In a poignant legal saga reflecting the complexities of inheritance and business ownership, two Cape Town women found themselves embroiled in a dispute over who rightfully owns the shares of a fishing company established by their late husbands.
The women, Ayanda Malunga and Thulile Queen Sanqela were in a court battle in the Western Cape High Court over the ownership of Ntshonalanga Fishing (Pty) Ltd.
The matter was brought to the high court on appeal by Mrs Malunga after the previous judge ruled in favour of Mrs Sanqela and ordered that she be awarded all shares of the company.
Mrs Malunga was unhappy with the order and sought relief in the same court declaring that she was entitled to 50% of the company.
The fishing company was birthed through the collaborative efforts of their husbands, Mtunzi Malunga and Balindi Sanqela, they each held 50% shares until Mr Sanqela passed away in December 2015.
Mr Malunga stepped up to lead as the sole director until his untimely death in September 2020.
After Mr Sanqela’s passing, Mrs Sanqela inherited her husband's 50% share, officially entering the business fold as a registered shareholder in June 2016.
However, tensions began to brew between her and Mr Malunga concerning corporate conduct and management.
Mr Malunga opened up negotiations regarding the handling of the company and came with his lawyer and Mrs Malunga was also represented by an attorney.
As negotiations unfolded, Mr Malunga, in pursuit of mutually beneficial terms, offered Mrs Sanqela the option to purchase his shares in the future on condition that he is afforded sufficient time to stay as a director and apply his knowledge and experience to grow the business and secure long-term fishing rights.
The decision had other conditions, and it was encapsulated in an agreement signed in March 2018.
However, when the agreement was made, Mr. Malunga was married to Mrs Malunga in community of property, and she was entitled to half of his shares. Mr Malunga had not informed his wife about the agreement he made with Mrs Sanqela.
The law dictates that in community of property marriages, any transactions involving significant assets require spousal consent.
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Mrs Malunga’s evidence was that the first time she became aware of the agreement was in October 2020, when Mrs Sanqela’s attorney addressed an email to her attorney.
In her defense, Mrs Sanqela contended that she lacked knowledge regarding the Malungas’ marital contract, asserting that she presumed Mrs. Malunga had consented to the agreement.
Lastly, she argued that Mr Malunga was an experienced businessman and director of 25 companies at the time of his death and he concluded the agreement in the ordinary course of business.
During the appeal, the court said that when the agreement was made, Mrs Sanqela's attorney failed to enquire whether Mr Malunga was married in community of property and whether his spouse had consented to the transaction.
It was held that Mrs. Sanqela’s attorney's failure to make the necessary inquiries was unreasonable and she was ethically and statutorily duty-bound to represent her client’s interests to the best of his ability and to act by her mandate to represent her on all legal matters about the transaction given her legal expertise.
The court ruled that Mrs Sanqela's failure to make the necessary and reasonable inquiry vitiates the agreement due to a lack of spousal consent.
Mrs Malunga's appeal was upheld, and Mrs Sanqela was ordered to pay the costs of the application.
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