Trevo Capital Ltd and Others v Steinhoff International Holdings (Pty) Ltd and Others (2833/2021) [2021] ZAWCHC 123; 2021 (6) SA 260 (WCC); [2021] 4 All SA 573 (WCC) (2 July 2021)

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[2021] ZAWCHC 123
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Trevo Capital Ltd and Others v Steinhoff International Holdings (Pty) Ltd and Others (2833/2021) [2021] ZAWCHC 123; 2021 (6) SA 260 (WCC); [2021] 4 All SA 573 (WCC) (2 July 2021)

REPORTABLE
THE REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No:  2833/2021
In
the matter between:
TREVO CAPITAL
LTD
1st

Applicant
HAMILTON
BV

2nd
Applicant
HAMILTON
2
BV

3rd Applicant
and
STEINHOFF
INTERNATIONAL HOLDINGS (PTY) LTD

1st Respondent
GLOBAL LOAN AGENCY
SERVICES

2nd

Respondent
FINANCIAL CREDITORS OF
THE FIRST RESPONDENT
AS
DEFINED IN THE TERM
SHEET

3rd Respondent
Coram:
Bozalek J
Heard:
24 – 26 May
2021; 7 – 9 June 2021
Delivered:
This judgment was handed down electronically
by circulation to the parties’ legal representatives by email.
The date and time
for hand-down is deemed to be 14:15 on 2 July 2021.
JUDGMENT
BOZALEK J
[1]
On 5 December 2017 the Steinhoff Group
announced that its annual financial statements would be delayed and
the following day its
CEO, Mr Markus Jooste, resigned with immediate
effect. What followed were revelations of large scale and
longstanding irregularities
in the financial statements of the Group
which led to a massive decline in the value of its traded shares as
well as acts of default
in relation to major loan instruments. In the
intervening years a process of debt restructuring was commenced
within the Group
which is ongoing and numerous legal claims were
brought against Steinhoff companies by a variety of claimants whose
shares had
lost all but a fraction of their previous value.
[2]
The applicants in the present matter are
two such claimants. The first applicant, Trevo Capital Ltd
(hereinafter ‘Trevo’),
instituted action against the
first respondent (Steinhoff International Holdings (Pty) Ltd)
(hereinafter ‘SIHPL’),
claiming in excess of R2bil, being
a loss allegedly suffered as a result of SIHPL’s alleged
intentional, alternatively, negligent
misstatements in its 2015
annual financial statements. The action is at an advanced stage but
has not yet been certified as ‘
trial
ready’
. Trevo’s case is
that, but for such statements, it would not have purchased shares by
means of a forward sale which it concluded
on or about in October
2015 with a related company.
[3]
The second and third applicants, Hamilton
BV and Hamilton 2 BV, (jointly referred to as ‘Hamilton’),
are foreign companies
which between them allege that they have taken
assignment of more than 14 000 claims by investors against SIHPL
and Steinhoff
International Holdings NV (SIHNV), its Dutch
subsidiary. Hamilton has instituted two claims against SIHPL in this
Court in which
they seek to recover losses allegedly suffered by the
individual investors attributable to SIHPL’s intentional,
alternatively
negligent, misstatements in its financial statements.
[4]
SIHPL is a now private company. It was
previously registered as a public company, Steinhoff International
Holdings Ltd (‘SIHL’),
and listed on the JSE as the
holding company of the Steinhoff Group of companies. In December
2015, pursuant to a scheme of arrangement
in terms of sec 114 of the
Companies Act, 71 of 2008 (‘the Act’), SIHL’s
entire issued share capital was swapped
for shares in Steinhoff NV
(‘SIHNV’), a company listed on both the JSE and the
Frankfurt Stock Exchange. Investors
who previously held shares in
SIHL became shareholders in Steinhoff NV, the new holding company of
the Steinhoff Group. The second
respondent, Global Loan Agency
Services (hereinafter ‘GLAS’), is a limited company
incorporated in terms of the laws
of the United Kingdom and carries
on business as a provider of financial administration services.
[5]
The third respondents are the financial
creditors of SIHPL as defined in a proposal by SIHNV and SIHPL
(together ‘Steinhoff’)
in terms of sec 115 of the Act to
effect a compromise of their financial obligations with three classes
of creditors identified
therein, many of whose claims arise from the
accounting irregularities referred to earlier. In July 2020 the broad
terms of Steinhoff’s
proposed compromise with its creditors
were set out in a ‘
term sheet’
on SIHNV’s website. That term sheet was updated in October 2020
and has since been formally published by SIHPL pursuant to
an order
of this Court on 25 January 2021 making provision for publication of
the proposal to creditors and all interested parties
in terms of sec
155(2) of the Act. The proposal together with annexures runs to some
270 pages and was published on 23 March 2021.
It involves the
compromise of Steinhoff’s financial obligations to three
classes of creditors which were initially referred
to in the term
sheet as the CPU Creditors (FC or Financial Creditors class),
Contractual claimants (CC class) and Market Purchase
claimants (MPC
class).
[6]
In separate proceedings the applicants have
challenged the sec 155 proposal seeking a declaratory order that two
of the classes
of creditors identified therein, namely, the
Contractual claimants and the MPC claimants, do not constitute a
‘
class of creditors’
as envisaged by sec 155 of the Act and as such the compromise is not
sanctionable by Court under sec 155(7)(b) of the Act. The
present
proceedings constitute, indirectly, a separate challenge to
Steinhoff’s sec 155 proposal.
[7]
Some further background is necessary. The
claims of many if not all of the Financial Creditors against SIHPL
originate in a convertible
bond to the value of €465mil issued
by Steinhoff Finance Holding GMBH (‘SFHG’) in January
2014 (‘the 2021
Bond’). The original maturity date of the
2021 Bond was 30 January 2021 and was guaranteed by SIHPL (then SIHL)
(‘the
2014 Guarantee’). Following the discovery of the
accounting irregularities in the Steinhoff Group, company voluntary
arrangements
(‘CVA’s’) under the UK Insolvency Act
of 1986 were concluded for certain companies in the Steinhoff Group,
including
SFHG, in order to restructure its debts. The debt
restructuring in the SFHG CVA included a contingent payment
undertaking by SIHPL
(‘the CPU’ or ‘the SIHPL CPU’)
which
inter alia
amended or replaced the 2014 Guarantee of the 2021 Bond.
[8]
The case that the applicants seek to make
out in the present proceedings is that both the 2014 Guarantee under
the 2021 Bond and
its amendment or replacement by way of the CPU
constituted the provision of financial assistance by SIHL/SIHPL to a
related or
interrelated company as contemplated in sec 45(2) of the
Act. It is alleged that the financial assistance was provided on the
first
occasion to SFHG, and on the second occasion to Steenbok Lux
Finco (1) SARL (‘Lux Finco 1’), a private limited company

incorporated in Luxembourg. The applicants’ case further is
that SIHL’s financial assistance to SFHG, the resolution
of
SIHL’s board authorising it to enter the 2014 Guarantee, and
the 2014 Guarantee itself are void for non-compliance with
the
provisions of sec 45(3) of the Act, namely, the solvency and
liquidity and fairness tests incorporated in that sub-section.
It is
also the applicants’ case that the resolution of SIHPL’s
board authorising the conclusion of the SIHPL CPU and
the CPU itself
are void for want of compliance with sec 45(3). The applicants’
case is that, as claimants proposed to be
included in the MPC class
of creditors pursuant to the sec 155 proposal, their claims are
directly affected by the recognition
or non-recognition of the FC
class of claimants and they are therefore entitled to the declaratory
relief they seek. They contend
that they are entitled to interdictory
relief restraining SIHPL from making any payments under or arising
from the 2014 Guarantee
or the CPU and/or any compromise or
arrangement proposed by SIHPL in terms of sec 155 of the Act that
purports to recognise the
claims of those financial creditors founded
on either of those two bases.
[9]
The applicants accordingly seek the
following relief:
i)
An order confirming or declaring that the
guarantee provided by SIHL in respect of the convertible bond
originally issued by SFHG
to financial creditors on or about 30
January 2014, with an original maturity date of 30 January 2021, is
void by virtue of sec
45(6) of the Act;
ii)
Confirming and/or declaring that the
resolution of SIHL’s board authorising its entry into the 2014
Guarantee is similarly
void by virtue of sec 45(6) of the Act;
iii)
The self-same declaratory relief in
relation to the CPU and the resolution of SIHPL’s board
authorising SIHPL’s entry
into the CPU;
iv)
In the alternative to the above relief, an
order declaring that the CPU and the concomitant resolution are void
to the extent that
the CPU amended or replaced the 2014 Guarantee and
the SIHPL CPU resolution authorised its entry into the CPU;
v)
Interdicting and restraining SIHPL from
making any payments under or arising from the 2014 Guarantee and the
CPU and/or any compromise
or arrangement proposed by SIHPL in terms
of sec 155 of the Act and from providing any security in respect
thereof.
[10]
The application was opposed by all three
respondents and initially produced a record of close to 1000 pages,
excluding the sec 155
proposal. At an advanced stage during argument,
and following the Court’s ruling that the UK CVA documentation
had not been
properly placed before the Court, the respondents
successfully applied for leave to supplement their papers, a process
which added
a further 1300 pages to the record and resulted in a
week’s delay.
[11]
In broad terms the sec 155 proposal is,
according to SIHPL, the product of discussions and analysis
undertaken over a year to formulate
a proposal to achieve the goal of
yielding an outcome likely to be materially better and more certain
for each of the three classes
of Scheme creditors than what it termed
a ‘
no settlement’
scenario i.e. the likelihood of the liquidation of SIHPL. It seeks to
compromise firstly, financial obligations which SIHPL admits
it owes
to certain of its creditors, the Financial Creditors, and secondly,
claims that it allegedly owes but which remain disputed
and are not
legally established, to two groups of litigation claimants being on
the one hand the Contractual claimants and on the
other the Market
Purchase claimants.
[12]
The Financial Creditors have, according to
SIHPL, undisputed contractual claims against it under the SIHPL CPU
with the result that
the fact and the amount of SIHPL’s
liability in that respect are seen by it as certain. Contractual
claimants are parties
which instituted claims against SIHPL or SIHNV
prior to 5 December 2020 in respect of ‘
arms-length
negotiated contractual arrangements’
under which shares in other enterprises were sold or transferred by
such claimants or their related parties to SIHPL and who received

