Aspek Pipe Co (Pty) Ltd and Another v Mauerberger and Others

• Jurisdiction: South Africa
• Judge: Tebbutt AJ
• Judgment Date: 20 December 1967
• Citation: 1968 (1) SA 517 (C)
• Court: Cape Provincial Division

F Tebbutt, A.J.:

On 1st September, 1945, one of the respondents, Morris Mauerberger (to whom I shall refer herein as Mauerberger) purchased certain immovable property at the corner of Adderley and Church Streets, Cape Town, for the sum of R150,000, upon which a multi-storied building G of shops and offices known as Dumbarton House was erected, the building being completed by 1947. Mauerberger financed the project and the building was constructed by one Arthur Abraham Spektor (to whom I shall refer as Spektor), a builder and contractor, who is married to a niece H of Mauerberger. On 24th September, 1945, a company known as Dumbarton House (Pty.) Ltd. was duly incorporated and registered which took transfer of the said site and on 19th October, 1945, an agreement was entered into between Mauerberger, Spektor and Dumbarton House (Pty.) Ltd. (to which I shall refer as the Dumbarton Co.) whereby it was agreed that Mauerberger personally, or a company which he controls known as M. Mauerberger (Pty.) Ltd., would take up and pay for in cash 2,038 £1 ordinary shares in the Dumbarton Co. and that Spektor would take up and pay for in cash 1,960 £1 ordinary shares in the said company; that

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Spektor would be employed to supervise and build the building at a salary of £100 per month; that Mauerberger would provide all the necessary finance required for the acquisition of the site and the erection of the building for which interest at the rate of 4 per cent per annum would be paid, which rate of interest could be varied upon A three months written notice but not in excess of the prevailing bank rate of interest less one per cent and that written notice requiring repayment within a period of not less than six months of such notice of the debt so due could be given. The agreement further provided that upon six months written notice the capital of the Dumbarton Co. could be B increased to £10,000, and that Mauerberger undertook to subscribe and pay for 51 per cent and Spektor 49 per cent of such increased capital. This later occurred and at present of the authorised and issued share capital of the Dumbarton Company, M. Mauerberger (Pty.) Ltd., holds 5,098 shares, Mauerberger personally one share and an employee of one C of his companies, Jean Pothier, one share. The directors of M. Mauerberger (Pty.) Ltd., which, as I have said is controlled by Mauerberger, are Mauerberger and his son-in-law, one Solm Yach. The 4,900 shares held by Spektor were transferred by him in March, 1962, to D the two petitioning companies; 1,960 being held by Aspek Pipe Company (Pty.) Ltd., and 2,940 by Promenade Mansions (Pty.) Ltd., but both these companies hold the shares as nominees for Spektor who controls them both. From the aforegoing it is clear that Mauerberger controls the majority of voting rights in the Dumbarton Co. Mauerberger provided the finance required through a company of his known as Union Textile Mills E and it (and therefore he) is the largest loan creditor of the Dumbarton Co.

Although the petitioners in this case are the two companies mentioned in the preceding paragraph, they are in truth Spektor's companies, the only shares in them being held by Spektor and by one Rechtman as nominee for Spektor, who is also the sole director of them and in this application F the companies are represented by him. The real applicant therefore is Spektor and I shall refer to him as such.

Spektor alleges that from about 1960 the harmonious relationship between him and Mauerberger ceased to exist, friction arose between them and they are now completely estranged. Spektor avers further that the Dumbarton Co. is in substance a partnership between him and G Mauerberger, which is carried on in the form of a private company by the partners, through or by means of the petitioning companies as far as Spektor is concerned and by and through Mauerberger's employees and M. Mauerberger (Pty.) Ltd., the company controlled by Mauerberger, as far

as the latter is concerned.

H Spektor alleges that since the deterioration in the relationship between him and Mauerberger, the affairs of the Dumbarton Co. have been and are still being conducted by Mauerberger, as the majority shareholder -

'in a high-handed, tyrannical manner which is grossly unfair and oppressive to your petitioners as minority shareholders and consequently to Mr. Spektor'.

