Wilds Home Owners Association and Others v Van Eeden and Others (780/11) [2012] ZASCA 113 (13 September 2012)

Wilds Home Owners Association and Others v Van Eeden and Others (780/11) [2012] ZASCA 113 (13 September 2012)

The Supreme Court of Appeal held that the forensic audit should be limited to the essential dispute regarding the set-off of levies and landscaping expenses, but the extraordinary general meeting should have the option to extend the scope. The developer's entrenched veto right in the articles of association should not be removed by special resolution at the extraordinary general meeting, as there was no evidence of its prejudicial or unjust exercise. The interdict preventing payment to the second and third appellants for litigation services without general meeting approval was justified, given the board's prior conduct and the requirements of the articles. The costs order against the...

Citation
[2012] ZASCA 113
Parties
Appellant: The Wilds Home Owners Association; Appellant: Rudi Boshoff; Appellant: Adrianus Lukas Faure; Appellant: Deon van Aarde; Appellant: Harris Kaplan; Appellant: P J J Van Vuuren Beleggings (Pty) Ltd; Respondent: Francois Johannes van Eeden; Respondent: Werner Herbst; Respondent: Henco Botes; Respondent: Gerhard Swart; Respondent: Pierre Roux; Respondent: Evert Bruwer; Respondent: André Barnard; Respondent: Piet Louw; Respondent: Herman Stassen; Respondent: Koos Pietersen; Respondent: Midcity Property Services (Pty) Ltd; Respondent: Diastoleus Professio Inc; Respondent: Woodhill College (Pty) Ltd; Respondent: Hendrina Audette Koekemoer; Respondent: Wybrand Andreas Lodewicus du Toit
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
13 September 2012
Case Number
780/11
Procedural Posture
Civil Appeal / Appeal From North Gauteng High Court
Outcome
Appeal allowed in part; order of the court a quo amended.
Judges
Navsa, Cloete, Mhlantla, Southwood, Erasmus
Legal Topics
Companies Act 1973 Section 252, Shareholder Rights, Articles of Association Amendment, Developer Veto Rights, Forensic Audit, Remuneration of Directors
Commercial and Corporate Companies Act 1973 Section 252 Shareholder Rights Articles of Association Amendment Developer Veto Rights Forensic Audit Remuneration of Directors

Case Brief

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Parties

The Wilds Home Owners Association

Appellant

Rudi Boshoff

Appellant

Adrianus Lukas Faure

Appellant

Deon van Aarde

Appellant

Harris Kaplan

Appellant

P J J Van Vuuren Beleggings (Pty) Ltd

Appellant

Francois Johannes van Eeden

Respondent

Werner Herbst

Respondent

Henco Botes

Respondent

Gerhard Swart

Respondent

Pierre Roux

Respondent

Evert Bruwer

Respondent

André Barnard

Respondent

Piet Louw

Respondent

Herman Stassen

Respondent

Koos Pietersen

Respondent

Midcity Property Services (Pty) Ltd

Respondent

Diastoleus Professio Inc

Respondent

Woodhill College (Pty) Ltd

Respondent

Hendrina Audette Koekemoer

Respondent

Wybrand Andreas Lodewicus du Toit

Respondent

Procedural Posture

Civil Appeal / Appeal From North Gauteng High Court

Legal Issues

  1. 1 Whether the scope of the forensic audit ordered by the court a quo should be limited to the essential dispute between the parties.
  2. 2 Whether the extraordinary general meeting should be empowered to amend the articles of association to remove the developer's veto right.
  3. 3 Whether the interdict preventing payment to directors for litigation services without general meeting approval was justified.

Ratio Decidendi

The Supreme Court of Appeal held that the forensic audit should be limited to the essential dispute regarding the set-off of levies and landscaping expenses, but the extraordinary general meeting should have the option to extend the scope. The developer's entrenched veto right in the articles of association should not be removed by special resolution at the extraordinary general meeting, as there was no evidence of its prejudicial or unjust exercise. The interdict preventing payment to the second and third appellants for litigation services without general meeting approval was justified, given the board's prior conduct and the requirements of the articles. The costs order against the...

Court Disposition

Appeal allowed in part; order of the court a quo amended.

Orders

  • The board of directors of the first applicant is directed to instruct auditors to perform a forensic audit limited to the essential dispute, with the extraordinary general meeting empowered to extend the scope.
  • The board of directors is ordered to convene an extraordinary general meeting within 60 days to consider and vote on proposed amendments to the articles of association, including the removal of the developer's right to appoint a majority of directors and related provisions.