Gent and Another v Du Plessis

Bonnox (Pty) Ltd was a fencing manufacturing company established in 1957 by Mr Schadewaldt. In 1998, he transferred shares to his daughter Ms Gent (80 shares, 53.33%) and Mr du Plessis (45 shares initially, later acquiring additional shares for a total of 46.67%). Mr du Plessis was employed by the company from 1986, promoted to general manager in 2010, and appointed director in 2012 when Ms Gent resigned. However, he was removed as director in March 2013 at a shareholders' meeting. After Ms Gent uncovered irregularities including Mr du Plessis conducting private business using company resources, committing fraud against the fiscus, and maliciously placing the company in business rescue to prevent his removal, he was dismissed as an employee in August 2014 following a disciplinary hearing. Mr du Plessis then applied for the company to be wound up on just and equitable grounds, or alternatively for Ms Gent to be ordered to purchase his shares, alleging oppressive conduct under s 163 of the Companies Act 71 of 2008. Hughes J dismissed the application. The Full Court dismissed the winding-up appeal but nevertheless ordered Ms Gent to sell her majority shareholding to Mr du Plessis despite finding that s 163(1) requirements were not met. Ms Gent appealed to the Supreme Court of Appeal, while Mr du Plessis' application for leave to cross-appeal was refused.

• Whether the Full Court erred in ordering the sale of shares under s 163(2) of the Companies Act 71 of 2008 when the requirements of s 163(1) were not satisfied
• Whether a respondent can obtain variation of a court order without a cross-appeal
• Whether Mr du Plessis proved oppressive or unfairly prejudicial conduct under s 163(1) of the Companies Act
• Whether removal of a minority shareholder as director and employee constitutes conduct falling within s 163(1)

The appeal was upheld with costs, including costs of two counsel. The order of the Full Court was set aside and replaced with an order dismissing the appeal with costs.

1. A court has no jurisdiction to grant relief under s 163(2) of the Companies Act 71 of 2008 unless the applicant first satisfies the statutory criteria set out in s 163(1). Only once oppressive or unfairly prejudicial conduct is proved does a court have power to exercise its discretion to grant appropriate relief under s 163(2). 2. In the absence of a cross-appeal, a respondent cannot obtain a variation of a court order that would be to the detriment of the appellant, save perhaps in exceptional circumstances where there is no prejudice. 3. The valid exercise of majority shareholding voting rights to remove a director in accordance with s 71 of the Companies Act does not constitute oppressive or unfairly prejudicial conduct under s 163(1), absent proof of some agreement or understanding that the minority shareholder would be entitled to directorship.

The court observed that Mr du Plessis' concession that the Full Court erred in making the buy-out order was made fairly and properly. The court noted that Mr du Plessis' conduct in maliciously placing the company in business rescue on the eve of a shareholders' meeting to remove him as director, and his manipulation of employees to bring the application as proxies, demonstrated abuse of his position of trust. The court also commented favorably on Ms Gent's gesture of goodwill in paying 71% of the punitive costs awarded against the employee proxies from her own funds in an attempt to reconcile with Mr du Plessis.

This case establishes important principles regarding the interpretation and application of s 163 of the Companies Act 71 of 2008, which provides relief for oppressive or unfairly prejudicial conduct. It clarifies that courts have no jurisdiction to grant relief under s 163(2) unless the statutory requirements in s 163(1) are first satisfied - courts cannot craft remedies to achieve a 'clean break' between shareholders absent proof of oppressive conduct. The case also reaffirms fundamental civil procedure principles that a respondent cannot obtain variation of an order to their advantage without cross-appealing. In company law, it confirms that the mere exercise of majority voting rights to remove a director does not constitute oppression absent proof of an agreement or understanding that the minority shareholder would be entitled to directorship.