Tayob N.O and Others v Samons N.O and Others (130746/2025) [2025] ZAGPPHC 873 (2 September 2025)

Case Note

Tayob and Others v Samons and Others (130746/2025) [2025] ZAGPPHC 10 (2 September 2025)

Reportability

This case is reportable as it addresses critical issues surrounding the locus standi of business rescue practitioners under South African law, particularly in the context of companies undergoing voluntary business rescue. The judgment provides clarity on the legal framework established by the Companies Act for the appointment of business rescue practitioners, which is significant for understanding the dynamics of corporate governance and creditor protection in distress situations. The implications of this case extend beyond the parties involved, potentially influencing the practices of business rescue practitioners and the interpretation of procedural rules within similar contexts.

Cases Cited

Knoop NO and Another v Gupta (Execution) 2021 (3) SA 135 (SCA)

Islandsite Investments 180 (Pty) Ltd v National Director of Public Prosecutions and Others 2024 (5) SA 20 (SCA)

Knoop and Others v Tegeta Exploration and Resources (Pty) Ltd and Others 2025 JDR 2927 (SCA)

Legislation Cited

Companies Act 71 of 2008

Superior Courts Act 10 of 2013

Rules of Court Cited

None specifically cited in the judgment.

HEADNOTE

Summary

This case revolves around an urgent application related to the appointment of business rescue practitioners for Northwest Transport Investments (NTI) and associated companies currently in business rescue. Mr. Tayob sought confirmation of his status as a joint business rescue practitioner alongside Mr. Samons. Central to the application was the legality of Mr. Tayob's purported appointment, which occurred after the commencement of rescue proceedings but without valid authority according to the Companies Act.

Key Issues

The primary issues addressed in this judgment include the validity of Mr. Tayob's appointment as a business rescue practitioner, the legality of the decisions made by the board of directors, and whether Mr. Tayob had the requisite locus standi to bring the application.

Held

The court held that Mr. Tayob was not a validly appointed business rescue practitioner for NTI and the associated companies. It concluded that his appointment did not comply with the statutory requirements defined in the Companies Act, thereby affirming that he lacked locus standi in the application.

THE FACTS

The applicants comprised Mr. Tayob and several companies that were in voluntary business rescue. The respondent, Mr. Samons, was the initially appointed business rescue practitioner for these companies. A humanitarian crisis arose due to non-payment of salaries to employees. This prompted Mr. Tayob to file an urgent application seeking not only salary payments for these employees but also a determination of his status as a joint business rescue practitioner.

Both parties acknowledged an agreement concerning part of the requisite salary payments. However, the crux of the proceedings was whether Mr. Tayob’s appointment as the business rescue practitioner was legitimate and what standing he had to pursue the application.

The companies had previously filed resolutions to begin voluntary business rescue in July, August, and September 2022, with Mr. Samons appointed shortly thereafter. However, in April 2025, the board of these companies resolved to appoint Mr. Tayob as a joint practitioner, leading to disputes regarding the validity of this decision especially given ongoing legal challenges against Mr. Samons' status.

THE ISSUES

The court was tasked with determining whether Mr. Tayob's appointment as a business rescue practitioner was legally valid under the Companies Act. The specific legal questions included his locus standi to bring the application, the authority of the board to appoint a new practitioner given the suspension of the previous order against Mr. Samons, and the interpretation of relevant sections of the Companies Act governing appointment procedures.

ANALYSIS

The court analyzed the statutory framework of the Companies Act, specifically sections concerning the appointment of business rescue practitioners. It emphasized that for a person to be appointed as a practitioner following the initiation of rescue proceedings, the appointment must occur within a defined timeframe. The court found that Mr. Tayob's appointment in April 2025 did not meet this requirement, as valid appointments needed to happen within five business days following the adoption of the relevant business rescue resolutions.

Further, the court assessed claims made by Mr. Tayob about the existence of a residual right of the board to appoint a new practitioner upon the removal or resignation of an existing one. However, it concluded that Mr. Samons had not been validly removed, as an application for leave to appeal against his removal was lodged before the purported appointment of Mr. Tayob, thus suspending any orders that would remove him.

The court pointed out procedural missteps in how the board convened its meeting to appoint Mr. Tayob, noting that Mr. Samons was neither informed nor involved in this process, rendering the resolutions taken null and void.

REMEDY

The court dismissed the application brought by Mr. Tayob and ruled that he should bear the costs of the respondents, which were to include costs associated with the engagement of two counsels. This outcome affirmed that Mr. Tayob did not have the standing to establish his appointment as a practitioner, thus impacting the ongoing business rescue proceedings for the companies involved.

LEGAL PRINCIPLES

The judgment reinforces several key legal principles under South African corporate law:

1. Appointment of Business Rescue Practitioners: The statutory requirements for the appointment of business rescue practitioners must be strictly adhered to, especially regarding timelines and procedural legitimacy.

2. Locus Standi: A party must demonstrate sufficient legal standing to pursue court action, particularly in complex business rescue matters where authority and appointment disputes arise.

3. Authority of Boards During Business Rescue: Directors retain their authority under certain conditions; however, they must also remain bound to the authority of the appointed business rescue practitioner until any valid removal occurs following established legal processes.

The case serves as a critical reminder for those within the business rescue framework to comply meticulously with statutory provisions to uphold the integrity of the process.