Goss v E C Goss & Co (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Shearer J
• Judgment Date: 09 December 1969
• Citation: 1970 (1) SA 602 (D)
• Hearing Date: 24 October 1969
• Court: Durban and Coast Local Division

B Shearer, J.:

The applicant in this matter, a widow, was until the year 1964 the sole beneficial shareholder in the first respondent, a company which carries on business at Durban as wholesale merchants and paper and stationery specialists. The first respondent had then an authorised C capital of R10,000 divided into 10,000 shares of a nominal value of R1 each. Of these 6,149 had been issued and the applicant was the registered owner of all but one of them.

On 4th December, 1964 the applicant entered into two written agreements. In terms of one of these, the second respondent, a director of companies, agreed to purchase from her 4,611 of her shares for the sum D of R800. This represented 75 per cent of her total shareholding. The agreement also provided that, for so long as the applicant remained a shareholder in the first respondent, she would be entitled to 25 per cent in number of any further shares that might be issued without any obligation to pay for such further shares. The second respondent undertook to introduce into the business of the company capital to a E minimum amount of R10,000 as and when such capital might be required for the proper conduct of the business. The written agreement contained the following clause:

'7.

It is recorded that the sale of the shares herein is subject to and conditional upon a contract of service being entered into by and between E. C. Goss (Pty.) Ltd. and Beatrice Made Goss for a F period of four years eight months commencing from the 1st day of February, 1965 at a remuneration of two hundred rand (R200) per month.'

The other written agreement was this service contract. The parties to it were the applicant and the first respondent. In terms thereof the first respondent agreed to pay to the applicant a remuneration of R200 per G month for a period of four years and eight months in return for her attendance at the offices of the first respondent on three mornings a week, save during defined periods of paid leave. That agreement which the second respondent purported to sign on behalf of the first respondent further provided as follows (the first party being the first respondent and the second party being the applicant):

'6.

The first party shall be entitled at any time during the H currency of this agreement to determine this agreement in which event the first party shall pay to the second party the aggregate amount which otherwise would be payable to her from the date of determination to the date of expiry of this agreement.'

This judgment is concerned with a preliminary point taken on behalf of the respondents by Mr. Milne who has appeared for them. So that the nature of the preliminary point may be understood it is necessary to set out the relief which the applicant seeks. It is:

Shearer J

'1.

That it be and it is hereby declared that the agreements entered into and signed by the applicant and the second respondent (annexures 'B' and 'C') are null and void and of no effect as transgressing sec. 86 bis (2) of the Companies Act.

2.

That the transfer of 4,711 shares in the first respondent to the A third respondent be and is hereby set aside.

3.

That the first respondent amend its share register to show the applicant as the beneficial owner of the shares referred to in para. 2, supra.

4.

That the applicant pay to the first respondent the sum of R9,000 and to the second respondent the sum of R800.

Alternatively:

5.

That the agreement entered into between the applicant and the first respondent allegedly represented by the second respondent on 4th B December, 1964, be declared to be of no effect and consequent thereon the agreement entered into between the applicant and the second respondent on 4th December, 1964, be declared to be voidable and in view of the applicant's renunciation thereof to be void.

6.

That the third respondent restore to the applicant 4,711 shares in the first respondent transferred to the third respondent by the applicant and approved by the directors of the first respondent on 2nd November, 1964.

7.

That the first respondent amend its share register to show the C applicant as the beneficial owner of the shares referred to in para. 2 above.

8.

That the applicant pay to the first respondent the sum of R9,000 and to the second respondent the sum of R800.

And in either event:

9.

That the first and second respondents pay the costs of this application jointly and severally, the one paying the other to be absolved, and in the event of any respondent opposing the application D such respondent shall be liable for the costs occasioned by such opposition or if more than one respondent shall oppose the granting of this order such respondents shall be jointly and severally liable for the costs occasioned by such opposition, the one paying the other or others to be absolved.'

Mr. Milne has pointed in argument to the fact that para. 1 of the order prayed is concerned with a declaratory order and paras. 2, 3 and 4 with E the relief which is claimed to be consequentional upon such declaration. Likewise a declaratory order is sought in para. 5 and paras. 6, 7 and 8 are concerned with the relief consequent upon it. He contends that the applicant's claim for consequential relief is prescribed for reasons which I shall set out later in this judgment and that since the claim F for consequential relief is (as he contends) prescribed the Court will, because the declaratory order will thus have no practical consequences, exercise its discretion against making any such order.

There are certain disputes of fact which appear from the papers and there is a possibility that further affidavits of the...