consideration directly from it by way of the issuance or transfer of
SIHNV shares.
[13]
The Market Purchase claimants are viewed by
SIHPL as being actual or potential litigation claimants who
‘
otherwise’
purchased SIHPL shares prior to the close of business on 6 December
2015, and continued to hold SIHNV shares (which they then received
in
exchange for SIHL shares pursuant to the Scheme of Arrangement) at
close of business on 5 December 2017. In SIHPL’s view
the fact
and amount of its liability in respect of such MPC claims are also
uncertain but for various reasons it considers that
they give rise to
a much less material risk of liability than those of the Contractual
claimants. The proposal identifies the arrangements
to be made in
satisfaction of the claims of the Financial Creditors which include:
certain amendments to the SIHPL CPU, including
a maturity extension,
the issue by SIHPL of two further loans, the grant of third ranking
security by SIHPL over its residual assets
for the benefits of the
Financial Creditors, the implementation of a quarterly cash sweep at
SIHPL for their benefit and that of
other residual secured creditors
and a waiver and release of non-contractual claims by the Financial
Creditors in favour of SIHPL.
According to the applicants the effect
of the proposed arrangements will be that financial creditors will to
all intents and purposes
be paid out in full in respect of their
claims.
[14]
As far as the second class is concerned
i.e. the Contractual claimants, their claims will be settled for a
total nominal amount
of R9.4bil payable in differing proportions in
cash and shares in Pepkor Holdings Ltd (the Steinhoff Group’s
South African
retail subsidiary). The proposal differentiates between
various Contractual claimants offering differing levels of settlement
in
respect of these groupings and with differing conditions attached.
Finally, as regards the Market Purchase claimants, SIHPL proposes
an
undifferentiated approach and advises that the settlement recovery
for those MPC claims which are accepted should fall between
4.0 and
6.6 cents in the rand. SIHPL’s sec 155 proposal finds no favour
with the applicants who, as mentioned, challenge
its lawfulness in
separate proceedings. Their fundamental objection is to the classes
of creditors which have been proposed by
SIHPL and which, in their
view, results in the unacceptable consequence that the financial
creditors are paid in full, the Contractual
claimants receive on
average of the order of 30 cents in the rand in respect of their
claims, whilst the Market Purchase claimants
will receive only some
five cents in the rand.
Trevo’s case
[15]
In its founding affidavit Trevo sets out to
explain the origin of many of the claims that SIHPL proposes to
compromise. It relies
inter alia
on an 11-page overview of an independent report by
PricewaterhouseCoopers (‘PwC’) released by Steinhoff NV
on 15 March
2019 which revealed that profits had been overstated over
several years in an approximate €6.5bil accounting fraud.  That

report found that a small group of Steinhoff Group former executives
and other non-Steinhoff executives, led by a senior management

executive, structured and implemented various transactions over a
number of years which had the result of substantially inflating
the
profit and asset values of the Steinhoff Group over an extended
period. Following those revelations, the Financial Sector Conduct

Authority (‘FSCA’) imposed a R53mil fine on Steinhoff for
making false misleading or deceptive statements to the market.
A
further consequence was that Steinhoff NV and SIHPL instituted action
against their former chief executive officer, Mr Markus
Jooste,
and their former chief financial officer, Mr Ben Le Grange, claiming
back salary, bonus and share incentive scheme payments
made to them
over the course of several years. That litigation is ongoing.
[16]
The applicants’ case commences with
their explanation of the origin of SIHPL’s obligations to the
Financial Creditors.
On 30 January 2014 SFHG issued the 2021 Bond as
a ‘
Guaranteed Convertible Bond’
to certain bondholders who lent SFHG €465mil with an original
maturity date of 30 January 2021. At the same time SIHPL guaranteed

