Knipe and Others v Kameelhoek (Pty) Ltd and Another

• Jurisdiction: South Africa
• Citation: 2014 (1) SA 52 (FB)

Knipe and Others v Kameelhoek (Pty) Ltd and Another
2014 (1) SA 52 (FB)

2014 (1) SA p52

Citation	2014 (1) SA 52 (FB)
Case No	1936/2011
Court	Free State High Court, Bloemfontein
Judge	Daffue J
Heard	May 23, 2013
Judgment	June 27, 2013
Counsel	HF Geyer for the applicants.; JW Steyn for the respondents.

Flynote : Sleutelwoorde E

F Company — Oppressive conduct — Relief — Ambit of remedy — Not appropriate in cases of irretrievable breakdown of trust between members of domestic company — Companies Act 71 of 2008, s 163.

Company — Winding-up — Grounds — Just and equitable to do so — Solvent company — Deadlock in administration of domestic company (quasi-partnership) — Total breakdown of trust between members (family feud) — Final G winding-up order appropriate — Companies Act 71 of 2008, s 81(1)(d).

Headnote : Kopnota

The court was called upon to decide whether to finally wind up two farm-owning companies. The application was originally brought by Mrs Knipe — then the companies' sole director — and daughter Carol. Three of Carol's four H siblings (the trio) were opposed to the granting of final relief and filed answering affidavits to this effect. [*] All five children were shareholders in the companies, but the division of shareholding was in dispute. Mrs Knipe was eventually removed as director and replaced by the trio. [†] The present litigation was the result of a family feud over the farms — and by extension over control of the companies — which ranged Mrs Knipe and Carol against the trio. It appeared from the evidence that the trio had made open tenders I on behalf of the companies for the purchase of Carol's shares.

2014 (1) SA p53

Among the issues to be decided were whether the companies, which were A solvent, should nevertheless be wound up under the just-and-equitable provision of s 81(1)(d) of the Companies Act 71 of 2008, or whether the option of relief under the oppressive-conduct provisions in s 163 of the Act would be preferable.

Held: The following legal principles were relevant: A solvent company would be wound up on just-and-equitable grounds under s 81(1)(d) for the same B reasons as an insolvent company under s 344(h) of the 1973 Act. These reasons included deadlock in the management of the company's affairs, and oppression, both of which were relevant here. The present companies, being domestic companies (or quasi-partnerships), would be liquidated if there were a complete breakdown of mutual trust and confidence between members. Although an applicant relying on the just-and-equitable ground C for the winding-up of a company had to come to court with clean hands, this requirement had to be weighed against the rights of minority members alleging oppressive or prejudicial conduct by the majority. The court's powers of protection under s 163 were wide, but any alleged unfairness to minority members would vanish if they were offered a fair price for their shares. An otherwise acceptable offer could be refused if it were not D genuine.

What the court ultimately had to decide was whether Carol had proved that it was just and equitable that the companies be finally wound up under s 81(1)(d) of the Act. The following factors, inter alia, showed that she had: she was not, as applicant, the sole cause of the breakdown in trust between E the members of the companies; the breakdown was clearly irretrievable; it was impossible to make a finding in respect of a fair price for her shares; and the offer made for them by the trio was not genuine. Application granted. (Paragraphs [23] – [24], [27] – [28], [31] – [33], [41] – [42] and [46] – [49] at 61D – 62B, 62I – 63E, 63I/J – 64I, 67A/B – I and 68H – 70B.)

Cases Considered

Annotations F

Case law

Southern Africa

APCO Africa (Pty) Ltd and Another v APCO Worldwide Inc 2008 (5) SA 615 (SCA) ([2008] 4 All SA 1): applied

Bayly and Others v Knowles 2010 (4) SA 548 (SCA): applied G

Budge and Others NNO v Midnight Storm Investments 256 (Pty) Ltd and Another 2012 (2) SA 28 (GSJ): applied

Count Gotthard SA Pilati v Witfontein Game Farm (Pty) Ltd and Others [2013] 2 All SA 190 (GNP): dictum in para [19] applied

Erasmus v Pentamed Investments (Pty) Ltd 1982 (1) SA 178 (W): dictum at 181A – 185C applied H

Garden Province Investment and Others v Aleph (Pty) Ltd and Others 1979 (2) SA 525 (D): dictum at 531C – H applied

Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 943 (A): dictum at 979B – E applied

Kudumane Investment Holding Ltd v Northern Cape Manganese Company (Pty) Ltd and Others [2012] 4 All SA 203 (GSJ): referred to I

Lawrence v Lawrich Motors (Pty) Ltd 1948 (2) SA 1029 (W): dictum at 1032 applied

Louw and Others v Nel 2011 (2) SA 172 (SCA) ([2010] ZASCA 161): applied

Moosa NO v Mavjee Bhawan (Pty) Ltd and Another 1967 (3) SA 131 (T): dictum at 136H – 138H applied J

