Albatross Fishing Corporation (Pty) Ltd v Ramsay

• Jurisdiction: South Africa
• Citation: 1968 (2) SA 217 (C)

Albatross Fishing Corporation (Pty) Ltd v Ramsay
1968 (2) SA 217 (C)

1968 (2) SA p217

Citation	1968 (2) SA 217 (C)
Court	Cape Provincial Division
Judge	De Villiers AJ
Heard	August 31, 1967; September 1, 1967
Judgment	December 12, 1967

Flynote : Sleutelwoorde

Estoppel — Share certificate wrongly stating that shares fully paid up — Company in liquidation — Liquidator claiming value of shares from E shareholder — When estopped from making such claim — Misrepresentation having emanated from company — Shareholder prejudiced in that he refrained from taking remedial action.

Headnote : Kopnota

After having made arrangements for payment of the value of 4,999 shares in a company now in liquidation, as regards the bulk with the administering director and chairman, defendant, also a director, had had every reason to believe that these shares had been fully paid by the time of allotment to himself. This belief had been further endorsed when F the chairman, in the presence of the auditor, had confirmed that the defendant no longer owed the company anything further. It appeared, however, that the bulk, at any rate, had never been paid in to the company by the chairman, who had apparently appropriated this amount for his own use. In an action by the liquidator claiming the nominal value of these shares plus interest a tempora morae, the defendant pleaded payment, or, alternatively, estoppel flowing from the issue to him of a share certificate stating that the shares were fully paid.

G Held, as regards the bulk, at any rate, that the defence of payment could not be sustained.

Held, further, however, as to the defence of estoppel, that there had clearly been a misrepresentation, bona fide relied on by the defendant, which misrepresentation had to be seen as emanating from the company.

Held, further, as, but for the misrepresentation, the defendant would have refused to accept the allotment, that he had relied on it in a vital respect.

H Held, further, as ignorance of the true facts, induced by the misrepresentation, had caused the detrimental act of accepting the allotment, i.e. had caused defendant to refrain from remedial action available at the time, that the resultant detriment was tangible and the plea of estoppel had to be upheld.

Case Information

Action claiming the nominal value of shares. The facts appear from the reasons for judgment.

E. L. King, for the plaintiff.

G. Hofmeyr, for the defendant referred to: Henochsberg, Companies

1968 (2) SA p218

Act, 2nd ed. at p. 66; Gower, Modern Company Law, 2nd ed. at pp. 354, 355, 358; In re Contributories Rosemount G.M. Syndicate, 1905 T.S. at pp. 205, 206; Autolec Ltd v du Plessis, 1965 (2) SA 243; Parbury's A case, (1896) 1 Ch. 100; Penang Foundery Co., 1913 Session Cases (Scotland) at p. 1207; Bloomenthal v Ford, 1897 A.C. 156 (House of Lords) at pp. 161, 162, 163, 164, 168; In re Coasters Ltd., 1911 Ch. at pp. 90, 91; Sprinz v Rayton Diamonds Ltd., 1926 W.L.D. 23; J. C. de Wet, Estoppel By Representation in die Suid-Afrikaanse Reg; Spencer Bower, Estoppel By Representation.

B Cur. adv. vult.

Postea (December 12th).

Judgment

C De Villiers, A.J.:

Plaintiff (hereinafter also called Albatross) was one of the smaller companies in a group, the major members of which was known as the Bee and Bee Fishing Corporation (Pty.) Ltd. (hereinafter called Bee and Bee). Albatross, and several of the other smaller companies in the group, were formed with a view to purchasing and D operating smaller fish-catcher vessels, which were to feed larger vessels owned by Bee and Bee. In each case half of the share capital of such a smaller company was provided by Bee and Bee and the other half by outside shareholding. In the case of Albatross the defendant, after negotiations with the managing director of Bee and Bee, one Berry, agreed to provide the whole of the outside share capital, being R5,000. E Defendant was also to become a director and to participate in the operations, maintenance and upkeep of the vessel to be owned by Albatross. Bee and Bee would provide the administration of the Albatross company and Berry would be the other director and chairman.

Albatross was incorporated in April, 1964, and in June of that year F there were duly allotted to each of defendant and Bee and Bee 4,999 shares of R1 each at par for cash. In each case the 5,000 was completed by transfer of one share from a previous nominal holder. After commencement of operations there were various arguments and points of disagreement between Berry and defendant, and towards the end of July, 1964, these resulted in an arrangement to part company, Bee and Bee taking over the whole of defendant's shareholding at par.

G All companies in the groups are now in liquidation. The...