the 2021 Bond in terms of the 2014 Guarantee, the terms of which were
set out in an Amended and Restated Trust deed dated 23 November
2015.
In terms of clause 5, headed
‘Guarantee
and Indemnity by SIHL’
, ‘
(a)s
between SIHL and the Trustee and the Bondholders but without
affecting (SFHG’s) obligations, SIHL will be liable under
this
Clause 5 as if it were the sole principal debtor and not merely as a
surety …
’. In terms of
paragraph 1(d) of Schedule 4 to the Trust Deed, ‘
(t)he
payment of all amounts payable in respect of the Bonds and all other
monies payable under or pursuant to the Trust Deed and
the Bonds has
been conditionally and irrevocably guaranteed, jointly and severally,
by SIHL and Steinhoff NV in the Trust Deed
… (the Guarantee)’
.
[17]
Following the December 2017 accounting
revelations, CVA’s under the United Kingdom Insolvency Act of
1986 were concluded in
the Steinhoff Group in order to restructure
its debt which included the SFHG CVA, originally dated 29 November
2018. In terms of
this restructuring the SIHPL CPU was concluded
between SIHPL and the second respondent, the latter acting as Agent
of the creditors
of SFHG, in August 2019 thereby amending or
replacing the 2014 Guarantee provided by SIHPL. The background to the
SIHPL CPU records
that the bondholders in terms of the 2021 Bond
agreed to defer and restructure their claims under the 2014
Guarantee, ‘
such that the debt due
under the Original Guarantees will not remain immediately due and
payable (and) SIHPL has agreed to repay
its indebtedness under each
of the Guarantees on the terms set out in this Deed …’
.
The maturity date of the SFHG debt in terms of the 2021 Bond was
extended to 31 December 2021 and the SFHG debt in terms of the
2021
Bond was restated by way of:
i)
the bondholders issuing a loan (‘the
New Lux Finco 1 21/22 Loan’) to Lux Finco 1 on a cashless
basis, in terms of a
Facilities Agreement;
ii)
Lux Finco 1 on-lending the deemed cashless
proceeds of the new Lux Finco 1 21/22 Loan to SFHG pursuant to an
inter-company loan;
iii)
SFHG using the deemed proceeds of the
inter-company loan to discharge its obligations to the bondholders
under the existing debt.
[18]
According to the applicants the net effect
of the SFHG CVA is that the bondholders have their debt, which
originally arose under
the 2021 Bond, restated pursuant to revised
terms and maturity date and the existing payment obligations provided
to bondholders
by SIHPL, originally under the 2014 Guarantee, are
deferred in terms of the (SIHPL) CPU. Further, according to the
applicants,
in terms of the CPU no payment by SIHPL is due until 31
December 2021 (unless a default event occurs) and the aggregate
maximum
amount that may be recovered from SIHPL may not exceed €1
581 300 000, the aggregate face value of the 2021 Bond issue of
€465mil and a similar convertible bond originally issued by SFHG
on 11 August 2015 for €1 116 300 000.
[19]
This explanation of the origin of the 2014
Guarantee and the CPU is not disputed by the respondents but that is
where the parties
cases part. According to the applicants the 2014
Guarantee guaranteeing SFHG’s debts in terms of the 2021 Bond
constituted
the provision of financial assistance by SIHL to a
related or interrelated company in terms of sec 45(1) and (2) of the
Act because
at the time the 2021 Bond was issued and the 2014
Guarantee provided, SFHG was a subsidiary of SIHL. The applicants
similarly take
the view that the SIHPL CPU similarly constituted the
provision of financial assistance in terms of sec 45 of the Act.
[20]
Insofar as it is relevant sec 45 of the Act
provides as follows:
‘
45.
Loans or other financial
assistance to directors
(1)
In this section, ‘financial
assistance’ –
(a)
includes lending money, guaranteeing
a loan or other obligation, and securing any debt or obligation; but
(b)
does not include –
…
…
(2)
Except to the extent that the
Memorandum of Incorporation of a company provides otherwise, the
board may authorise a company to
provide direct or indirect financial
assistance to a director or prescribed officer of the company or of a
related or interrelated
company, or to a related or interrelated
company or corporation, or to a member of a related or interrelated
corporation, or to
a person related to any such company, corporation,
director, prescribed officer or a member, subject to subsections (3)
and (4).
(3)
Despite any provision of a company’s
Memorandum of Incorporation to the contrary, the board may not
authorise any financial
assistance contemplated in subsection (2),
unless –
(a)
the particular provision of
financial assistance is –
(ii)
pursuant to a special resolution of the shareholders, adopted within
the previous two years, which
approved such assistance either for the
specific recipient, or generally for a category for potential
recipients, and the specific
recipient falls within that category;
and
(b)
the board is satisfied that –
(i)
immediately after providing the
financial assistance, the company would satisfy the solvency and
liquidity test, and
(ii)
the terms under which the financial
assistance is proposed to be given are fair and reasonable to the
company.
…
..
(6) A resolution by
the board of a company to provide financial assistance contemplated
in subsection (2), or an agreement with
respect to the provision of
any such assistance, is void to the extent that the provision of that
assistance would be inconsistent
with –
(a) this section; or
(b)
a prohibition, condition or requirement contemplated in subsection
(4). …
’
[21]
The applicants aver that both the 2014
Guarantee and the SIHPL CPU are void in terms of sec 45(6) of the
Act. As regards the 2014
Guarantee, the applicants’ case is
that notwithstanding the fact that SIHL purported to apply the
provisions of sec 45(3)
its board could not, upon a proper analysis
of SIHL’s financial position at the time, have been satisfied
that:
i)
immediately after providing the financial
assistance in question SIHL satisfied the solvency and liquidity
test; and
ii)
the terms of the 2014 Guarantee were fair
and reasonable to SIHL (now SIHPL).
[22]
The applicants aver, in particular, that
SIHL was then insolvent in that its liabilities exceeded its assets
on a consolidated basis
by between €700mil and €1.3bil. In
this regard they rely on a financial analysis by Professor G
Everingham, an accounting
expert.
[23]
As regards the SIHPL CPU, the applicants’
case is that, in contrast to the 2014 Guarantee, SIHPL did not even
purport to comply
with sec 45(3) in concluding the CPU and in any
event at that time SIHPL was factually and materially insolvent in
that its liabilities
exceeded its assets on a consolidated basis.
Trevo called upon SIHPL to produce its financial statements for the
relevant period
and any other proof of solvency should it dispute
that SIHPL was in fact insolvent.
The first and
second respondents’ case
[24]
The first and second respondents’
case is that at the time that the 2014 Guarantee was provided the
financial information
upon which SIHL’s board of directors
relied reflected that its financial position was such that the
requirements of sec 45(3)
were met. SIHPL also avers that the
applicants offer no evidence that the financial statements upon which
SIHL’s directors
relied at the time were unreliable. SIHPL
emphasises that a determination whether there was compliance with sec
45(3) must be based
on the facts, information and documentation
available to the board of directors at the time that the decision was
made (and upon
which reasonable reliance was placed by the directors)
and that it is misdirected for the applicants to seek to revisit
those financial
documents by extrapolating, with retrospective
effect, information which had been procured, analysed and interpreted
some seven
years after the financial information served before the
SIHL board.
[25]
SIHPL relies on the affidavit of Mr
Frederick Nel, a former director of SIHL who held the position of
financial director during
December 2013. Mr Nel confirms that at a
meeting of the board of directors of SIHL it approved the launch by
SFHG of a convertible
bond issue to foreign investors of up to
€465mil and that SIHL would act as guarantor for the obligations
of the issuer; further
that the board had reviewed SIHL’s
audited financial statements for the year ending 30 June 2013, the
company’s working
capital requirements, its existing financing
and facility arrangements and the tenure of same and had performed
and met the solvency
and liquidity test.
[26]
It is recorded in the relevant minute that
the company wished to provide financial assistance to the holders of
the convertible
bonds, the trustee ‘
and
the other parties to the Relevant Documents’
within the meaning of sec 44 and 45 of the Act; further that the
shareholders of the company had in a general meeting held earlier

that day approved the provision of such financial assistance by way
of a special resolution as contemplated in sec 45 and 45 of
the Act.
The extract of the minutes goes on to record that the directors of
the company were satisfied that:
‘
6.1
For the purposes of section 44(3)(b)(i) and
section 45(3)(b)(i)
of
the
Companies Act, after
considering all reasonable foreseeable
financial circumstances of the Company, immediately after providing
the Financial Assistance:
6.1.1  the assets
of the Company (fairly valued) would equal or exceed the liabilities
of the Company (fairly valued) (taking
into consideration reasonably
foreseeable contingent assets and liabilities of the Company); and
6.1.2  it appears
that the Company would be able to pay its debts as they become due in
the ordinary course of business for
a period of 12 months after the
date of this resolution;
6.2
For the purposes of
section 44(3)(b)(ii)
and
section 45(3)(b)(ii)
of
the
Companies Act, the
terms and conditions on which the proposed
Financial Assistance are to be given are fair and reasonable to the
Company; and …’
[27]
Mr Nel confirms an extract from the minutes
of the annual general meeting of the shareholders of SIHL held
earlier that day when
the necessary resolutions authorising SIHL’s
directors to vote on the issue were passed in terms of special
resolution number
3.  He confirms furthermore, that at the time
SIHL’s board did reasonably believe that SIHL was in fact
solvent and
liquid as of December 2013 when the board assessed its
solvency and liquidity as provided for in sec 4 of the Act. SIHPL
also relies
on an independent assessment and analysis by PwC, which
on 25 January 2014, issued a so-called ‘
Fairness
Opinion’
in respect of the
Convertible Bond guaranteed by SIHL to be issued on 30 January
2014 in which they considered
inter alia
whether the terms of the Convertible Bonds were fair and reasonable.
The opinion records that PwC reviewed a range of financial
documents,
including Steinhoff’s audited financial statements for the 2013
financial year, and concluded that the terms and
conditions in
respect of the Convertible Bond were fair to SIHL’s ordinary
shareholders. SIHPL also relied on legal opinions
procured from two
legal firms, one dated 30 January 2014 and the other in August 2015
which reviewed all the relevant documentation
relating to the issue
of Convertible Bonds, including the resolutions referred to above and
which concluded
inter alia
that the Guarantor had full corporate power to enter into and perform
its obligations under the Contracts and Bonds and to provide
the
Guarantee.
[28]
As regard the SIHPL CPU, the first and
second respondents’ case is that this was a mere restatement of
the terms of SIHPL’s
obligations to the Bondholders in terms of
the 2021 Bond and 2014 Guarantee and did not entail SIHPL assuming
any further debt
or providing financial assistance. SIHPL does not
purport to have complied with the provision of sec 45 in relation to
the CPU
since as far as it was concerned it did not constitute a new
provision of financial assistance to SFHG.
[29]
The first and second respondents explained
the genesis of the SIHPL CPU as following after the December 2015
accounting irregularities
revelations which led to SFHG being unable
to comply with the terms of the 2021 Bond. As a result, in December
2018, the original
Bondholders notified SFHG that the bond had become
immediately due and payable and, when the latter failed to satisfy
their demand
for immediate payment, notified SIHPL and demanded
payment from it pursuant to its 2014 Guarantee. As a consequence, the
respondents
state, ‘
SIHPL became
unconditionally liable to discharge the SIHPL payment obligations as
Guarantor and principal debtor under the 2021
Bond’
.
The respondents explain further that as part of its financial
restructuring SIHPL concluded the CPU in terms of which the 2014