He avers, moreover, by reason of the

'complete breakdown in partnership, understanding and harmony between Mauerberger and Spektor',

that the winding up of the Dumbarton Co. would be justified in terms

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of sec. 111 (g) of the Companies Act, 46 of 1926, as amended, on the ground that such winding up would be just and equitable. He alleges, however, that to wind up the Company would unfairly prejudice the petitioners as minority shareholders and accordingly he applies for an A order, in terms of sec. 111 bis of the Companies Act, that Mauerberger or his nominee or alternatively M. Mauerberger (Pty.) Ltd., purchase the shares held by the petitioning companies in the Dumbarton Co. at a price of R25 per share, or at a price to be determined by this Court, or for an alternative order in terms of sec. 111 bis of the said Act.

B The petition with its annexures is a voluminous document and lengthy opposing affidavits by Mauerberger, Yach, Pothier and others and a replying affidavit by Spektor have been filed. These documents contain a sharp conflict of fact on a number of material issues and when the matter came before me for argument Mr. Gordon, who with Mr. Dison appeared for Spektor, stated that, as the application could not be decided on the papers filed, I should order that the matter go C to trial and he formally applied for that course to be followed (cf. Tomkin (Pty.) Ltd v Bower, 1931 T.P.D. 292). Mr. Snitcher, who with Mr. Baker, appeared for the respondents, however, took an objection in limine that no sufficient case for the relief sought had been made out in the petition and that the application should, even at this stage, be D dismissed. His basis for so contending was that not even a prima facie case of oppression within the provisions of sec. 111 bis had been made out by the applicants. The task of this Court therefore is to decide whether Mr. Snitcher's objection in limine is a valid one, i.e. whether the applicants have made out in the petition a prima facie case of oppression within the terms of sec. 111 bis, or whether the matter E should be referred to trial, as applied for by Mr. Gordon.

It is, of course, always open for a respondent in proceedings instituted by way of petition to take the point, by way of preliminary objection, that the petition does not make out a prima facie case for the relief claimed (see, e.g., Taylor v Welkom Theatres (Pty.) F Ltd. and Others, 1954 (3) SA 339 (O); Bader and Another v Weston and Another, 1967 (1) SA 134 (C)). Where this occurs the Court should, in deciding such preliminary objection, proceed on the bases (a) that the petition alone has to be considered and (b) that the allegations made in the petition have to be accepted as established facts (see Taylor v G Welkom Theatres (Pty.) Ltd. and Others, supra at p. 345). During the course of argument, counsel for both parties referred to allegations contained in both the opposing and replying affidavits. I do not think that in deciding this matter I should have reference thereto. It has been held both in this country and in England, in dealing with a similar H point, that only the petition can be looked at in deciding a preliminary objection such as the present. (See Re SA Hawken Ltd., (1950) 2 All E.R. 408 at p. 412; Taylor's case, supra at p. 345). It is essential that a case for the relief claimed should be made out in the petition and it is by the petition that a petitioner must stand or fall (cf. Palmer, Company Law, 17th ed., p. 394 and see Taylor's case, supra). I do not intend to look beyond the petition in deciding the present issue save in two respects. In the petition much reference is made to the annual general meeting of the Dumbarton Co. held on 29th October, 1965. The

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minutes of this meeting were not annexed to the petition but were annexed to the opposing affidavit of Mauerberger. The correctness of these minutes was not disputed and indeed they were frequently referred to by both Mr. Gordon and Mr. Snitcher A when dealing with the allegations in the petition concerning that meeting. As they do not involve any derogation from the petition but are really complementary thereto and as both counsel referred to them (Mr. Snitcher having accepted that only the petition should be looked at) I feel I can also refer to them where necessary. Similarly a table B summarising the financial records of the Dumbarton Co. from 1949 to 1966 and showing the amount of the loan owed by the Dumbarton Co. in each year during such period, the annual income of the Company in those years, the dividends and directors' fees paid and the surplus and unappropriated profits of the Company was annexed to Spektor's replying C affidavit. Both counsel referred extensively to this and as the document reflects what is in effect a summary of the financial state of the Company from 1949 to 1966 and, again, as Mr. Snitcher did not suggest that I should not have regard to it, I intend also to refer to it where necessary. Apart from those two documents, however, I do not intend to

travel beyond the petition, the allegations wherein I shall, for the purposes of the present judgment, accept as being established facts.

D It is necessary, now, to refer in some deatil to the allegations contained in the petition.

Spektor alleges that following the completion in 1947 of Dumbarton

House, which is the major asset in the Dumbarton Co., he attended to the letting of the offices and shops in the building, the collection of E rentals and the...