Smyth and Another v Mew (270/09) [2010] ZASCA 56; 2010 (6) SA 537 (SCA) (1 April 2010)

Smyth and Another v Mew (270/09) [2010] ZASCA 56; 2010 (6) SA 537 (SCA) (1 April 2010)

The Supreme Court of Appeal held that the breakdown in the relationship between the members of the close corporation was irretrievable and that confidence and trust no longer existed. While section 36 of the Close Corporations Act allows for a compulsory buy-out of a member's interest, the court retains discretion and requires sufficient evidence to determine the terms of such a buy-out. Smyth failed to provide reliable evidence regarding the valuation of Mew's interest, as the valuation was based solely on information from Smyth and the bookkeeper, without input from Mew. The association agreement did not bind the court to accept the valuation. In the absence of adequate evidence to...

Citation
[2010] ZASCA 56
Parties
Appellant: Richard James Smyth; Appellant: Coco Haven 1325 CC; Respondent: Bernard Darren Mew
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
1 April 2010
Case Number
270/09
Procedural Posture
Civil Appeal / Appeal From South Gauteng High Court (johannesburg)
Outcome
Appeal dismissed with costs.
Judges
Navsa, Cloete, Van Heerden, Bosielo, Seriti
Legal Topics
Close Corporation Winding Up, Just and Equitable Ground, Compulsory Buy Out, Association Agreement, Valuation of Members Interest
Commercial and Corporate Civil Procedure Close Corporation Winding Up Just and Equitable Ground Compulsory Buy Out Association Agreement Valuation of Members Interest

Case Brief

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Parties

Richard James Smyth

Appellant

Coco Haven 1325 CC

Appellant

Bernard Darren Mew

Respondent

Procedural Posture

Civil Appeal / Appeal From South Gauteng High Court (johannesburg)

Legal Issues

  1. 1 Whether the court below erred in granting a winding-up order instead of ordering the cessation of the respondent's membership and acquisition of his interest by the first appellant under section 36 of the Close Corporations Act.
  2. 2 Whether the valuation of the member's interest by the corporation's accounting officer was binding on the court.
  3. 3 Whether sufficient evidence was adduced to justify a compulsory buy-out rather than liquidation.

Ratio Decidendi

The Supreme Court of Appeal held that the breakdown in the relationship between the members of the close corporation was irretrievable and that confidence and trust no longer existed. While section 36 of the Close Corporations Act allows for a compulsory buy-out of a member's interest, the court retains discretion and requires sufficient evidence to determine the terms of such a buy-out. Smyth failed to provide reliable evidence regarding the valuation of Mew's interest, as the valuation was based solely on information from Smyth and the bookkeeper, without input from Mew. The association agreement did not bind the court to accept the valuation. In the absence of adequate evidence to...

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.