Bader and Another v Weston and Another

• Jurisdiction: South Africa
• Judge: Corbett J
• Judgment Date: 26 September 1966
• Citation: 1967 (1) SA 134 (C)
• Court: Cape Provincial Division

Corbett, J.:

The petitioners in this matter, L. I. Bader and G. M. Jaffee, are minority shareholders in a company known as Bagmeni

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Holdings (Pty.), Ltd. (hereinafter referred to as 'Bagmeni Holdings'), which has an authorised share capital of R10,000 divided into 10,000 shares of a nominal value of R1 each. All these shares have been issued and are fully paid up. At the time of the filing of the petition in this A matter the shares were held as follows: 7,000 by a company known as Gavelkind Holdings (Pty.) Ltd. (hereinafter referred to as 'Gavelkind'); 1,200 by petitioner Bader; 1,200 by petitioner Jaffee; 425 by a company known as Regsel (Pty.) Ltd. (hereinafter referred to as 'Regsel'); and 175 by one L. I. Jaffee, the brother of the petitioner Jaffee. Gavelkind B is a wholly-owned subsidiary of a company known as Convale Holdings (Pty.) Ltd. (hereinafter referred to as 'Convale'). The only two shareholders in Convale are one W. G. Weston, who holds 790 shares, and his wife, who holds the remaining 210 shares. Regsel is a nominee company in which the petitioners Bader and G. M. Jaffee hold all the shares.

C In the petition application is made in terms of sec. 111 bis of the Companies Act, 46 of 1926, as amended, for an order compelling Gavelkind and Weston to purchase the shares held by the petitioners and Regsel in Bagmeni Holdings at a price to be determined by this Court after hearing oral evidence and for certain other relief, which need not now be D detailed. The application is opposed by Gavelkind and Weston and it is relevant at this point to mention briefly the procedural steps that have occurred to date.

The petition was filed on 24th March, 1966, and was served on the interested parties at more or less the same time. It was set down for hearing on 30th March, 1966. On that date Weston and Gavelkind appeared, E through counsel, to oppose the application and to ask for a postponement in order to enable them to file opposing affidavits. This request was granted by the Court. The matter was postponed sine die and Weston and Gavelkind (to whom I shall collectively refer as 'the respondents') were given leave to file their affidavits on or before 6th F May, 1966. Towards the end of April negotiations for settlement took place but these were not successful; and by arrangement between the parties the time for the filing of respondents' opposing affidavits was extended until 23rd May. On 20th May each of the respondents filed a short document giving notice that, at the hearing of the petition, application would be made for the dismissal of the petition on the basis G that the facts alleged in the petition, if proved, would not entitle the petitioners to relief under sec. 111 bis of the Companies Act. Each of these notices particularises in general terms the various grounds upon which this application is made and goes on to state that, if the application is not upheld, then an extension of time within which to file opposing affidavits will be applied for. Thereafter the matter was H set down for further hearing on 10th June. On that date petitioners' counsel criticised respondents' failure to file proper opposing affidavits and asked that the hearing of the matter be postponed until such affidavits were before the Court. Respondents' counsel, on the other hand, argued, that the procedure adopted by them was a perfectly competent one and one that had been sanctioned by both our Courts and the English Courts. They asked that the case be allowed to proceed and that the Court hear the applications for the dismissal of the petition as foreshadowed

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in the notices of 20th May. At that stage, and for reasons which were set forth in a separate judgment, I directed that the matter should proceed. Thereupon Mr. Duncan, on behalf of Weston, and Mr. Schock, on A behalf of Gavelkind, made their applications for the dismissal of the petition. Between them they raised a number of what have been termed objections in limine to the petition. Argument on these objections occupied 10th and 14th June and 23rd August.