Guarantee obligations and its payment obligations were deferred. The
respondents averred that the SIHPL CPU was merely a restatement
of
the terms of SIHPL’s original obligations to the bond holders
and accordingly the deferred terms under the SIHPL CPU apply
without
SIHPL having assumed any further debt or providing financial
assistance. They aver further that as any payments to the
Bondholders
pursuant to the SIHPL CPU will serve to reduce SIHPL’s
‘
crystallised debt’
such payments cannot be regarded as providing further financial
assistance to SFHG.
Preliminary points
[30]
Apart from the substantive issues between
the parties the first and second respondents raised three preliminary
points. Firstly,
they contend that the applicants’ reliance on
sec 45 of the Act is misplaced because the transaction or
transactions sought
to be impugned relate to the provision of
financial assistance to a ‘
foreign
company’
within the meaning of
the
Companies Act whereas
sec 45
does not apply to a foreign company.
[31]
The second preliminary point raised is that
Trevo does not have standing to attack the transaction or
transactions in issue since
it was never a shareholder in SIHPL and
thus has no cognizable legal interest entitling it to apply to court
for the setting aside
the transactions and resolution. A related
point is that Trevo does not have a claim against SIHPL and therefore
lacks locus standi
in these proceedings. As against Hamilton, which
were granted leave to intervene in this application, the first and
second respondents
similarly take the point that since Hamilton was
not a shareholder of SIHPL at the time of the 2014 Guarantee, it too
has no cognizable
legal interest entitling it to the relief sought.
The respondents also contended that Hamilton’s participation in
the application
constitutes an abuse of this Court’s process
inasmuch as it is allegedly being used to obtain a financial benefit
to which
Hamilton is not entitled. This point was not pursued in
argument and I shall say no more of it.
[32]
There was agreement between the parties
that the four main issues which fell to be determined were:
1.
whether the applicants have standing in
these proceedings;
2.
whether foreign companies fall within the
ambit of
sec 45
;
0
in; line-height: 200%">
3.
if so, did SIHL satisfy the requirements of
sec 45
prior to concluding the 2014 Guarantee; and
4.
whether the 2019 CPU constituted the
provision of financial assistance by SIHPL.
[33]
I deal with these issues in turn.
Standing
[34]
The
first and second respondents contend that the applicants are not
‘
proper
plaintiffs’
for the purposes of sec 45 of the Act since a breach of sec 45 is a
wrong done to the company and it is only SIHPL or a shareholder

deploying a derivative action that is entitled to sue. They contend
further that neither applicant has valid claims in law, basing
this
primarily on an analysis of the as yet unreported judgment by
Unterhalter J in
De
Bruyn v Steinhoff International Holdings NV and others
.
[1]
The respondents also rely on the decision in
Hlumisa
Investment Holdings KF Ltd v Kirkinis and others,
[2]
where the Court dealt with the ‘
proper
plaintiff’
principle. The respondents contend further that when a wrong is done
to a company, such as a breach of sec 45, it is the company
that is
the proper plaintiff and in circumstances where the company refuses
to act it is its shareholders, by way of a derivative
action, who
have the right to act. They contend further that any failure by the
directors to satisfy the requirements of sec 45
when granting
financial assistance results in such directors being liable in terms
of sec 77(3)(e)(v) of the Act which, the respondents
contend, points
to a breach of sec 45 being properly construed as a wrong done only
to the company in which event the company is
the proper plaintiff.
[35]
Trevo contends that the proper plaintiff
rule is inapplicable inasmuch as the basis of the relief sought is
SIHPL’s own non-compliance
with sec 45 and not a wrong
committed against SIHPL. They contend further that the present
application is distinguishable from
a derivative action where the
shareholders seeks to compel the company to litigate in respect of a
wrong done to the company in
order ‘
to
protect the legal interests of the company’
.
What is asserted in the present matter is Trevo’s own direct
and substantial interests. For their part Hamilton contends
that the
‘
proper plaintiff’
rule does not apply in the case of a sec 45 challenge since if a
shareholder or creditor were unable to challenge a company’s

decision to provide financial assistance to a related company it
would lead to the unlikely if not absurd result that only the
company
could take issue with such a decision. They contend furthermore that
the ‘
proper plaintiff’
rule arises in the context of a wrong perpetrated against the company
and a need to prevent ‘
double
recovery’
. This is not applicable
to sec 45 challenges, not least because there are no considerations
of a ‘
double recovery’
.
[36]
In my view the judgment in
Hlumisa
is not of direct application to the present circumstances and does
not assist the respondents. That case was concerned with a claim
by
minority shareholders of a company which suffered a dramatic collapse
in its share price. The shareholders sued the company’s

directors and auditors for damages alleging mismanagement of that
company and a subsidiary and a failure by the auditors to adhere
to
auditing standards in their presentation of the subsidiary’s
annual financial statements which hid losses. The principal
issue was
whether
sec 218(2)
of the
Companies Act permitted
the shareholders to
claim in their capacity as individual shareholders against the
directors for their contravention of various
other sections of the
Companies Act. This
in turn raised the applicability of the rule
against recovery of reflective loss. In the present proceedings, by
contrast, the
applicants claim no losses mirroring those which may
have been suffered by the company. They seek to challenge a key
element of
a
sec 155
proposal, which rests on the lawfulness of
financial undertakings which they contend were concluded in breach of
sec 45.
These circumstances are far removed from those in
Hlumisa
and do not, I consider, operate to deprive the applicants of standing
in the present matter. I was referred to no direct authority
dealing
with the issue of which party would have standing to challenge the
provision by a company of financial assistance to a
related party in
contravention of
sec 45
and can see no reason in principle why a
shareholder of a company would not have a sufficient interest to
challenge the latter’s
decision to provide financial assistance
to a related or interrelated party.
[37]
It is correct that in the present instance
Trevo was not a direct shareholder in SIHL or SIHPL. Hamilton
however, advances the claims
of direct shareholders which they have
acquired through assignment. For what it is worth, in Trevo’s
case its damages claim
against SIHPL arises from a contract in terms
of which it purchased SIHPL shares in terms of a forward sale in
October 2015. In
that sense it is by no means a stranger to SIHPL.
[38]
The second aspect of the respondents’
challenge to the applicants’ standing is based on the argument
that ultimately
neither have valid claims against SIHPL in law. This
argument rests on the respondents’ interpretation of the
judgment in
the
De Bruyn
matter which counsel spent much time analysing, dissecting or
distinguishing.  In my view, it is not necessary to discuss
the
merits, ratio or points of similarity between the delictual claims of
the applicants and the class action sought to be certified
in
De
Bruyn
for the simple reason that the
merits of the applicants’ claims are of no direct relevance in
the present application. At
best for the respondents the validity or
otherwise of the applicants’ claims are an issue for any trial
court seized of their
action proceedings. As the applicants contend,
their standing in the present application is based on their inclusion
in the MPC
class of creditors in SIHPL’s sec 155 proposal. As I
understand the proposal, SIHPL proposes to pay some part of a fund
with
a starting capital of €370mil to the MPC claimants,
including the applicants, notwithstanding any negative view it may
have
of the merits of their claim, subject, in the case of Hamilton,
to proper proof that they lawfully hold such claims on behalf of
the
original shareholders. In the
sec 155
term sheet it was specifically
mentioned in an introductory statement that Trevo would be entitled
to ‘
a MPC for shares held on 5
December 2017 purchased from Treemo (Pty) Ltd in cash and preference
shares’
. The final
sec 155
proposal makes it clear, in paras 2.4 and 2.5 of the introductory
section, that if the compromise is approved and sanctioned by
Court
it will become final and binding on all the company’s creditors
who will no longer be able to pursue their claims against
SIHPL, the
audit firm and all directors, officers and other personnel of the
Steinhoff Group.
[39]
In
Public
Protector v Mail and Guardian Ltd and others
[3]
Nugent JA stated as follows regarding the question of whether a party
has standing to bring litigation:
‘
The
common law has no fixed rule that determines whether a party has
standing to bring litigation, and the courts have always taken
a
flexible and practical approach. The right to bring litigation before
the Courts is restricted for various reasons; the Courts
are not
there to pronounce upon academic issues; they are not there to
pronounce upon matters that have no significant consequences
for the
initiating party; they are not there for the benefit of busybodies
who wish to harass others; and so on. Thus the Courts
have always
required that initiating litigants should have an interest in the
matter. The interest that is required has been expressed
in various
forms that are collected in
Cabinet
of the Transitional Government for the territory of South West Africa
v Eins
. It has been expressed as
“an interest in the subject matter of the dispute [that] must
be a direct interest”, and
as “an interest that is not
too remote”, and as “some direct interest in the subject
matter of the litigation
or some grievance special to himself”,
and as “a direct interest in the matter not merely the interest
which all citizens
have”’.
[40]
Trevo and Hamilton have instituted
delictual actions against SIHPL arising from the accounting
irregularities in the Steinhoff Group
and are classed as MPC’s
in SIHPL’s sec 155 proposal. Although SIHPL denies that the MPC
claimants have valid claims
against it, its proposal nonetheless
involves establishing a settlement fund which will be used to settle
this class of claims.
The
sec 155
proposal envisages different terms
for the three classes of creditors with Financial Creditors receiving
the most favourable treatment,
involving payment of approaching 100%
of the face value of claims. If the applicants’ challenge in
terms of sec 45 of the
Act to the financial assistance allegedly
given by SIHL or SIHPL is successful, it is likely to have a direct
impact on the claims
of the Financial Creditors and, potentially at
least, could release further funds to meet the claims of the other
two classes of
creditors. In these circumstances, given their real
and substantial interest in the form and outcome of the sec 155
proposal, the
applicants have standing in these proceedings. They
cannot be said to have an interest that is too remote or only one
which all
citizens have. In the result I find that the applicants
have standing to sue for the relief that they seek in the present
application.
Does section 45
apply to foreign companies?
[41]
As will be seen from the definition of sec
45 cited above, the essential question is whether the phrase ‘
or
to a related or interrelated company or corporation’
in sec 45(2) is properly read as including foreign companies. The
question could be asked why, if the legislature intended foreign

