Parry vs. Dunn-Blatch and Others

South Africa

28.02.2024

Company

To succeed in obtaining relief in terms of Section 163 of Companies Act, the applicant must prove to the court that the relevant conduct complained was of oppressive or unfairly prejudicial

Present litigation emanates from an acrimonious relationship between two directors and shareholders of a small private company. The applicant, who is a shareholder and director of that company, alleges that the first respondent, as a director and co-shareholder in the same company, has exercised her powers as a director in such a manner as to oppress, unfairly prejudice or disregard her interests unfairly.

To succeed in obtaining relief in terms of Section 163 of Companies Act, 2008, the applicant must prove to the court that the relevant conduct complained of was oppressive, or unfairly prejudicial or unfairly disregards the applicant’s interests. It is always open to the parties to an agreement to change the contractual terms as they wish, if they are so inclined. Where there is a refusal by one party to do so, a court, considering an application to vary the terms of the agreement, must always tread carefully so as to ensure that it does not end up making a contract for the parties other than the one they in fact made. It is axiomatic that varying the terms of the licence agreement in the manner suggested by Parry automatically imposes certain financial obligations on ITRISA. This is a step that can only be taken if there is clear evidence justifying it.

The court’s jurisdiction to grant the relief envisaged in Section 163 only arises once all specified criteria set out in that provision have been satisfied. Present Court have already alluded to the existence of factual disputes on material issues. Such disputes are incapable of resolution on the papers and could only have been decided after oral evidence had laid bare all the circumstances under which the alleged oppression, unfair prejudice and unfair disregard of interests are based. These disputes were foreseeable, given the acrimonious e-mail exchange both before and after the conclusion of the licence agreement in 2015. These factual disputes pose an insurmountable hurdle for the granting of an order on the papers.

Parry had failed to establish that the business of TRADSA is being or was carried on, or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregarded her interests, or, that any act or omission of TRADSA, has had a result that is oppressive or unfairly prejudicial, or disregards her interest, or that Dunn-Blatch exercised her powers as a director of TRADSA in a manner that unfairly disregards her interests as is required by Section 163(1) of the Companies Act. The granting of relief envisaged in Section 163(2) of the Companies Act does not arise. Appeal dismissed.

Tags : Powers Director Conduct

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