party who purports to raise the dispute has in his affidavit seriously and
unambiguously addressed the fact said to be disputed. There will of course be instances
where a bare denial meets the requirement because there is no other way open to the
disputing party and nothing more can therefore be expected of him. But even that may not be
sufficient if the fact averred lies purely within the knowledge of the averring party and no
basis is la id for disputing the veracity or accuracy of the averment. When the facts averred
are such that the disputing party must necessarily possess knowledge of them and be able to
provide an answer (or countervailing evidence) if they be not true or accurate but, instead of
doing so, rests his case on a bare or ambiguous denial the court will generally have difficulty
in finding that the test is satisfied. I say ‘generally’ because factual averments seldom stand
apart from a broader matrix of circumstances all of which needs to be borne in mind when
arriving at a decision. A litigant may not necessarily recognise or understand the nuances of
a bare or general denial as against a real attempt to grapple with all relevant factual
allegations made by the other party. But when he signs the answering affidavit, he commits
himself to its contents, inadequate as they may be, and will only in exceptional circumstances
be permitted to disavow them. There is thus a serious duty imposed upon a legal adviser who
settles an answering affidavit to ascertain and engage with facts which his client disputes and
to reflect such disputes fully and accurately in the answering affidavit. If that does not happen
it should come as no surprise that the court takes a robust view of the matter.
[31] The general rule as was stated by Van Wyk J in Stellenbosch Farmer’s
Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) as follows:
9 Plascon-Evans Paints v Van Riebeeck Paints 1984 (3) SA 623 (AD) at 634H-635C
10 2008 (3) SA 371 (SCA)
21
“…where there is a dispute as to the facts a final interdict should only be granted in notice oof
motion proceedings if the facts as stated by the respondents together with the admitted facts
in the applicant’s affidavits justify such an order…Where it is clear that facts, though not
formally admitted, cannot be denied, they must be regarded as admitted”11
[32] There are however two exceptions to the above general rule and these
exceptions are as follows:
“1. In certain cases a denial by respondent of a fact which has been alleged by
applicant may be insufficient to raise a real genuine or bona fide dispute regarding
this alleged fact. If, in such a case, respondent has not availed itself of the right to
apply for the deponent concerned to be called to be cross examined in terms of Rule
6(5)(g) of the Uniform Rules of Court, and the Court is satis fied as to the inherent
credibility of the factual averment of applicant, it may proceed on the basis of the
correctness of th is averment and include it within the factual matrix upon which it
determines whether applicant is entitled to the final relief sought. With regard to this
exception, the meaning of a denial by respondent of a fact alleged by applicant which
may be insufficient to raise a real, genuine or bona fide dispute of facts was set out
in Petersen v Cuthbert Co Ltd 1945 AD 420 at 428-429 thus:
“The lessors say that they require the premises and state in detail the reasons for
requiring them. The lessee admits in his affidavit that the questions whether the
lessors require the premises for their own use and whether such requirement is
reasonable are matters peculiarly within the lessor’s own knowledge, yet he
challenges most of the statements made by the lessors as to the difficulty and
inconveniences due war conditions which arise under the present system of
carrying on business. He cannot truly say that he denies statements made by the
carrying on business. He cannot truly say that he denies statements made by the
lessor, because he has no real knowledge of the facts, but he questions their truth
and says the matter should be investigated in a trial action. Now this is not, in my
opinion, a real dispute of fact, it is merely a suggestion that the difficulties and
inconveniences have been exaggerated, and that the lessor’s desire to make use of
its own premises for conducting their business in their own ways is an unreasonable
requirement. The answer to that contention is that the lessors have shown prima
facie that they have good reason for requiring the premises for their own use. If the
lessee wished to test the validity of their reasons by cross examination, he could
have done so under the rules of court to which reference has been made’.
See also Room Hire Company (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd.
1949(3) SA 1155 (T) 1164.
11 Stellenbosch Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA 234 (C) at 235E - G
22
2. By contrast, the second exception operates where a respondent’s answer contains
a denial of allegations which were so far fetched, so untenable that a court is
justified in rejecting them on the papers. This is different to a case where
respondent questions the truth of averments made by applicant in circumstances
where he has no real knowledge of the facts. The second exception is designed to
deal with a case in which respondent seeks to subvert the Stellenvale rule, namely
where a respondent makes certain bald allegations or farfetched denials which are
manifestly untenable, not supported by any evidence or reason and which have
been designed simply to exploit the Stellenvale rule to the latter’s advantage and to
the determent of applicant whose factual averments cannot be attacked on any
plausible basis. See also South Africa Veterinary Council and Another v
Szymanski 2003 (4) SA 42 (SCA) at 50-51.”12
The submissions of counsel for the Applicants
[33] To support his conviction that the Applicants are entitled to the relief
sought, Applicants’ counsel made the following submissions on behalf of the
Applicants:
[33.1] That following the execution of the partnership agreement, the
First Respondent’s active participation in the business waned, and he
ceased fulfilling his obligations under the partnership agreement.
