Eayrs NO obo The Daku Trust v Strydom NO and Others (3704/11) [2012] ZAECPEHC 4 (31 January 2012)

Eayrs NO obo The Daku Trust v Strydom NO and Others (3704/11) [2012] ZAECPEHC 4 (31 January 2012)

The court found that First and Second Respondents failed to comply with the Articles of Association in the purported sale of shares to Third Respondent. The Articles require a written notice and offer to other shareholders, which was not properly done. The Franchise Agreement's pre-emptive rights do not override the...

Source-derived case information.

Citation
[2012] ZAECPEHC 4
Parties
Applicant: Michael Bradley Eayrs N.O. obo The Daku Trust; Respondent: Stephanus Johannes Strydom N.O.; Respondent: Dean Alan Holdstock N.O.; Respondent: Adele Kathleen Holdstock N.O.; Respondent: Barry Neil Carter N.O.; Respondent: Linda Carter N.O.; Respondent: Pick 'n Pay Retailers (Pty) Ltd
Court
Eastern Cape High Court, Port Elizabeth
Jurisdiction
South Africa
Judgment Date
31 January 2012
Case Number
3704/11
Procedural Posture
Urgent Application / Interim Interdict Application Heard and Judgment Delivered
Outcome
Application granted; interim interdict confirmed.
Judges
Mageza
Legal Topics
Pre Emptive Rights, Articles of Association, Franchise Agreement, Interim Interdict, Share Transfer, Shareholder Disputes
Commercial and Corporate Civil Procedure Pre Emptive Rights Articles of Association Franchise Agreement Interim Interdict Share Transfer Shareholder Disputes

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Summary, issues, holding and outcome

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Parties

Michael Bradley Eayrs N.O. obo The Daku Trust

Applicant

Stephanus Johannes Strydom N.O.

Respondent

Dean Alan Holdstock N.O.

Respondent

Adele Kathleen Holdstock N.O.

Respondent

Barry Neil Carter N.O.

Respondent

Linda Carter N.O.

Respondent

Pick 'n Pay Retailers (Pty) Ltd

Respondent

Procedural Posture

Urgent Application / Interim Interdict Application Heard and Judgment Delivered

Legal Issues

  1. 1 Whether First and Second Respondents complied with the Articles of Association regarding the sale of shares.
  2. 2 Whether the pre-emptive rights in the Franchise Agreement override those in the Articles of Association.
  3. 3 Whether Applicant waived or failed to exercise its rights to acquire the shares.

Ratio Decidendi

The court found that First and Second Respondents failed to comply with the Articles of Association in the purported sale of shares to Third Respondent. The Articles require a written notice and offer to other shareholders, which was not properly done. The Franchise Agreement's pre-emptive rights do not override the contractual rights between shareholders as set out in the Articles. Applicant did not waive its rights and was not afforded a genuine opportunity to purchase the shares. The urgency was justified due to the risk of irreparable harm to Applicant's commercial interests. Accordingly, the court granted an interim interdict restraining the transfer of shares until proper compliance...

Court Disposition

Application granted; interim interdict confirmed.

Orders

  • First and Second Respondents are interdicted from transferring their shares in Carter Trading (Pty) Ltd to Third Respondent or any other third party until they have complied with the procedures set out in the Articles of Association for the sale of shares.
  • First, Second and Third Respondents are ordered to pay the costs of the application on an attorney and client scale, jointly and severally, the one paying the other to be absolved.