companies to be subject to the provisions of sec 45, it did not refer
to them in terms. But it might equally be asked why, if the
intention
of the drafter was to exclude foreign companies from the ambit of sec
45, this was not explicitly stated.
[42]
A starting point is to consider certain
defined terms in the Act. Before doing so it is to be noted that
section 5 of the Act, under
the heading
‘General
interpretation of the Act’
,
provides that it must be interpreted and applied in a manner that
gives effect to the purposes of the Act as set out in sec 7
which
include to:
‘
(b)
promote the development of the South African economy by-
(i)
encouraging transparency and high
standards of corporate governance as appropriate, given the
significant role of enterprises within
the social and economic life
of the nation;
…
(i) balance the rights
and obligations of shareholders and directors within companies;
(j) encourage the
efficient and responsible management of companies;
…
(l) provide a
predictable and effective environment for the efficient regulation of
companies.’
[43]
The term ‘
company’
and ‘
foreign company’
are defined in the Act. A foreign company ‘
means
an entity incorporated outside the Republic irrespective of whether
it is:
(a)
a profit, or non-profit, entity; or
(b)
carrying on business or non-profit activities as the case may be,
within the Republic’.
whilst a company is
defined as meaning:
‘
a
juristic person incorporated in terms of [the] Act, a domesticated
company or a juristic person that, immediately before the effective

date –
(a) was registered in
terms of the –
(i)
Companies Act, 1973;
…
or
(ii)
Close
Corporations Act 1984
…., if it has subsequently been converted
in terms of Schedule 2.
(b) was in existence
and recognised as an “existing company” in terms of the
Companies Act, 1973; or
(c)
was deregistered in terms of the Companies Act 1973… and has
subsequently been re-registered in terms of this Act’
.
[44]
Clearly a foreign company does not fall
within the above definition of a company. If sec 45(2) is to be
interpreted as covering
foreign companies that leaves only the phrase
or word ‘
corporation’
in sec 45(2) into which the concept of a foreign company can fit. A
corporation is not defined in the Act. According to the Concise

Oxford English Dictionary it is ‘
a
large company or group of companies authorised to act as a single
entity and recognised as such in law’
.
On behalf of the applicants it was contended that the ordinary
meaning of ‘
corporation’
namely, a legal entity separate and distinct from its owners, should
apply without the restrictions imposed by the definition of
‘
company’
which limits that term to South African companies. On behalf of SIHPL
it was contended that to treat ‘
corporation’
as a proxy for a ‘
foreign company’
would be to exceed the permissible bounds of interpretation and stray
into the field of legislating. SIHPL contended furthermore
that such
an interpretation would result in tautology inasmuch as a ‘
company’
is also a legal entity separate and distinct from its owners.
[45]
As
has been authoritatively said or restated in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
,
[4]
and as most recently endorsed by the Constitutional Court in
Democratic
Alliance v African National Congress
,
[5]
the logical point of departure in the interpretation of a document,
be it contractual or statutory, is the language itself, read
in the
context of the overall document, having regard to the purpose of the
provision and against the background to the production
of the
relevant document.
‘
Whatever
the nature of the document, consideration must be given to the
language used in the light of the ordinary rules of grammar
and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material known to
those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the light of
all these
factors. The process is objective not subjective. A sensible meaning
is to be preferred to one that leads to insensible
or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against, the temptation
to substitute
what they regard as reasonable, sensible or businesslike for the
words actually used. To do so in regard to a statute
or statutory
instrument is to cross the divide between interpretation and
legislation;’.
[46]
Applying these principles to sec 45 and, in
particular, to the relevant subsection and the phrase ‘
or
to a related or interrelated company or corporation’
,
requires in the first instance recourse being had to the definitions
section of the Act. Given the relatively wide definition
of ‘
company’
one has to ask why the apparently tautologous words ‘
or
corporation’
are used as well. On
behalf of SIHPL, Mr Smalberger submitted that the word could only be
a reference to a close corporation, pointing
out that such a juristic
person does not fall within the definition of company. However, close
corporations are defined in terms
of the Act and one would expect
they would be referred to as such if the drafter intended, through
the use of the word ‘
corporation’
,
to bring them within sec 45(2). Mr Smalberger submitted that the word
‘
corporation’
was often used as shorthand for ‘
close
corporation’
and referred in this
regard to Schedules 2 and 3 to the Act. The only instance of this
occurring in Schedule 2 is in item 1(2)(a)
in the words ‘
a
written statement of consent approving the conversion of the close
corporation signed by members of the
corporation
holding in aggregate, at least 75% of the members’ interest in
the
corporation
;’
.
This single instance of such a use in Schedule 2 in my view carries
little weight in the interpretation of the term ‘
corporation’
in sec 45(2) for two reasons. Firstly, Schedule 2 specifically deals
with the conversion of a close corporation to a company and
so any
reference to a corporation therein would be unlikely to be mistaken
for anything else other than a close corporation. Secondly,
in the
subparagraph in question, 1(2)(a), the use of the word ‘
corporation’
as shorthand for close corporation is clear and merely an instance of
not using otiose words. The same considerations apply to
the use of
the word ‘
corporation’
in certain headings in Schedule 3.
[47]
Mr Smalberger contended that another
textual indication that ‘
corporation’
means a ‘
close corporation’
is the use of the word ‘
member’
in sec 45(2) coupled with the word ‘
corporation’
inasmuch as it is trite that close corporations have members. A close
corporation does have members but the term ‘
member’
also has a wider meaning in relation to juristic persons or
corporations. This is recognised in the Act’s definitions
section
which provides that in reference to entities other than a
close corporation or non-profit company, ‘
member’
means ‘
a person who is a
constituent part of that entity’
.
[48]
The
presumption against superfluity is a well-known doctrine in the
interpretation of statutes. It was crisply stated in
Wellworths
Bazaar Ltd v Chandlers Ltd
[6]
as follows:
‘
One
who reads a legal document, whether public or private, should not be
prompt to ascribe and should not without necessity or some
sound
reason, impute to its language, tautology or superfluity, and should
rather at the outset be inclined to suppose every word
intended to
have some effect or to be of some use
.’
[49]
Counsel for the applicants submitted,
without contradiction, that the word ‘
corporation’
is used only once in the 225 sections of the Act, i.e. apart from in
Schedules 2 and 3. This too suggests that the word ‘
corporation’
was used by design in sec 45(2)(a) and not as a form of shorthand for
a close corporation. The question arises whether ‘
close
corporations’
are excluded from
the provisions of sec 45(2)(a) when they are not mentioned by name
which would, on the face of it, be a surprising
result. However, if
the word ‘
corporation’
in sec 45(2)(a) is given a wide and inclusive meaning it would
include close corporations, resolve other apparent anomalies and

render the word ‘
corporation’
non-tautologous. Such an interpretation would also constitute textual
justification for the apparent omission of the phrase ‘
foreign
company’
since such an entity
would be subsumed within the category of ‘
corporation’
.
[50]
Of course an examination of the text alone,
without having regard to the context in which the provision appears
and the apparent
purpose to which it is directed, would involve an
incomplete interpretation exercise. The mischief which sec 45 seeks
to prevent
is that of a company’s directors abusing their
powers by providing financial assistance to external entities or
persons on
terms which have insufficient regard to the interests of
the company’s creditors and shareholders. In my view, the
purpose
of sec 45, as well as those purposes of the Act which I have
cited, are served by broadening rather than narrowing the class of

related parties to which sec 45 applies and, on the face of it, there
appears to be no plausible reason for excluding financial
assistance
by a local company to a related a foreign company from its operation.
If not so interpreted, a company’s directors’
intent on
providing financial assistance to an otherwise affected party, but
seeking to avoid the strictures of sec 45(3)(b), could
circumvent its
provisions by making use of a foreign company in a circuitous manner.
[51]
On
behalf of SIHPL Mr Smalberger submitted that the exclusion of foreign
companies from sec 45’s reach is perfectly logical
in that its
inclusion would be to subject international companies, having no
presence or business in South Africa, to South African
law. In
support of this submission he relied on
CMC
Di Ravenna SC and Others v Companies and Intellectual Property
Commission and Others.
[7]
I do not see the application of sec 45 to foreign companies, however,
as amounting to a regulation or over-regulation of
foreign companies.
On the interpretation which I favour, sec 45’s strictures apply
only to South African companies and are
extended to foreign companies
only to the extent that such companies may not be the
recipient
of financial assistance from South African companies unless the
provisions of sec 45 are met by the local company. Seen from this

