Six- a – Property Investments (Pty) Ltd v Ferreira

• Jurisdiction: South Africa
• Judge: Vahed J, K Pillay J and Ploos van Amstel J
• Judgment Date: 28 February 2014
• Docket Number: AR 236/13
• Court: KwaZulu-Natal High Court, Pietermaritzburg
• Hearing Date: 17 February 2014
• Citation: 2014 JDR 0483 (KZP)

Vahed J:

[1]

Some years ago it was popular for certain investment advisers within the financial community to express the view that it was unwise for a professional person in private practice to tie the fortunes of his or her professional practice to the providences of his or her investments. The facts underlying this appeal are suggestive of perhaps why that might have been sound advice.

[2]

The first respondent is an attorney who, at the times material to the facts in this appeal, was in private practice. During October 1981 he entered into partnership with five other attorneys, namely Louis McEwan Halse, Robert Frederich Havemann, Johannes Jochemis Lloyd, Lester Schoeman and Thomas Ian Askew. That

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Vahed J:

partnership practised as attorneys, notaries and conveyancers, in Durban under the name Halse, Haveman and Partners and in Pinetown, initially under the name Halse Haveman and Lloyd (Incorporating CJA Ferreira) and subsequently under the name Halse, Haveman, Lloyd and Ferreira. The partners decided to invest in property and the vehicle for that investment became the appellant. The appellant's name is plainly obvious, "Six – A" representing six attorneys. The principal object of the appellant was to invest in and develop property. The appellant then acquired immovable property at 47 Kings Road in Pinetown for a purchase price of R175 000.00. It intended developing the property, which was then vacant, by the construction thereon of a block of offices.

[3]

The appellant's shareholders (the first respondent and his then partners) were unable to finance the cost of the development of the office block. To further its aims the appellant then secured the interest of Frank and Richard Verbaan, people closely associated with the construction industry through a company controlled by them, Verbaan Construction (Pty) Ltd. The Verbaan brothers acquired one half of the shareholding in the appellant. It was envisaged at the time that the appellant would be converted into a share block company but this was never done. The first respondent and his co-partners however continued to hold, in equal shares, the remaining fifty percent of the shareholding in the appellant.

[4]

Finance was obtained from a financial institution against the security of a first mortgage bond over the appellant's property and in due course an office block, which became known as Media House, was constructed on the appellant's property. Upon completion, the Verbaan brothers, through Verbaan Construction (Pty) Ltd,

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Vahed J:

took occupation of the first floor of the office block and the partnership practice conducted by the first respondent and his then partners took occupation of the ground floor of the office block. This was with effect from 1st November 1985 and lease agreements between the two occupants and the appellant were concluded with regard to their respective occupation of the building. The occupants each paid rentals to the appellant.

[5]

On 28 February 1986 the professional partnership terminated when Halse resigned as a partner. On 1 March 1986 a new partnership commenced and this time the partners were the first respondent, Havemann, Lloyd, Schoeman, Askew and two new additions, namely Paul Stephanus Robbertse and David Grindlay. This new partnership assumed the rights and obligations of the previous partnership under the agreement of lease relating to the occupation of the ground floor premises by the practice. This arrangement endured until 28 February 1988.

[6]

This new partnership dissolved on 29 February 1988 when the first respondent resigned from the partnership. On 1 March 1988 the first respondent then proceeded to take occupation of a portion of the ground floor of the office block, that portion being described as Suite 3 Media House, together with two undercover and two open parking bays and part of a storeroom situated on the premises. He contended he had a right to do so in relation to his one sixth shareholding in the appellant. No agreement of lease was concluded between the first respondent and the appellant and neither was any rental or other occupational interest paid in respect of such occupation.

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Vahed J:

[7]

By 1989 Askew ceased to be a shareholder in the appellant, his shares being transferred to Halse, Haveman and Lloyd. Sometime thereafter Schoeman disposed of his shares in the appellant to one P. S. Smit who in turn disposed of those shares to the Booysen Family Trust.

[8]

Disputes in and amongst the shareholders arose and there were various attempts to resolve those disputes. They centered essentially around how the expenses relating to the office block were to be recovered and discharged and how and in what manner an income was to be derived from the occupation of the ground floor of the premises.

[9]

Those disputes culminated in a meeting of the shareholders of the appellant held on 30 March 2004. I set out below the minutes of that meeting in their entirety. I indicate that the minute was prepared and typed in advance of the meeting and the italicized portion of the minute reproduced below represents manuscript insertions and additions made and agreed to at the meeting.

'MINUTES OF A MEETING OF THE SHAREHOLDERS OF SIX-A PROPERTY INVESTMENTS (PTY) LIMITED HELD IN THE KWAZULU-NATAL LAW SOCIETY LIBRARY BOARD ROOM ON 30TH MARCH 2004

PRESENT:	Johannes Booysen (in his personal capacity)
	Johannes Booysen N.O. (in his capacity as the authorized representative of the Booysen Family Trust)
	L M Halse
	R Haveman
	J J Lloyd
	(hereinafter collectively referred to as the Group "A" shareholders)
	and
	C J A Ferreira

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Vahed J:

RESOLVED:

1.

That C J A Ferreira continue to occupy the portion of the premises on the ground floor of Media House currently occupied by him without paying any consideration therefor other than the monthly expenditure referred to in 3 below without deduction or demand as determined by the Company's Auditors from time to time.

2.

That the Group A shareholders are entitled to occupy the balance of the ground floor of Media House on the same basis as C J A Ferreira as set forth in resolution 1 above mutatis mutandis

3.

That the shareholders of the company pay the expenses of the company according to their respective shareholdings.

4.

That the shareholders are entitled to sub-let their respective portions of the ground floor of Media House, should they wish to do so, to any other person or entity and the company hereby consents to such sub-letting.

5.

That with immediate effect all business of the company will be dealt with by the company's auditors, Leibenberg Fraser, who shall attend to all secretarial work on behalf of the company in conjunction with the Smart Accounts.

6.

That the...