Wackrill v Sandton International Removals (Pty) Ltd and Others
Jurisdiction | South Africa |
Judge | Margo J |
Judgment Date | 30 May 1983 |
Citation | 1984 (1) SA 282 (W) |
Court | Witwatersrand Local Division |
Margo J:
This is the return day of a provisional winding-up order made against the respondent company under the provisions E of s 344 (h) of the Companies Act 61 of 1973 on the "just and equitable ground".
The applicant is a member and director of the respondent company, but not a creditor. The confirmation of the provisional winding-up order is opposed by the respondent. It F is also opposed by its principal shareholder, Wilton Distribution Services (Pty) Ltd ("Wilton"), and by its main creditor, Allied Acceptances (Pty) Ltd ("Allied Acceptances"), each of which was given leave to intervene at an earlier hearing before Franklin J.
The two main allegations upon which the applicant relies are, firstly, that the respondent is insolvent and is trading at a G loss and, secondly, that there has been an irretrievable breakdown in the relationship between the applicant and the other members and directors of the respondent, who have unlawfully excluded him from meetings and decisions of the board of directors, and thereby from his say in the management H of the respondent company, despite a contract between the members whereby they undertook, inter se, to maintain one another in office as directors.
The application was launched on 19 November 1981. It was heard in May 1982 and was opposed by the respondent. On 9 August 1982, VERMOOTEN J granted a provisional winding-up order. The return day was thereafter extended to 3 November 1982, when Franklin J granted leave to Wilton and Allied Acceptances to intervene, and thereafter reserved judgment on the contested application for confir-
Margo J
mation of the rule. Franklin J's untimely death occurred before his decision could be handed down. The opposed application for confirmation of the rule was thereafter argued before me on 4, 5 and 6 May.
Among the legal questions which have arisen in this case is that of the degree of proof of the relevant facts required for A confirmation of a provisional winding-up order. Counsel advised me that they had found no authority on this subject other than the case of Provincial Building Society of South Africa v De Bois 1966 (3) SA 76 (W), which was concerned with a provisional sequestration order.
Although the practice is well established of granting a B provisional winding-up order and a rule nisi calling on all persons concerned to show cause why a final order should not be granted, such procedure is not laid down in the Companies Act. See s 347 (1), which reads as follows:
"The Court may grant or dismiss any application under s 346 or adjourn the hearing thereof conditionally or unconditionally or C make any interim order or any other order it may deem just..."
The practice of granting a provisional order and a rule nisi was developed by the Courts for the reasons reflected in cases such as Rintoul v Bill Whittaker Syndicate 1910 TH 24 at 24 - 25 and Ryss v Precision Engineering Co Ltd 1923 CPD 408 at 408 - 9. In Ebrahim (Pty) Ltd v Pakistan Bus Services (Pty) Ltd D 1964 (4) SA 146 (N) MILLER J, as he then was, said at 148 in fine - 149:
"Taking all these circumstances into consideration, I cannot find sufficient justification for exercising my discretion against the applicant who, as I have said, prima facie has a right to the provisional order which it seeks and who has shown that the requirements laid down by the Companies Act for the grant of such an order have been met. I need hardly add that E this is the first stage of these proceedings. What I have said could clearly not be decisive of the situation which might arise on the return day of the rule which I propose to issue, for further facts may be placed before the Court which might conceivably induce the Court which then hears the matter to take a different view. At this stage I am satisfied that a case for a provisional order has been made out."
When that case was decided, the Companies Act 46 of 1926 was F still in force. Secton 117 (1) of that Act was substantially similar to s 347 (1) of the present Act.
In Prudential Shippers SA Ltd v Tempest Clothing Co (Pty) Ltd and Others 1976 (2) SA 856 (W) MCEWAN J, at 867A, came to the conclusion that under the present Act a prima facie case is all G that is necessary for the issue of a provisional winding-up order. He considered that the approach to the question of deciding an application for a provisional winding-up order on affidavits should be similar to that suggested for a provisional sequestration order by TROLLIP J in the Provincial Building Society case supra.
On the other hand, as indicated in the Pakistan Bus Services H case supra, the Legislature could not have intended that the requirements of s 347 (1) of the Companies Act would be satisfied in respect of a final winding-up order by the adduction of evidence sufficient only to prove a mere prima facie case. Ordinarily the consequences of a final winding-up order are drastic indeed, and it could not have been intended that proof of all the allegations necessary for such an order should be anything less than that required generally in civil cases. that
Margo J
is proof on a clear balance of probabilities, with the admission of viva voce evidence, where that may be necessary, to resolve material disputes on the affidavits. That also appears to be the standard of proof required for a final A sequestration order in terms of s 12 of the Insolvency Act 24 of 1936, according to which the Court must be "satisfied" that the petitioning creditor has established the elements of his case.
It follows that, whereas a prima facie case was all that was necessary for the provisional winding-up order granted by VERMOOTEN J, at this stage of the case the requirement is that B of proof upon a clear balance of probabilities.
I turn now to the facts. It is necessary to refer to certain aspects of the shareholders' contract, which was concluded on 1 November 1980. In terms thereof Wilton acquired, from E R Petersen, 50 of the 100 issued shares in the respondent for R50 000, and from the applicant one share for R1 000. That gave C Wilton 51 shares out of the total of 100. The applicant was left with 19 shares, and D K Cooper and G Benzie with 15 each. On the board of the respondent were R D Bradley and W Becker (the sole shareholders of and representing Wilton), the applicant, Cooper and Benzie.
Section C of the shareholders' contract was concluded between D the respondent, Sandton Transport (Pty) Ltd ("Sandton Transport"), which is a company controlled by the applicant, Wilton, Bradley, Becker, the applicant, Cooper, Benzie and two others. In terms of section C, the respondent and Sandton Transport undertook to confine their respective businesses to different aspects of the removals, transport and storage market E and further undertook not to compete and that each would refer to the other any enquiries or prospective business within the other's field and would co-operate fully as if they were divisions of the same company. Wilton and the other shareholders of the respondent agreed to observe the same requirements while they were shareholders of the respondent and F for two years thereafter, and Bradley and Becker, who were the shareholders of Wilton, undertook for themselves similar commitments and restraints. It is to be noted here that preamble H to the shareholders' contract records that:
"Sandton Transport and Sandton International (ie the respondent) are marketed jointly and it is the intention of all the parties hereto that this should continue in the future in a spirit of mutual co-operation and trust."
G In terms of section E of the contract, as later corrected (see at 226 of the papers), the shareholders of the respondent agreed inter se on certain conditions governing the disposal by a shareholder of his shares, and also agreed as follows:
"5. Appointment of shareholders and their nominees as directors of the company.
H Wackrill (Graham Dunbar Wackrill as his alternate), Benzie and Cooper, as well as Bradley and Becker as nominees of Wilton, shall be appointed as directors of Sandton International.
The shareholders hereby undertake in favour of one another that for so long as they are shareholders of Sandton International, they will vote in favour of the appointment of one another or one another's nominee or alternate as the case may be."
These provisions, at least in so far as the applicant is concerned, are plainly related to the special relationship between the respondent and
Margo J
the applicant's company...
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