Godfrey and Others v Jaftha and Another (EL 80/2008, ECD 180/2008) [2008] ZAECHC 78 (12 June 2008)

Godfrey and Others v Jaftha and Another (EL 80/2008, ECD 180/2008) [2008] ZAECHC 78 (12 June 2008)

The court held that it could not grant an order for the cessation of the first respondent's membership in the close corporation under section 36(1)(d) of the Close Corporation Act without also making the necessary financial adjustments as required by section 36(2). The applicants failed to provide sufficient evidence for the valuation of the first respondent's member interest, as no audit or proper assessment of the corporation's assets and goodwill had been conducted. Granting the relief sought would be unfair and inequitable to the first respondent, as she would be left to recover the value of her interest as an outsider. The application was therefore dismissed with costs.

Citation
[2008] ZAECHC 78
Parties
Applicant: Marcelle Anne Godfrey; Applicant: Grant Godfrey; Applicant: Clint Ernest du Plessis; Respondent: Dr Zukiswa Jaftha; Respondent: Ilifu Trading 330 CC
Court
High Courts - Eastern Cape
Jurisdiction
South Africa
Judgment Date
12 June 2008
Case Number
EL 80/2008, ECD 180/2008
Procedural Posture
Urgent Application / Application for Cessation of Membership and Compensation Under Section 36 of the Close Corporation Act
Outcome
Application dismissed with costs.
Judges
Revelas
Legal Topics
Close Corporation Membership, Just and Equitable Removal, Valuation of Member Interest
Commercial and Corporate Close Corporation Membership Just and Equitable Removal Valuation of Member Interest

Case Brief

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Parties

Marcelle Anne Godfrey

Applicant

Grant Godfrey

Applicant

Clint Ernest du Plessis

Applicant

Dr Zukiswa Jaftha

Respondent

Ilifu Trading 330 CC

Respondent

Procedural Posture

Urgent Application / Application for Cessation of Membership and Compensation Under Section 36 of the Close Corporation Act

Legal Issues

  1. 1 Whether the first respondent should cease to be a member of the close corporation under section 36(1)(d) of the Close Corporation Act.
  2. 2 Whether the court can order cessation of membership without determining the financial consequences under section 36(2) of the Act.
  3. 3 Whether sufficient evidence exists to value the first respondent's member interest for compensation.

Ratio Decidendi

The court held that it could not grant an order for the cessation of the first respondent's membership in the close corporation under section 36(1)(d) of the Close Corporation Act without also making the necessary financial adjustments as required by section 36(2). The applicants failed to provide sufficient evidence for the valuation of the first respondent's member interest, as no audit or proper assessment of the corporation's assets and goodwill had been conducted. Granting the relief sought would be unfair and inequitable to the first respondent, as she would be left to recover the value of her interest as an outsider. The application was therefore dismissed with costs.

Court Disposition

Application dismissed with costs.

Orders

  • The application is dismissed with costs.