Schwartz NO v Pike and Others (668/06) [2007] ZASCA 106; [2007] SCA 106 (RSA) [2008] 1 All SA 89 (SCA); 2008 (3) SA 431 (SCA) (19 September 2007)

Schwartz NO v Pike and Others (668/06) [2007] ZASCA 106; [2007] SCA 106 (RSA) [2008] 1 All SA 89 (SCA); 2008 (3) SA 431 (SCA) (19 September 2007)

The Court held that clause 16.1 of the Association Agreement established a multi-stage process for determining the value of a deceased member's interest in a close corporation. The process required the executor and remaining members to negotiate and attempt to reach agreement on the value and, if unsuccessful, to jointly appoint a chartered accountant. Only if consensus on the appointment could not be reached could either party request the Institute to nominate an accountant. The appellant failed to afford the respondents a reasonable opportunity to reach consensus on the appointment, proceeding unilaterally to request the Institute's intervention. This was contrary to the parties'...

Citation
[2007] ZASCA 106
Parties
Appellant: I Schwartz NO; Respondent: S E Pike; Respondent: A Van der Merwe; Respondent: M M Masito N.O.
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
19 September 2007
Case Number
668/06
Procedural Posture
Civil Appeal / Appeal From Dismissal of Application in Pretoria High Court
Outcome
Appeal dismissed with costs.
Judges
Mthiyane, Heher, Van Heerden
Legal Topics
Contract Interpretation, Close Corporation Membership, Valuation of Interest, Association Agreement, Dispute Resolution Mechanism
Commercial and Corporate Civil Procedure Contract Interpretation Close Corporation Membership Valuation of Interest Association Agreement Dispute Resolution Mechanism

Case Brief

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Parties

I Schwartz NO

Appellant

S E Pike

Respondent

A Van der Merwe

Respondent

M M Masito N.O.

Respondent

Procedural Posture

Civil Appeal / Appeal From Dismissal of Application in Pretoria High Court

Legal Issues

  1. 1 Whether the appellant complied with clause 16.1 of the Association Agreement regarding the appointment of a chartered accountant to value the deceased's interest.
  2. 2 Whether the appellant was entitled to unilaterally request the South African Institute of Chartered Accountants to appoint an accountant without affording the remaining members an opportunity to reach consensus.
  3. 3 Whether the application for payment based on the valuation was premature.

Ratio Decidendi

The Court held that clause 16.1 of the Association Agreement established a multi-stage process for determining the value of a deceased member's interest in a close corporation. The process required the executor and remaining members to negotiate and attempt to reach agreement on the value and, if unsuccessful, to jointly appoint a chartered accountant. Only if consensus on the appointment could not be reached could either party request the Institute to nominate an accountant. The appellant failed to afford the respondents a reasonable opportunity to reach consensus on the appointment, proceeding unilaterally to request the Institute's intervention. This was contrary to the parties'...

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.