It is appropriate that I should at this point make some observations about the procedure adopted by the respondents. It is always open to B a respondent in proceedings instituted by way of petition to take the point, by way of a preliminary objection, that the petition does not make out a prima facie case for the relief claimed. An instance of such a procedure being adopted in an application similar to the present one is afforded by the case of Taylor v Welkom Theatres (Pty.) Ltd. and C Others, 1954 (3) SA 339 (O). In that case the application was made for an order for the compulsory purchase of shares in terms of sec. 111 bis, or, alternatively, for a winding up order. The respondent filed opposing affidavits and the applicant filed replying affidavits. These affidavits revealed sharp disputes of fact upon a number of material issues and it was agreed that these could only be decided after oral D evidence had been heard in terms of the Rules of Court. Under those circumstances the Court entertained, as a preliminary point, the objection that the petition failed to make out a sufficient case for the relief sought and it considered the point on the basis that regard should be had to the petition alone and that the allegations therein should be accepted as established facts. It is to be noted that in that E case the respondent had filed affidavits dealing with the merits of the application: in the present instance the respondents have not done so. In my view, they erred in not doing so. It seems to me that, generally speaking, our application procedure requires a respondent, who wishes to oppose an application on the merits, to place his case on the merits F before the Court by way of affidavit within the normal time limits and in accordance with the normal procedures prescribed by the Rules of Court. Having done so, it is also open to him to take the preliminary point that (in this case) the petition fails to disclose a cause of action and this will often be a convenient procedure where material disputes of fact have arisen which cannot be resolved without recourse G to the hearing of oral evidence. On the other hand, I do not think that normally it is proper for such a respondent not to file opposing affidavits but merely to take the preliminary point. I say 'normally' because situations may arise where this procedure is unexceptionable. For example, a respondent, who is suddenly and without much notice H confronted with a complex application and who would normally be entitled to a substantial postponement to enable him to frame opposing affidavits, might well be permitted there and then to take such a preliminary point. Generally speaking, however, where a respondent has had adequate time to prepare his affidavits, he should not omit to prepare and file his opposing affidavits and merely take the preliminary objection. The reason for this is fairly obvious. If his objection fails, then the Court is faced with two unsatisfactory alternatives. The first is to hear the case without giving the respondent an opportunity to file opposing affidavits: this the Court

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would be most reluctant to do. The second is to grant a postponement to enable the respondent to prepare and file his affidavits. This gives rise to an undue protraction of the proceedings, which cannot always be compensated for by an appropriate order as to costs and results in a A piecemeal handling of the matter which is contrary to the very concept of the application procedure. In this connection it is interesting to note that Rule 6 (5) (d) of the Uniform Rules of Court appears to contemplate a respondent in motion proceedings, who wishes to oppose the application, giving notice of his intention to do so and then delivering B his answering affidavits within 14 days. It is only where he intends to raise a question of law only that he is directed within the same time limit to deliver a notice of this intention setting forth the question of law. Respondents' counsel are probably correct in submitting that this sub-rule does not apply to applications made by way of petition but I think that the Rule reflects the general practice C relating to the application procedure. In so far as it deals with this point, the case of Randfontein Extension Ltd v South Randfontein Mines Ltd., 1936 W.L.D. 1 at p. 4, is, I think, in conformity with these views.

In my opinion, the circumstances of the present case reveal no ground D for departing from the normal procedure. Although the respondents were initially brought to Court on rather short notice, they were given the ample period of more than five weeks within which to file their opposing affidavits and this period was extended by approximately another two weeks by arrangement between the parties. Their action in merely filing preliminary objections just before the termination of this period not E only smacks of delaying tactics but carries with it all the inherent disadvantages to which I have referred above.

At various stages the record in this matter has been considerably lengthened by a steady accretion of affidavits. On 3rd June an affidavit deposed by the petitioner Jaffee was filed. In it the deponent indicates that the petitioners intend to oppose the application for a further F extension of time which, according to the respondents' notices of 20th May, would be made in the event of the objections in limine not being upheld, and proceeds to state their grounds of opposition. The affidavit alleges, inter alia, that the conduct of the respondents - and more particularly their failure to file their opposing affidavits - is calculated to delay the final adjudication of the matter and that the G delay is being utilised to put 'other pressures' on the petitioners. The affidavit then proceeds to detail at...