Briers and Another v Dr J Bruwer and Assoc. NO. 78 Inc. and Others

The applicants, both medical doctors, concluded consultancy agreements with the first respondent, a medical practice. Each agreement contained a clause allowing termination on 30 days' notice and a 'deemed sale' provision forcing the terminating shareholder to sell their 10% shareholding for R1 per share. Disputes arose, and the first respondent gave notice of termination to the second applicant (effective 17 September 2023) and the first applicant (effective 18 November 2023). The applicants launched an urgent application (Part A) to interdict implementation of the termination regarding the first applicant and the forced sale of shares, which was dismissed on 17 November 2023. Part B, seeking relief under s 163 of the Companies Act for the respondents to acquire the applicants' shares at fair market value, was postponed to 24 April 2024. On 14 December 2023, after the first applicant's notice period expired, the respondents sold and transferred both applicants' shares to remaining shareholders, paying each R10. The applicants sought to amend their notice of motion to introduce additional relief, including setting aside the termination and subsequent share sale.

• Whether the applicants had locus standi to seek relief under s 163 of the Companies Act 71 of 2008 after their shares were sold and transferred pursuant to deemed sale provisions in their consultancy agreements.
• Whether the first applicant lost locus standi by failing to amend his relief before the effective date of termination of his consultancy agreement.
• Whether the doctrine of litis contestatio operated to preserve the first applicant's standing once pleadings had closed.

1. The first applicant is granted leave to amend Part B of the notice of motion, but any reference to the second applicant must be deleted. 2. The second applicant's application for leave to amend is dismissed. 3. The first and second applicants shall bear the costs of the application for leave to amend jointly and severally on scale B.

A shareholder who was still a shareholder at the time of launching proceedings under s 163 of the Companies Act retains locus standi to seek relief even if their shares are subsequently transferred pursuant to the very deemed sale provision that forms the subject matter of the dispute, particularly where the opposing party effected the sale with full knowledge of the pending litigation. Litis contestatio does not operate to freeze standing as a matter of substantive law, but the critical factor is that the applicant took steps to enforce rights while still a shareholder and the deprivation of shareholding flows from the impugned contractual provision itself.

The court noted that it deliberately did not enter into the terrain of the merits in the main application, as that was not before it. The court also observed that tardiness in bringing an amendment is not of itself a ground for refusal. Additionally, the court noted that the first applicant may need to further amend other existing prayers in the notice of motion pertaining to the second applicant, but that issue was not for determination.

This case clarifies the requirements for locus standi under s 163 of the Companies Act 71 of 2008 in circumstances where a shareholder's shares are transferred after litigation has commenced pursuant to the very contractual provisions being challenged. It confirms that a shareholder who launches proceedings while still a shareholder does not automatically lose standing if shares are subsequently transferred under a disputed deemed sale clause, provided the opposing party had knowledge of the pending litigation. The case also confirms that litis contestatio is a procedural concept that fixes the articulation of issues rather than determining substantive rights.