Khoza v Radebe and Others (A113/2022) [2023] ZAWCHC 55 (15 March 2023)

Khoza v Radebe and Others (A113/2022) [2023] ZAWCHC 55 (15 March 2023)

The court held that the first respondent validly exercised his right of pre-emption by notifying his intention to purchase the shares within the one-month period stipulated in Article 23 of the Articles of Association. The inability to agree on a price triggered Article 24, which provides for an auditor's valuation but does not prescribe a specific time frame. The court found that the time limit in Article 23 does not extend to Article 24, and that a reasonable period is implied for the valuation process. The court rejected the appellant's argument that the right of pre-emption lapsed due to the absence of agreement within one month, holding that the Articles of Association do not support...

Citation
[2023] ZAWCHC 55
Parties
Appellant: Dumisani Chilton Khoza; Respondent: Marko Radebe; Respondent: Moongate 129 (Pty) Ltd; Respondent: Mutodo Properties (Pty) Ltd
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
15 March 2023
Case Number
A113/2022
Procedural Posture
Civil Appeal / Appeal Against Judgment and Order of the Court a Quo
Outcome
Appeal dismissed with costs. The order of the court a quo is amended to require the second respondent to appoint an auditor to determine the true and fair value of the shares within a reasonable period.
Judges
Nziweni, Saldanha, Henney
Legal Topics
Right of Pre Emption, Interpretation of Articles of Association, Shareholder Disputes, Valuation of Shares
Commercial and Corporate Right of Pre Emption Interpretation of Articles of Association Shareholder Disputes Valuation of Shares

Case Brief

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Parties

Dumisani Chilton Khoza

Appellant

Marko Radebe

Respondent

Moongate 129 (Pty) Ltd

Respondent

Mutodo Properties (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal Against Judgment and Order of the Court a Quo

Legal Issues

  1. 1 Whether the right of first refusal under the Articles of Association was validly exercised by the first respondent within the prescribed period.
  2. 2 Whether the first respondent's pre-emptive right had lapsed due to failure to exercise it timeously or validly.
  3. 3 Whether the valuation mechanism in Article 24 of the Articles of Association is subject to the one-month time limit in Article 23.

Ratio Decidendi

The court held that the first respondent validly exercised his right of pre-emption by notifying his intention to purchase the shares within the one-month period stipulated in Article 23 of the Articles of Association. The inability to agree on a price triggered Article 24, which provides for an auditor's valuation but does not prescribe a specific time frame. The court found that the time limit in Article 23 does not extend to Article 24, and that a reasonable period is implied for the valuation process. The court rejected the appellant's argument that the right of pre-emption lapsed due to the absence of agreement within one month, holding that the Articles of Association do not support...

Court Disposition

Appeal dismissed with costs. The order of the court a quo is amended to require the second respondent to appoint an auditor to determine the true and fair value of the shares within a reasonable period.

Orders

  • The appeal is dismissed with costs.
  • The order of the court a quo is amended by deletion of paragraphs 43.1 - 43.8 and replaced with the directive that the second respondent shall appoint an auditor to determine the true and fair value of the shares as contemplated in paragraph 24 of the Articles of Association.