[33.2] That the Respondent himself confirmed, on more than one
occasion, that he was retiring from active involvement in the business
due to ill-health.
[33.3] That the admission of ill health and imminent retirement
underscores the impracticability of any continued joint management
of the affairs of the Second Respondent.
12 Ripoll-Dausa v Middleton NO and Others 2005 (3) SA 141 (C) at 152C-153C
23
[33.4] That the fact that the business relationship between the parties
has broken down irretrievably justifies the relief sought in terms of
section 36 and 49 of the Act. The deadlock between equal members has
made it impractical for the Second Respondent to continue its business
with both members as contemplated in section 36(1) of the Act. Section
49(1) of the Act empowers the Court to grant relief where a member’s
conduct is oppressive or unfairly prejudicial to the interests of another
member.
[33.5] That evidence demonstrates that the First Respondent has
persistently acted in a manner unfairly prejudicial to the Applicant’s
rights and interests as co -members of the Second Respondent and has
breached the duty of utmost good faith owed both under the Act and the
partnership agreement.
[33.6] That the actions of the First Respondent as detailed at paragraph
16 of this judgement breach the fiduciary duty imposed by section
42(2)(a) of the Act which places an obligation on members to act
honestly and in good faith towards the corporation and such conduct in
its very nature is unfairly prejudicial to other members of the Second
Respondent.
[33.7] That the First Respondent’s verbal assaults and uses demeaning
language toward the Applicants during meetings and in front of staff
were calculated to humiliate and undermine them, destroying any
remaining trust necessary for joint business administration.
[33.8] That based on the above and what is contained in paragraph 16
of this judgement, the Applicants have established that the First
24
Respondent’s conduct is unfairly prejudicial within the meaning of
section 49(1) and that it is just an d equitable for the Court to order that
the First Respondent cease to be a member of the Second Respondent
and that his member’s interest be acquired by the Applicants or the
Second Respondent.
[33.9] That the relief sought will preserve the viability of the business,
safeguard employment, and ensure that the Second Respondent
continues under effective management while the liquidation of a
solvent and profitable entity would, by contrast, be destructive and
contrary to the equitable considerations underpinning section 36 and 49
of the Act.
[33.10] With regard to the issue of dispute of facts, the Applicants
counsel submitted that the denials of fact made by the Applicants by
the First Respondent is not such that they raise a real, genuine or bona
fide dispute of fact. Applicant’s counsel also submitted that the version
of the Applicants in their respective affidavits are supported by
contemporaneous documents, is logical and further supported by staff
members of the Second Respondent whilst First Respondent’s version
is plagued by bare denials and illogical explanations, so his version
stands to be disregarded as it is untenable and bereft of factual and legal
substratum.
The submissions made by counsel for the First Respondent
[34] In opposing the relief sought by the Applicants, counsel for the First
Respondent submitted as follows:
25
[34.1] That Applicants’ application is for all intents and purposes
stillborn as the Applicants have fallen desolately short in establishing a
right to the relief sought. In fact, apart from its inherent shortcomings,
the application is but a manifestation of a stratagem on the part of the
Applicants to appropriate the business established by the First
Respondent and his wife.
[34.2] That the application is fatally defective and stillborn for the
following reasons:
[34.2.1] Apart from complaints about certain expletives
which the First Respondent has used in the past, and
certain acts committed on the part of his daughter
whilst in the employ of the Second Respondent, the
Applicants have failed, singularly, to advance any
form of factual basis to justify the invocation of
sections 36 and 49 of the Act as the authorities
applicable to these provisions establish a high onus
on the Applicants to succeed with the relief sought.
The Applicants have most certainly failed to
discharge this onus.
[34.2.2] Applicants seek final relief in their application. The
legal principles applicable to final relief are
therefore germane, as established in the locus
classicus of Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) (“the
Plascon-Evans rule”)
26
[34.2.3] In advancing their case, applicants have relied on
secondary facts as opposed to primary facts,
accordingly an underlying factual basis, other than
conclusions, are relied upon.