2014 (1) SA p54

Paarwater v South Sahara Investments (Pty) Ltd [2005] 4 All SA 185 (SCA): dictum in para [3] applied A

Peel and Others v Hamon J&C Engineering (Pty) Ltd and Others 2013 (2) SA 331 (GSJ) ([2013] 1 All SA 601): referred to

Pienaar v Thusano Foundation and Another 1992 (2) SA 552 (B): dictum at 592D applied

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A): dictum at 634E – 635C applied B

Rand Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd 1985 (2) SA 345 (W): dictum at 350C – H applied

Rentekor (Pty) Ltd and Others v Rheeder and Berman NNO and Others 1988 (4) SA 469 (T): dictum at 500E – G applied

Sammel and Others v President Brand Gold Mining Co Ltd 1969 (3) SA 629 (A): dictum at 678G – H applied C

Trust Bank van Afrika Bpk v Western Bank Bpk en Andere NNO 1978 (4) SA 281 (A): applied.

England

Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (HL) ([1972] 2 All ER 492): applied D

Re Data Online Transactions (UK) Ltd [2003] BCC 510: compared

Re Yenidje Tobacco Co Ltd [1916] 2 Ch 426 (CA): applied

Vujnovich and Another v Vujnovich [1990] BCLC 227 (PC): applied.

Statutes Considered

Statutes E

The Companies Act 71 of 2008, ss 81(1)(d) and 163: see Juta's Statutes of South Africa 2012/13 vol 2 at 1-25 and 1-358.

Case Information

HF Geyer for the applicants.

JW Steyn for the respondents.

F Return date of a rule nisi issued in two applications in which companies were placed under provisional liquidation.

Judgment

Daffue J:

Introduction G

[1] This is the extended return date of rules nisi issued in two applications in terms whereof the companies, Kameelhoek (Pty) Ltd and Schaapplaats 978 (Pty) Ltd, were placed under provisional liquidation in the hands of the master by the full bench of the Free State High Court.

Background to the litigation in this court H

[2] Moira Elizabeth Knipe (Mrs Knipe) and others, including her daughter Carol Jessie Kathleen Lotz (Carol), launched two separate applications under Nos 1936/2011 and 1937/2011 for provisional liquidation of the companies Kameelhoek (Pty) Ltd and Schaapplaats 978 I (Pty) Ltd, respectively, which were by agreement simultaneously argued before Jordaan J who dismissed both applications with costs. However, leave to appeal was granted to the full bench.

[3] On 23 July 2012 both appeals were heard by the full bench and in terms of its judgment of 30 August 2012 the appeals succeeded with J costs. The orders of the court a quo were set aside and provisional

2014 (1) SA p55

Daffue J

winding-up orders were granted against both companies with return date A 11 October 2012. When the full bench heard the appeals the application papers in each application totalled in number just over 700 pages. The paper war continued hereafter and the papers increased in each application to approximately 2000 pages. In this process the rules nisi were extended several times. B

[4] Pursuant to the granting of winding-up orders Jacqueline Moira Deborah Vigne (Jackie), a daughter of Mrs Knipe, brought an application seeking leave to be joined in the applications and to file answering affidavits in opposition to the granting of final relief. These applications were strictly speaking not necessary as she as a shareholder in both C companies is an interested party and all interested parties were called upon by the full bench to show cause, if any, why final orders of winding-up should not be granted. She therefore had a right to advance reasons, which she made use of. Her affidavit consists of 66 pages and the annexures thereto 93 pages. Her brother Johnny, supported by the other brother, André, also advanced reasons why final orders of winding-up D should not be granted. His affidavit consists of 61 pages and the annexures thereto about 460 pages.

[5] Mrs Knipe replied to the affidavits of Johnny and Jackie in an 80-page affidavit and the annexures thereto are in excess of 80 pages. E

[6] Robert Petrus Jansen (Pieter) brought an application to intervene in the proceedings. He is the fifth child of Mrs Knipe, the other four having been referred to above, being Carol, Jackie, André and Johnny. The companies opposed this joinder application and both their attorney and André filed affidavits, relying on several further annexures. F

[7] Further affidavits were filed by various parties and accepted by agreement. I shall later herein refer thereto. The papers are voluminous and, as mentioned, contain various sets of affidavits and annexures. Different issues arise, some vital, but the majority merely peripheral. As will be shown later, these proceedings, formidable as they are, are but a G skirmish in a full-blown campaign — a family war — being fought on several fronts. The dramatis personae are Mrs Knipe, an 81-year-old widow and mother of the abovementioned five children, and the five children. Mrs Knipe and Carol are in the same camp, while Jackie, André and Johnny are on the other side. Pieter is...