Bongani is a director of Better Bodies (Pty) Ltd, a company that owns and manages a...

  

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Bongani is a director of Better Bodies (Pty) Ltd, a company that owns and manages a chain of health spas in Johannesburg. The company wishes to expand one of its facilities and requires the building adjacent to the spa for this purpose. Unfortunately, the owners of the building refuse to sell the building to the company because of a feud dating back many years between the shareholders of Better Bodies (Pty) Ltd and the owners of the building. Bongani, looking for a change of career, resigned from Better Bodies (Pty) Ltd and together with an associate formed a new company, Venture Properties (Pty) Ltd, a property investment company. Bongani was a shareholder and director of this company. Venture Properties (Pty) Ltd first undertaking was to purchase the building next to that of the spa owned by Better Bodies (Pty) Ltd. It then sold the building to Better Bodies (Pty) Ltd, realizing a large profit from the transaction. When the directors of Better Bodies (Pty) Ltd discover that Bongani is a shareholder of Venture Properties (Pty) Ltd they wish to take legal action against Bongani for the profit made on the transaction. (a) Advise Better Bodies (Pty) Limited of their prospects of success in their action against Bongani. (10 marks) (b) As a director, Bongani has certain duties, namely a fiduciary duty and a duty of care and skill. With reference to decided cases discuss these duties fully. (20 marks) Bongani is a director of Better Bodies (Pty) Ltd, a company that owns and manages a chain of health spas in Johannesburg. The company wishes to expand one of its facilities and requires the building adjacent to the spa for this purpose. Unfortunately, the owners of the building refuse to sell the building to the company because of a feud dating back many years between the shareholders of Better Bodies (Pty) Ltd and the owners of the building. Bongani, looking for a change of career, resigned from Better Bodies (Pty) Ltd and together with an associate formed a new company, Venture Properties (Pty) Ltd, a property investment company. Bongani was a shareholder and director of this company. Venture Properties (Pty) Ltd first undertaking was to purchase the building next to that of the spa owned by Better Bodies (Pty) Ltd. It then sold the building to Better Bodies (Pty) Ltd, realizing a large profit from the transaction. When the directors of Better Bodies (Pty) Ltd discover that Bongani is a shareholder of Venture Properties (Pty) Ltd they wish to take legal action against Bongani for the profit made on the transaction. (a) Advise Better Bodies (Pty) Limited of their prospects of success in their action against Bongani. (10 marks) (b) As a director, Bongani has certain duties, namely a fiduciary duty and a duty of care and skill. With reference to decided cases discuss these duties fully. (20 marks)

Answer rating: 100% (QA)

a In this situation Better Bodies Pty Ltd may have prospects of success in taking legal action against Bongani for the profit made on the transaction ... View the full answer