[34.2.4] Firstly, applicants rely solely on secondary facts,
namely their own misplaced inferences and
conclusions, as opposed to primary facts, which
would consist of evidence which the Honourable
Court could rely upon to make a finding and to
determine the veracity of the secondary facts.
[34.2.5] Without primary facts, the Honourable Court is left
with respondent’s conclusions alone, without
evidence to support such conclusions.
[34.2.6] Therefore, applicants cannot obtain the relief they
seek on that stated in their founding affidavit.
[34.2.7] The First Respondent advances both factual and
legal grounds as a basis of opposition, and in so
doing, establish numerous material factual disputes.
[34.2.8] Accordingly, even if the Honourable Court were to
find that applicants have made out a case for the
relief as sought in their founding affidavit, which is
denied, the Honourable Court cannot come to
applicants’ assistance by virtue of the Plascon-
Evans rule given the factual disputes.
27
[34.2.9] The only manner in which the Honourable Court
can come to applicants’ assistance is to find that the
exceptions to the Plascon -Evans rule are germane.
As is demonstrated hereunder, a finding of this
nature cannot be made.
[34.3] What is more, and as will be demonstrated hereunder, applicants
were aware of these disputes prior to the institution of their application
and would therefore be hamstrung in seeking a referral for oral evidence
under Uniform Rule 6 (5) (g). At the very least, applicants were made
aware of the factual disputes at the time first respondent delivered his
answering affidavit.
[34.4] That when the grounds of opposition raised on the part of the
First Respondent are considered in casu , it cannot be said that the
exceptions to the “Plascon-Evans rule” do not apply thereto.
Discussion and findings
[35] The elephant in the room in this application is whether there is indeed
a dispute of fact which militates against this Court granting the relief sought
by the Applicants in this matter . As stated somewhere in this judgement, a
real, genuine and bona fide dispute of fact can only exist where the court is
satisfied that the party who purports to raise the dispute has in his affidavit
seriously and unambiguously addressed the fact said to be disputed.
Unfortunately, the First Respondent has made no effort to genuinely and
unambiguously engage with the averments set out in the founding affidavit of
the First Respondent but had resorted to denials not supported by facts,
28
reasons or specific details. This Court therefore finds that there is no genuine
dispute of fact herein.
[36] Having made the above finding, this Court finds that the following are
not in dispute:
[36 .1] That First Applicant and First Respondent are members of the
Second Respondent who hold 50% membership interest each in the
Second Respondent.
[36 .2] That the First Respondent injected capital into the business of
the First Respondent while the Applicants would run the business of the
Second Respondent, the business of the Second Respondent was
essentially run by the Second Applicant as she had previous restaurant
experience.
[36 .3] That since the beginning of March 2023, the business
relationship between the Applicants and the First Respondent with
regards to the Second Respondent is regulated by the Partnership
Agreement.
[36.4 ] That as a result of this agreement, the First Respondent became
the Managing Director and head of acquisitions and relationships
maintenance with suppliers and investors whilst the Second Applicant
became the Operations Director and head of operations of the business
of the Second Respondent including kitchen controls, stock controls,
cash control, staff and any other activities required for the business to
run effectively and profitably during trading hours , in line with her
experience.
29
[36.5] The First Respondent had limited success while performing his
duties in terms of the agreement and his general involvement in the
business of the Second Respondent waned. He failed to carry out his
responsibilities and devote himself to the progress and welfare of the
Second Respondent. Even though the First Respondent sought to deny
this fact he did not successfully do so, because the evidence that he
sought to present as proof that he was performing his duties as required
by the partnershi p agreement was only for the months of September,
October, November and December 2024.
[36.6] That it later transpired that the First Respondent ’s non-
performance was a result of PTSD that he was suffering from which
had prompted him to consider retiring soon. The plan was that
Janine would take over his responsibilities.
[36.7] That the First Respondent and Janine, who had absolutely
nothing to do with the Second Respondent sought to interfere with the
work of the Second Respondent when they called Second Respondent
to a meeting and took issue with a post posted on her personal
Facebook page wherein she invited her Facebook friends over to the
business of the Second Respondent for a celebratory drink to celebrate
the five -year milestone of the business of the Second Respondent .
Janine insisted that the Second Appl icant should be removed as a
member of the Second Respondent for posting the said post without
their consent.
