Life St Mary’s doctors win dispute over shares

Seven doctors who are shareholders in Life St Mary’s private hospital get to keep their shares after the Mthatha high court declared as invalid a 2002 agreement that required them to sell their equity in the hospital on retirement, reaching 70 years of age or moving their practices away from Mthatha.

Eight doctors took on the hospital’s board, which sought to enforce the 2002 shareholders agreement demanding that they sell their shares.

None of them remembered signing the agreement in 2002.

Professors Banwari Meel, Khimanand Gaire, Berena Karaire-mushabe, Alex Nganwa-bagumah, Austin Kafuko as well as doctors Moses Ejumu, Pelisa Nokuzola Mafuya and Frederick Mayanja asked the Mthatha high court to declare the 2002 agreement invalid. Ejumu has since died. The hospital board brought a counterclaim, asking the Mthatha high court to declare the agreement valid and binding and to order the doctors to immediately give effect to it.

Judge Buyiswa Majiki said the doctors had first entered into a shareholders’ agreement in 1996.

The 2002 agreement was drafted, presented and discussed at various board meetings, with a view to having it signed and entered into by the shareholders.

The doctors said it was never validly signed or concluded and did not therefore replace the 1996 agreement.

The 1996 agreement had specified that no variation on it would be valid unless reduced to writing and signed by all shareholders.

Six of the doctors claimed they had never been presented with or signed the agreement.

They suggested that the page on which their signatures appeared might have been attached to the agreement.

They suggested the signatures were likely to note their attendance at a meeting rather than as consent to any agreement.

Majiki ruled that the 2002 agreement clearly sought to replace rather than vary the 1996 agreement.

The signature of the doctors on one page was also problematic.

There was no evidence about the circumstances of the procurement of the signatures, what document was presented and whether the signatories understood what they were signing for.

“In my view, (Life St Mary’s private hospital) has not established that the 2002 agreement was presented to shareholders and signed at various places as it alleged.”

She declared the 2002 agreement invalid and of no force and effect.

She dismissed the hospital’s counterclaim.