perspective, interpreting sec 45(2) as extending to foreign companies
makes sense, is in keeping with apparent purpose of sec 45,
provides
a sensible and businesslike meaning to the subsection and accords
with those purposes of the Act highlighted above.
[8]
[52]
Having regard to the language used in sec
45(2)(a), eschewing superfluity and having regard to the purpose of
sec 45 provisions
as a whole, I consider that the legislature indeed
intended that foreign companies would fall within the class of
persons to whom
financial assistance could only be extended by local
companies upon compliance by the latter with the provisions of sec
45(3).
Did SIHPL satisfy
the requirements of sec 45 prior to the issuance of the 2014
Guarantee?
[53]
It is common cause that in 2014 SIHL issued
a guarantee for a Convertible Bonds issue by SFHG, a related Austrian
company in an
amount of €465mil. The bond issue was made to
creditors on or about 30 January 2014, the bonds having an original
maturity
date of 30 January 2021. The 2021 Bond was issued as a
‘
Guarantee C Bond to the
Bondholders’
who lent SFHG €465
million. The terms of the 2014 Guarantee were set out in clause 5 of
an Amended Restated Trust Deed, dated
23 November 2015. The
parties to the Trust Deed were SFHG, SIHL, SIHNV and Citi Corp
Trustee Company Ltd. The relevant portions
read as follows:
‘
5.
Guarantee and Indemnity by SIHL
5.1
Guarantee: SIHL unconditionally and irrevocably guarantees that if
the Issuer (SFHG) does not pay any
sum payable by it under this Trust
Deed or the Bond by the time and on the date specified for such
payment (whether on the normal
due date, on acceleration or
otherwise), SIHL will pay that sum to or to the order of the Trustee,
… in London in euro in
immediately available funds) before
close of business on that day in the city to which payment is to be
made.
…
5.2
SIHL as Principal Debtor
As between SIHL and
the Trustee and the Bondholders but without affecting the Issuer’s
obligations, SIHL will be liable under
this Clause 5 as if it were
the sole principal debtor and not merely a surety. Accordingly, it
will not be discharged, nor will
its liability be affected, by
anything that would not discharge it or affect its liability if it
were the sole principal debtor.
…
5.3
Guarantor’s Obligations
Continuing
SIHL’s
obligations under this Trust Deed are and will remain in full force
and effect by way of continuing security until
no sum remains payable
under this Trust Deed or the Bond. …’
[54]
The applicants’ case is that the 2014
Guarantee constituted the provision of financial assistance by SIHL
to a related or
interrelated company in terms of sections 45(1) and
(2) of the Act because at the relevant time SFHG was a subsidiary of
SIHL.
I find that sec 45 was applicable to this transaction. They
contend further that in terms of sec 45(3) of the Act SIHL’s

board was prohibited from authorising the 2014 Guarantee unless it
was satisfied that:
i)
immediately after providing the financial
assistance in question SIHL would have satisfied the solvency and
liquidity test; and
ii)
the terms under which the 2014 Guarantee
was proposed to be given were fair and reasonable to SIHL.
[55]
The provisions of the solvency and the
liquidity test are set out in sec 4 of the Act and provide as
follows:
‘
(1)
For any purpose of this Act, a company satisfies the solvency and
liquidity test at a particular time
if, considering all reasonably
foreseeable financial circumstances of the company at that time -
(a)
the assets of the company, as fairly
valued, equal or exceed the liabilities of the company, as fairly
valued; and
(b)
it appears that the company will be
able to pay its debts as they become due in the ordinary course of
business for a period of
-
(i)
12 months after the date on which
the test is considered; …
(2)
For the purposes contemplated in
subsection (1) -
(a)
any financial information to be
considered concerning the company must be based on -
(i)
accounting records that satisfy the
requirements of section 28; and
(ii)
financial statements that satisfy
the requirements of section 29.
(b)
Subject to paragraph (c) the board
or any other person applying the solvency and liquidity test to a
company -
(i)
must consider a fair valuation of
the company’s assets and liabilities, including any reasonably
foreseeable contingent assets
and liabilities, irrespective of
whether or not arising as a result of the proposed distribution, or
otherwise; and
(ii)
may consider any other valuation of
the company’s assets and liabilities that is reasonable in the
circumstances; …’
[56]
Trevo contends that, notwithstanding the
resolution of SIHL’s board of directors in January 2014
approving the 2014 Guarantee,
SIHL nonetheless failed to comply with
the provisions of sec 45 in that at the time it was factually and
materially insolvent because
its liabilities exceeded its assets on a
consolidated basis by between €700mil and €1.3bil. Trevo
relies on a financial
analysis prepared in February 2021 by Professor
Geoff Everingham, an independent accounting expert, in which he
expresses the view
that at the relevant time SIHL’s tangible
net asset value as reflected in the relevant balance sheet was
negative, and that
the value of the intangible assets (comprising
goodwill, brands and trade names) was significantly overstated. Trevo
contends further
that the financial information considered by SIHL’s
board when authorising the issue of the 2014 Guarantee in January
2014
could not have satisfied the requirements of sec 4(2) of
the Act in that its financial statements from 2009 to 2013 were
materially
misleading as a consequence of fictitious transactions and
accounting irregularities and therefore required restatement.
[57]
Trevo contends that given the extent of
SIHL’s insolvency at the time that the 2014 Guarantee was
issued and the unreliability
of its financial statements from 2009 to
2013, SIHL’s board, acting reasonably, could not have satisfied
itself that it met
the solvency and liquidity test immediately after
guaranteeing SFHG’s debt in terms of the 2021 Bond. Hamilton
aligns itself
with the stance adopted by Trevo.
[58]
SIHPL’s response is to contend that
an assessment of SIHL’s compliance with sec 45’s
provisions has to be
undertaken with reference to the documentation
and information that served before SIHL’s board at the time the
financial
assistance was approved; further, that the board acted
reasonably in concluding that immediately after providing the
financial
assistance to which the 2014 Guarantee related, SIHL
satisfied the solvency and liquidity test and, furthermore, that the
terms
under which the financial assistance was proposed and given
were fair and reasonable to SIHL.
[59]
In making its case SIHPL relied on
the affidavit of Mr Frederick Nel who was financial director of SIHL
at the time of the December
2013 meeting. He attended the board
meeting on 3 December 2013 and was party to the resolution
approving the financial assistance
to SFHG. Mr Nel testified that at
the time of considering the resolution the board reviewed SIHL’s
financial statements for
the year ending 30 June 2013, its working
capital requirements, the solvency and liquidity test and whether the
terms on which
the financial assistance was to be provided were fair
and reasonable to SIHL. The June 2013 financial statements recorded
that
SIHL was solvent and would be so after providing the financial
assistance in question. Mr Nel contended that the board reasonably

believed that the solvency and liquidity test were satisfied.
[60]
SIHPL also relies on an independent
assessment by PwC prior to the bond issue, entitled ‘Fairness
Opinion’ which concluded
that the terms and conditions in
respect of the Convertible Bond were fair to the ordinary
shareholders of SIHL. SIHPL relies too
on its published 2013
Integrated Report which confirmed that the net equity value of SIHL
as at 30 June 2013 was R66.619bil, i.e. even
if SIHL had paid
off all its liabilities and debt that amount would be available to
its shareholders; that SIHL’s cash and
cash equivalents at 30
June 2013 was R9.188bil, being an amount that could be converted into
cash immediately as at 30 June 2013,
and that the solvency and
liquidity test required in terms of sec 45 of the Act would thus have
been satisfied as at that date.
Reliance was also placed on SIHL’s
unaudited interim results for the 6-month period ending 31 December
2013, i.e. shortly
after the resolution was taken, which
revealed that its net asset value at that date was R82.148bil and its
cash and cash equivalents
were R10.947bil.
[61]
In
argument Trevo contended that given the extent of SIHL’s
insolvency as at June 2013, as determined by Professor Everingham
in
his analysis, its directors, acting reasonably, could not have been
satisfied that the solvency and liquidity test had been
met. Trevo
contends that sec 45(3)(b) and in particular the words ‘
the
board is satisfied’
requires something more than a purely subjective belief on the part
of the directors and must be interpreted as meaning a subjective

satisfaction based on reasonable grounds. This approach carries the
approval of the authors of Henochsberg
[9]
who reason that the expression the ‘
board
is satisfied’
means that the particular board is satisfied, which is a subjective
test, but qualified by the objective ‘
reasonably
foreseeable circumstances’
in sec 4. Actual (objective) solvency and liquidity is,
therefore, not the test. Support for this interpretation is also to

be found in the remarks of Binns-Ward J in
Da
Cruz and Others v City of Cape Town and Others
[10]
to the effect that in such an instance it is not a matter of pure
judgment, however
bona
fide
it may be, since the decision-maker is required to have regard to the
objectively relevant facts and must make a reasonable judgment
on the
basis of them. I accept the submission of the applicants that the
purely subjective belief of directors can never be a sufficient
test
since in that event a wilfully, or even negligently, ignorant
judgment would suffice in the face of obviously foreseeable

