Stewart v Schwab and Others

• Judge: De Wet J
• Judgment Date: 19 October 1956
• Citation: 1956 (4) SA 791 (T)
• Hearing Date: 16 October 1956
• Court: Transvaal Provincial Division

De Wet, J.:

The applicant alleges that the third respondent company known as Westonaria Foundry (Pty.) Ltd., was formed and registered in July 1947 by himself and the first and second respondents for the F purpose of conducting a foundry business. He alleges that in February 1948 a written agreement was entered into which was signed only by himself and the first respondent, but it is alleged that the second respondent agreed to the terms of this agreement, which is stated to be an agreement of 'partnership'.

The material terms of this agreement are that the sole shareholders of G the Company shall be the applicant and the first and second respondents, who shall hold respectively 875, 875 and 3,050 shares of a nominal value of £1; that the applicant and the first and second respondents shall be the directors of the Company and be entitled to draw a minimum amount of £30 per month each; that notwithstanding the H disparity in shareholding each director shall have 'equal power'; that the partnership shall continue for an indefinite time subject to the right of each partner to withdraw on three months' notice, whereupon the remaining partners shall have the right to purchase his shareholding in the Company, and the partner withdrawing would be paid out in a specified manner. It is provided that the applicant and the first respondent shall devote their whole time and attention to the conduct of the Company's business.

De Wet J

It is alleged that the applicant and the first respondent had no means and that the necessary working capital for the Company was provided by the second respondent, who lent substantial sums of money to the Company in addition to subscribing for his shareholding.

A The business has been carried on with considerable success; the applicant mainly concerned himself with supervision and carrying out the practical side of manufacture, whereas the first respondent was mainly concerned with the business side. In terms of the alleged agreement the second respondent took no active part in the conduct of the business.

B At a directors' meeting on 13 June 1956, without any previous warning to the applicant, a resolution was passed dismissing him from the service of the Company, and a further resolution was passed that a special meeting should be convened for the purpose of removing the applicant as a director, in terms of sec. 69 ter of the Companies Act, 46 of 1926, as amended.

C Application is now...