[36.7] That the First Respondent also spoke condescendingly about the
First Applicant in this meeting something that the Second Applicant
30
did not take kindly to. The meeting did not end well as the Second
Respondent proposed the dissolution of the partnership together with
the Second Respondent and that one party buy the other out . Second
Applicant’s proposal was accepted by the First Respondent who also
advised that he will consider an exit strategy for either party and
revert at the end of the meeting. This was a clear acceptance by the First
Respondent that the business relationship between the parties has
broken down irretrievabl y. This acceptance was repeated at a
subsequent meeting when the First Respondent acknowledged that
things between the parties have gone “pear-shaped”.
[36.8] That Janine and the First Respondent were in the practice
verbally assaulting the Applicants, showing total disdain for the First
or Second Applicant and belittling them in full view of staff members
of the Second Applicant. This evidences that they never regarded the
Applicants as equal partners despite this being so in terms of the
agreement. This also clearly comes out of the Answering Affidavit of
the First Respondent when he avers that “the Second Applicant was to
be regarded as an Operations Director, and although we welcomed her
input, she had no authority over the conducting of the of the Second
Respondent’s business whatsoever, as any decision pertaining to the
Second Respondent would have to meet with my approval as its
Managing Director”. This was First Respondent’s opinion however
misplaced it is.
[36.9] That the First Respondent also interfered with the disciplinary
proceedings which had been initiated by the Second Applicant with the
assistance of the Second Respondent’s labour consultant against the
31
daughter of the First Respondent (“Josie” ) who was employed as a
General Manager of the Second Respondent. Josie made herself guilty
of untoward conduct of being rude to fellow employees of the Second
Respondent, abusing alcohol during working hours at the restaurant
among other things.
[36.10] That First Respondent also allowed Janine who had instructed
the accountants of the Second Respondent to deny the Second
Applicant access to the accounting records of the Second Respondent,
to interfere in the operational matters of the Second Respondent.
[36.11] According to the Applicants, all of the aforegoing was a clear
indication that the First Respondent and Janine had no intention of
allowing the Second Applicant the leeway to perform her duties as head
of operations without interference. This, per se , resulted in their
business relationship becoming quickly toxic and intolerable. This, in
turn, led to the Applicants becoming deeply concerned about the impact
the rapid deterioration of the relationship is having on the successful
business operations of the Second Respondent.
[36.12] As a result of the deterioration in business relationship between
the Applicants and the First Respondent, the Applicants consulted their
attorney who sent a letter with a settlement proposal to the First
Respondent but nothing positive came out of the said letter.
[37] It clear from the undisputed facts outlined above that the business
relationship between the parties to the partnership agreement has broken down
irretrievably. It is also clear that all the parties to the partnership agreement
are aware of this irretrievable breakdown as at least two attempts have been
32
made in order to bring the parties to the table have taken place and both of
them have failed.
[38] The First Respondent has made it clear that he is not prepared to sit
around the same table with the First Applicant in order to resolve whatever
problems they have with each other amicably. It is therefore clear from the
above set of facts that the parties to the partnership agreement have now
reached a deadlock. It is a result of this deadlock that the Applicants have now
turned to this Court for an appropriate relief.
[39] As previously stated somewhere in this judgement, a member seeking
to invoke the provisions of section 36 of the Act , bears the onus of proving
that he is entitled to the relief sought and it is incumbent on him to place before
Court the necessary evidence not only to enable the Court to decide whether
it should grant the order in terms section 36(1)(a) – (d), but to also make any
further order envisaged in section 36(2) of the Act.
[40] Similarly, a member seeking to invoke the provisions of section 49 of
the Act must establish not only that a particular act or omission results in a
state of affairs which is unfairly prejudicial, unjust or inequitable to him or
her, but that the particular act or omission itself was one which was unfair or
unjust or inequitable.
[41] Based on the above requirements, it is the finding of this Court that the
Applicants have managed to show that the First Respondent is permanently
incapable as a result of his PTSD to perform his part in the carrying on of the
business of the Second Respondent , that his conduct of interfering with the
clearly defined roles of the Second Applicant while neglecting to perform his
clearly defined roles is likely to have a prejudicial effect on the carrying on of
33
the business of the Second Respondent and that as a result of the
aforementioned conduct it has now become not reasonably practicable for the
Second Applicant to carry on the business of the Second Respondent with
him. Moreover, this Court also finds that based on his conduct of interfering
with the Second Applicant’s defined role, protecting his daughter Josie who
is accused of being rude to fellow employees, encouraging her to consume
alcohol while on duty and allowing Janine to be clandestinely involved in the
business of the Second Respondent even though she had no right to be , it is
just and equitable that the First Respondent should cease to be a member of
the Second Respondent and that his interest in the Second Respondent should
be acquired by the Applicants. This order is made in line with section 36(1)
and (36)(2) of the Act.