circumstances pointing in a different direction.
[62]
Trevo contends that SIHL’s directors
did not act reasonably
inter alia
when they relied on financial statements which were five months old,
i.e. the June 2013 annual financial statements; but even accepting

those financial statements, the board, acting reasonably, should have
interrogated them in which event alarm bells should have
sounded in
respect of three aspects, namely goodwill and intangibles, liquidity,
and an impairment of a loss-making subsidiary,
the JD Group. In
regard to goodwill and intangibles it was contended that the value
attributed thereto should have been more carefully
scrutinised and
had been overstated by an amount of €4.573mil. In regard to
liquidity considerations Trevo contended that
SIHL’s directors
should have utilised widely acceptable financial ratios to assess the
liquidity of the Group in which event
these would have revealed that
the ratios were below those which would generally be considered safe
and acceptable. Further, it
was submitted, notwithstanding the
board’s knowledge of the poor financial performance of the JD
Group, it had not considered
any impairment of its investment therein
and had they done so they would not have been satisfied that
immediately after the financial
assistance had been rendered SIHL
would have satisfied the solvency and liquidity test in sec 4 of
the Act.
[63]
Finally, Trevo contends that since both
Messrs Markus Jooste and Ben Le Grange, as directors and CEO and
CFO respectively,
were present at the December 2014 board meeting and
that given their knowledge of the irregular and fictitious
transactions which
had the effect of substantially inflating the
profit  and asset values of the Steinhoff group over an extended
period, they
could not have been satisfied that the solvency and
liquidity test would have been met or that the 2013 annual financial
statements
complied with the requirements of sections 28 and 29 of
the Act. It was further contended that SIHL could not simultaneously
hold
a contradictory position within its board of directors.
[64]
Professor Everingham, who is well qualified
to offer an opinion on accounting matters, prepared a report entitled
Opinion as to
Solvency of Steinhoff Group Company. He did this based
on an analysis prepared by Mr J Enslin, a chartered accountant and
the deponent
to Trevo’s founding affidavit in his capacity as
director of the company having beneficial ownership thereof. Mr
Enslin appears
to have considered the restatements which appear in
Steinhoff NV’s consolidated financial statements for the period
ending
30 December 2017 which corrected prior period errors and
disclosure deficiencies following the revelations in December 2017.
The
conclusion Professor Everingham arrived at is that in truth SIHL
was insolvent on the 30 June 2013 and 30 June 2014.
[65]
Hamilton generally align themselves with
the submissions made by Trevo and likewise contend that the failure
by Messrs Jooste and
Le Grange, at the meeting in December 2013, to
disclose to the remainder of the board that the 2013 annual financial
statements
were unreliable as not taking into account fictitious
and/or irregular transactions which had a material impact on SIHL’s

financial performance, meant that the SIHL board could not be
regarded as having acted reasonably in satisfying itself that the

solvency and liquidity test would be met immediately after concluding
the SIHPL Guarantee.
Discussion
[66]
The applicants’ challenge to the 2014
Guarantee is based largely on an accounting exercise in turn premised
upon financial
irregularities and misstatements which only came to
light some three years later. It presupposes that SIHL’s board,
were
it to have acted reasonably, would have uncovered the
irregularities and would have realised that the audited financial
statements
were inaccurate. The question is whether the assumptions
implicit in this argument are realistic and whether there is a
bona
fide
factual dispute at play in which
event SIHPL’s version, if not untenable or far-fetched, cannot
be rejected out of hand and
must prevail on the basis of the
Plascon-Evans
principles.
[67]
The evidence emanating from SIHPL, which in
part has been summarised above, is that its board was comprised of a
large number of
individuals with a wide array of skills and
experience, including expertise in accounting, and that it reviewed
the June 2013 financial
statements and other documentation in
considering whether the 2014 Guarantee should be given. SIHPL also
presented the evidence
of a board member, Mr Nel, who confirmed
that the board, acting as a whole, reasonably believed the solvency
and liquidity
test had been satisfied. Needless to say, this would
exclude the two directors, Messrs Jooste and Le Grange, who are
alleged to
have been implicated in the financial irregularities. The
financial statements then available and approved by Deloitte and
Touche
clearly suggest that SIHL could give the financial assistance
in question without any threat to its solvency or liquidity. At the

time SIHL’s cash and cash equivalents amounted to R9.188bil,
many times more than the financial assistance being provided.
As has
also been mentioned, SIHL’s board sought advice on the fairness
and reasonableness of the terms of financial assistance
from PwC and
two reputable law firms. Nor do I consider that the applicants’
remaining criticisms of the board’s reliance
on the 2013
financial statements have sufficient weight to conclude that it acted
unreasonably in relying on them and approving
the financial
assistance.
[68]
As far as the over-valuation of intangible
assets is concerned, as was pointed out by SIHPL, the 2013 financial
statements include
R41.5bil of intangible assets. Even if this figure
was overstated there would certainly be no basis for a wholesale
reduction of
this figure based as it was on intangible assets
including licences for software patents and trademarks, trade and
brand names.
[69]
As regards the treatment of the JD Group,
it would appear that the directors were well aware that its profits
had declined in preceding
years, but this was discussed at the board
meeting on 3 December 2013 and, in addition, was referred to in the
report of the audit
committee.
[70]
SIHPL’s director and CEO, Mr Du
Preez, pointed out in his opposing affidavit that the guaranteed
amount of the 2014 Guarantee
was just less than R6bil, but that as of
30 June 2013 the company held cash and equivalents in excess of
R9bil; furthermore, these
cash and equivalents increased from R9bil
in 2013 to approximately R16.3bil in June 2014 which serves to
vindicate the board’s
judgment, in December 2013, that it had
sufficient cash on hand to meet any claim under the 2014 Guarantee.
[71]
The fundamental difficulty in the
applicants’ challenge to the 2014 Guarantee is that it is
almost wholly reliant on
ex post facto
analysis of the company’s financial position made with the
benefit of hindsight following the revelations of December 2017
and
the accounting revisions of 2019. Given that the applicants seek
final relief in motion proceedings and that there is, in my
view, a
bona fide
dispute of fact in regard to this issue I consider that SIHPL’s
version is certainly not untenable or farfetched and thus
cannot be
rejected. Finally, I should add that, based on SIHPL’s version
of the December 2013 board meeting, which on these
papers I must
accept, at worst for it two members of an eighteen-strong board were,
it is alleged, secretly aware of gross financial
irregularities which
completely distorted and rendered inaccurate SIHPL’s financial
statements. In my view, however, purely
on this scenario it cannot be
said that the entire board’s decision was thereby tainted and
cannot stand.
[72]
It follows that the applicants have failed
to make out a case that the board, acting reasonably, could or should
not have been satisfied
that the financial assistance in the form of
the 2014 Guarantee satisfied both the solvency and liquidity test and
that its terms
were fair and reasonable. In the result the applicants
have not made out a case that the 2014 Guarantee is void for want of
compliance
with sec 45.
Is the SIHPL CPU
void for lack of compliance with sec 45?
[73]
The next issue to be determined is whether
SIHPL CPU is void by virtue of sec 45(6) of the Act. The origin of
the CPU was the 2014
Guarantee and the events of December 2017 when
revelations surfaced about the extent of financial irregularities in
the Steinhoff
Group. These were described by Steinhoff International
Holdings NV’s CEO, Mr Du Preez, the ultimate holding company of
SIHPL,
as follows:
‘
In
December 2017, an investigation into the alleged accounting
irregularities within the Steinhoff Group commenced. There were acts

of default on the part of SFH (SFHG) with respect to the Bond, and
the bond holders called upon the 2014 Guarantee. SIHPL in consequence

concluded … the SIHPL CPU, which merely deferred the existing
payment obligations under the 2014 Guarantee. The SIHPL CPU
was not a
new provision of financial assistance. It was an affirmation of the
financial assistance already provided by SIHPL to
SFH(G) in 2014.’
[74]
He describes these developments in further
detail as follows:
‘
During
2018 and 2019, the Steinhoff Group inter alia put in place a
financial restructuring to extend its financings until 31 December

