McMillan NO v Pott and Others (11125/08) [2009] ZAWCHC 96; 2011 (1) SA 511 (WCC) (18 June 2009)

McMillan NO v Pott and Others (11125/08) [2009] ZAWCHC 96; 2011 (1) SA 511 (WCC) (18 June 2009)

The court found that the exclusion of McMillan from management and employment in Tygerberg Minolta (Pty) Ltd was directly relevant to the Trust's position as shareholder, given the underlying joint venture understanding. The majority shareholders failed, within a reasonable time, to offer the Trust an opportunity to withdraw its capital after McMillan's exclusion, which constituted unfairly prejudicial conduct under section 252(1) of the Companies Act. The court held that even if McMillan was at fault for his exclusion, the equity-based nature of the remedy did not preclude relief. The articles of association did not provide an adequate or practical mechanism for withdrawal, as the...

Citation
[2009] ZAWCHC 96
Parties
Applicant: Brian Mervin McMillan N.O.; Respondent: Simon Leslie Pott; Respondent: Garry Owen; Respondent: Kevin Errol Hosking; Respondent: Stephen Williams; Respondent: Unipalm Investment Holdings (Pty) Ltd; Respondent: Corporate Business Automation (Pty) Ltd; Respondent: Tygerberg Minolta (Pty) Ltd
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
18 June 2009
Case Number
11125/08
Procedural Posture
Civil Application / Final Judgment After Opposed Motion
Outcome
Application granted. The sixth respondent is ordered to purchase the applicant's shares in the seventh respondent at fair value, with directions for valuation and ancillary relief.
Judges
A G Binns-Ward
Legal Topics
Unfair Prejudice Remedy, Section 252 Companies Act, Shareholder Buy Out, Quasi Partnership, Legitimate Expectation, Minority Shareholder Protection
Commercial and Corporate Civil Procedure Unfair Prejudice Remedy Section 252 Companies Act Shareholder Buy Out Quasi Partnership Legitimate Expectation Minority Shareholder Protection

Case Brief

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Parties

Brian Mervin McMillan N.O.

Applicant

Simon Leslie Pott

Respondent

Garry Owen

Respondent

Kevin Errol Hosking

Respondent

Stephen Williams

Respondent

Unipalm Investment Holdings (Pty) Ltd

Respondent

Corporate Business Automation (Pty) Ltd

Respondent

Tygerberg Minolta (Pty) Ltd

Respondent

Procedural Posture

Civil Application / Final Judgment After Opposed Motion

Legal Issues

  1. 1 Whether the exclusion of the applicant from management of the company was unfairly prejudicial, unjust or inequitable to the Trust as a shareholder.
  2. 2 Whether the applicant is entitled to relief under section 252 of the Companies Act 61 of 1973.
  3. 3 Whether the conduct of the company and its majority shareholders justified a buy-out order of the Trust's shares.

Ratio Decidendi

The court found that the exclusion of McMillan from management and employment in Tygerberg Minolta (Pty) Ltd was directly relevant to the Trust's position as shareholder, given the underlying joint venture understanding. The majority shareholders failed, within a reasonable time, to offer the Trust an opportunity to withdraw its capital after McMillan's exclusion, which constituted unfairly prejudicial conduct under section 252(1) of the Companies Act. The court held that even if McMillan was at fault for his exclusion, the equity-based nature of the remedy did not preclude relief. The articles of association did not provide an adequate or practical mechanism for withdrawal, as the...

Court Disposition

Application granted. The sixth respondent is ordered to purchase the applicant's shares in the seventh respondent at fair value, with directions for valuation and ancillary relief.

Orders

  • Corporate Business Automation (Pty) Ltd is directed to purchase the McMillan Family Trust's thirty percent shareholding in Tygerberg Minolta (Pty) Ltd at fair value as determined in accordance with annexure A to the order.
  • The fair value of the shares shall be determined with reference to the financial condition of Tygerberg Minolta (Pty) Ltd as at 29 February 2008.