[42] Based on the same set of facts, this Court also finds that the Applicants
have also succeeded in showing that the conduct of the First Respondent is
unfairly prejudicial, unjust or inequitable to the Applicants in terms of section
49 of the Act in that despite the fact that the First Respondent plays no positive
role in the welfare of the business, that he continuously interferes with the
successful execution of the Second Applicant’s duties and uses underhand
tactics (such as instructing accountants of th e Second Respondent not to
furnish her with information relating to the business) to undermine her but
still shares equally with the Second Applicant in the nett profits of the
business.
[43] As previously stated somewhere in this judgement, the object ive of
section 49 is to come to the relief of the victim of oppressive conduct, it
empowers the Court to make orders “with a view to settling the dispute”
between the members of a close corporation if it is just and equitable to do so.
34
Therefore, and in line with this objective, it will be just and equitable for the
First Respondent to sell his member’s interest to the Applicants.
[44] In the circumstances, this Court grants an Order as follows:
1. Th
e First Respondent shall cease to be a member of the S econd
Respondent;
2. Th
e Applicants shall acquire and take transfer of the total member’s
interest held by the F irst Respondent in the Second Respondent,
against payment of a purchase price representing a fair market value
for the First Respondent’s member’s interest (“the purchase price”),
which must be determined in the manner set out below, alternatively
for a value as determined by this Honourable Court
;
3. T
he purchase price shall be determined by:
3
.1 An expert practising as a professional accountant of at least
10 years’ experience appointed by the Chief Executive
Officer of the South African Institute of Professional
Accountants (“the valuer”)
;
3
.2 The costs of the valuer/receiver shall be borne by the Second
Respondent;
35
3.3 The Applicants and F irst Respondent are ordered to
cooperate with and to assist the said v aluer/receiver in all
respects (including the provision of all documentation and
information requested by the valuer) in expeditiously
producing the determination of the purchase price and or the
partnership asset value;
3.4 In addition, the valuer is also hereby directed and/ or
authorised:
3.4.1To determine whether the second respondent has any
claim against the first respondent; and/or
3.4.2 To determine whether First Respondent has any
claim against Second Respondent;
3.4.3 To take these amounts into account (make
adjustments, deductions and/or apply set-off where
possible) in determining the purchase price. Such amounts
should be added to or subtracted from the purchase price;
3.4.4 Authorised in his or her sole discretion to call for and
to receive oral and/or written representations from the
respective parties;
3.4.5 Authorised in his or her sole discretion to call for and
receive further documents or evidence and/or may
him/herself undertake further investigations and enquiries
and the parties are instructed to cooperate with the v aluer
36
in this regard. The valuer shall have the broadest possible
powers in this regard.
3.5 The determination of the purchase price and net asset value of
the Second Respondent shall be completed within sixty (60) days from
the date of an order herein;
3.6 The Applicants shall forthwith pay the purchase price to the
First Respondent, whereupon the F irst Respondent shall, against such
payment, take all steps necessary to effect transfer of his member’s
interest to the Second Applicant.
3.7 Against payment of the purchase price, the parties shall do all
things necessary to effect transfer of the F irst Respondent’s member’s
interest in the Second Respondent to the Second Applicant alternatively
the Second Respondent.
4. The Sheriff of the above Honourable Court is hereby authorized to do
all such things necessary for and on behalf of the R espondents including
signing documents on their behalf, in order to give effect to the orders sought
herein.
5. The First Respondent shall provide to the A pplicants all the financial
information and documents relating to the S econd Respondent in his
possession, including but not limited to all accounts and vouchers, the First
Respondent shall cooperate with any audit or investigation pursuant thereto,
whether conducted by the Applicants or any party.
37
7. The First Respondent to pay and/or compensate and/or restore to the
Second Respondent any amount or benefit, held by any Court, to have been
improperly paid to or misappropriated by First Respondent.
8. The F irst Respondent shall pay the party & party costs of this
application inclusive of counsel’s costs on … scale including the costs of the
application of 15 May 2025.
______________________________
TJ MGENGWANA
ACTING JUDGE OF THE HIGH COURT
APPEARANCES:
For the Applicant: Mr. G. Potgieter
Cape Bar
Instructed by: Matthews Enslin Inc.
For the First Respondent: Mr. L. Zazeraj
Cape Bar
Instructed by: Rwasabisi Attorneys Inc.
38