2021, including under the terms of what is known as
“
Contingent
Payment Undertakings (‘CPU’)”
,
entered into by inter alia by SIHNV, a Dutch registered company, and
the ultimate holding company of the Steinhoff Group, and
SIHPL, being
a restatement of public payment obligations arising from guarantees
previously given (i.e. including the 2014 Guarantee)’.
[75]
Mr Du Preez provides the following
rationale for the assertion that the SIHPL CPU did not amount to the
provision of financial assistance
in terms of sec 45:
‘
84.
Accordingly, the deferred terms under the SIHPL CPU apply without
SIHPL assuming any further debt or providing
financial assistance.
Moreover, as any payments to the bond holders under the Bond pursuant
to the SIHPL CPU will serve to reduce
SIHPL’s crystallised
debt, such payments cannot be regarded as providing further financial
assistance to SFH. The financial
assistance (to the extent that it
qualifies as such) was given when the 2014 Guarantee was issued’.
[76]
During argument an objection was raised by
Hamilton to the use by the respondents of the provisions of the SFHG
CVA without it having
been properly introduced into evidence. The
objection was sustained whereupon the respondents successfully
applied to supplement
their answering affidavit by introducing the
CVA and contextualising it. The applicants filed supplementary
replying affidavits,
the overall result being that the parties
refined their cases in regard to the 2019 CPU.
[77]
In summary SIHPL explained the history and
meaning of the SFHG CVA as follows. SFHG was an Austrian incorporated
company but by
November 2018 its ‘
centre
of main interest’
was in England,
thus making it eligible to utilise an English law statutory rescue
and compromise procedure introduced into law
by Part 1 of Chapter 8
of the Insolvency Act, 1986 (c45), called a ‘
company
voluntary arrangement’
, which it
did in the form of the SFHG CVA. At the same time, Steinhoff Europe
AG (‘SEAG’) another Austrian company,
and a holding
company for key Steinhoff European investments within the Steinhoff
Group, also proposed a CVA of its own.
[78]
A CVA allows a company, represented by its
directors, alternatively by its liquidator or administrator, to make
a proposal to its
unsecured creditors to resolve its financial
liabilities where the alternative is an insolvency procedure such as
a liquidation
or the English law equivalent of a South African
business rescue procedure. Whilst the proposal is being considered,
and if the
proposal has not been made by the liquidator or
administrator of the company concerned, an independent ‘
Nominee’
or ‘
Nominees’
(usually licenced insolvency practitioners) are appointed and have to
satisfy themselves as to the company’s financial position,
the
proposal’s prospects of being implemented successfully and that
there is no manifest unfairness. The Nominees report
to creditors in
writing on any meeting of creditors convened to consider the CVA
proposal. For the proposal to pass at a creditors
meeting it has to
be approved by at least 75% in value of creditors present at the
meeting and by at least 50% of the shareholders
present at the
meeting and voting on the resolution. Once the proposal is approved
it binds all creditors and shareholders who
were entitled to vote at
the meeting or would have been entitled if they had notice. The
Nominees become the ‘
Supervisors’
and their role is to supervise the implementation of the CVA and to
scrutinise compliance with its terms.
[79]
Mr Du Preez proceeded to explain where the
SFHG CVA fitted into the Steinhoff restructuring process. It began
with the 5 December
2017 SIHNV public announcement that new
information had surfaced relating to possible accounting
irregularities and a subsequent
investigation by PwC into such
irregularities and/or possible violations of laws. This led in time
to an overview of the PwC report
being published on the Steinhoff
Group’s website on 15 March 2019 as well as announcements by
SIHNV that its 2015 and 2016
financial statements could no longer be
relied on and had to be revised and that its financial statements of
previous years might
also have to be revised.
[80]
Following these developments and the
related precipitous fall in the Steinhoff share price, various
investigations, civil liability
proceedings and class actions were
initiated against SIHNV or SIHPL in Germany, South Africa and The
Netherlands. Several bank
loans and (convertible) bonds that
Steinhoff Group companies had previously obtained or issued were also
on the verge of becoming
due and payable or were cancelled whilst
guarantees of Group debt given by SIHNV and SIHPL became capable of
being demanded. These
and other adverse financial developments
occasioned by the 2017 crisis placed the Steinhoff Group in ‘
severe
financial difficulty’
to the
extent that in early 2018 the Steinhoff Group debt was estimated to
be approximately €10.2bil.
[81]
One of the Group’s priorities was to
stabilise the Steinhoff Group holding companies to prevent ‘
a
widespread multi-jurisdictional insolvency of the group entities’
which would likely cause ‘
value
destruction for all stakeholders’
.
SIHNV, SIHPL, SFHG and SEAG, as the key holding companies in the
Group, engaged in negotiations with an
ad
hoc
group of the Group’s
financial creditors and their legal and financial advisors in the
first half of 2018 with a view to
agreeing a medium-term financial
restructuring in respect of the Group’s holding companies’
debt. These negotiations
culminated in a Lock-Up Agreement in July
2018 involving an obligation on financial creditors to support and
implement the financial
restructuring in accordance with appended
term sheets.
[82]
Key commercial principles in the Lock-Up
Agreement were a three-year extension of debt maturity to 31 December
2021, creditors agreeing
not to exercise their enforcement rights
under all financial instruments and a revised credit and security
structure and package
of undertakings and events of default to
reflect the new state of the Group’s affairs. The Lock-Up
Agreement contemplated
the financial restructuring of SFHG and SEAG
through English law CVA’s. The SFHG CVA was inter-conditional
on the effectiveness
of the SEAG CVA and these CVA proposals were
approved by the respective boards on 29 November 2018 and published
the following
day. The CVAs were approved by creditors with the
requisite majorities on 14 December 2018.
The terms of the
SFHG CVA
[83]
The terms of the SFHG CVA became effective
following its approval on 14 December 2018 and its completion
was specified to occur
on 13 August 2019. The SFHG CVA is split into
sec 1, which describes the proposal, and section 2, which contains
its terms. Section
1 contains,
inter
alia
, a summary of the key terms of the
restructuring and the SFHG CVA itself. The terms include the
conditions precedent to launching
the restructuring, the sequence and
implementation of steps for the restructuring, the terms for the
calculation and receipts of
entitlements and various other
conditions. According to Mr Du Preez, the first restructuring step
was the conclusion of the CPU
since the failure to conclude the CPU
would have presented ‘
an
insuperable obstacle to the remainder of the Restructuring Steps’
.
[84]
The CVA is a lengthy and detailed document
running to more than 300 closely typed pages. In paragraph 5.2 under
the heading ‘
Implementation of the
Restructuring by SFHG’
the
following was explained:
‘
5.2.2
The Existing SFHG Debt will be reconstituted as follows:
i)
The issuance of the New Lux
Finco 1 21/22 Loan and the New Lux Finco 1 23 Loan by Lux Finco 1,
and guaranteed by SFHG from the Implementation
Commencement Date, on
a cashless basis to the SFHG creditors pro rata to their holdings of
Existing SFHG Debt;
ii)
Lux Finco 1 will onlend the deemed
cashless proceeds from the New Lux Finco 1 21/22 Loan and the New Lux
Finco 1 23 Loan to SFHG
pursuant to the Lux Finco 1 Intercompany
Agreement; and
iii)
The Existing Guarantee given by
SIHPL will either be amended or restructured as a contingent payment
undertaking depending on the
circumstances applicable to SIHPL
…
5.2.4 The net effects
of these steps is, in summary, that SFHG Creditors who hold existing
SFHG Debt will have such debt …
restated pursuant to revised
terms and maturity.’
[85]
Clause 8.4. in section 2 of the CVA is of
importance and, insofar as it is relevant, reads as follows:
‘
8.4
Treatment of Existing SFHG Debt
8.4.1
Save only for the indemnities provided under (i) clause 12.5 of the
Trust Deed dated 23 November 2015, as amended, restated
and/or
supplemented from time to time in relation to the SFHG 2021
Convertible Bonds and … in respect of the notices of
demand
and acceleration issued by the relevant SFHG Trustee on 12 December
2018 and for the benefit of the relevant SFHG Trustee
only, with
effect from the time at which the Lux Finco 1 Inter Company Agreement
becomes effective in accordance with its terms,
in consideration for
the restructuring and the payment terms constituted by the New Lux
Fi
nco
1 Loans, SFHG shall have no further liabilities or obligations to a
SFHG Creditor, arising out of or in connection with the
Convertible
Bonds, the Support letters and the Lock-up Agreement … under
the applicable Convertible Bonds.
[my
highlighting]
8.4.2
In relation to the entry into of either the SIHPL
Guarantee
obligation or the SIHPL Contingent Payment Undertaking (as
applicable) or the SFHG Contingent Payment Undertakings, nothing
in
this Proposal or the SFHG CVA, including the restructuring of the
obligations of SFHG pursuant to the Convertible Bonds, shall
operate
to discharge or release SIHPL and SIHNV from any liability or
obligation in respect of the SFHG 2021 Convertible Bonds,
…
which shall be restructured on the terms set out in either the SIHPL
Guarantee Obligation or the SIHPL Contingent Payment
Undertaking (as
applicable) and the SFHG Contingent Payment Undertakings, the
conditions of which shall apply following the occurrence
of the
Restructuring Effect Date.’
[86]
Mr Du Preez stated in his supplementary
affidavit that he had been advised that the upshot of the CVA was
that SFHG’s debt
to the Bondholders (i.e. the Financial
Creditors) was ‘
restated’
by Lux Finco 1 in the form of the New Lux Finco 1 21/22 Loan. He
added that the rationale for the exchange of the Convertible Bonds

(listed debt instruments) for private loan instruments was primarily
to ensure that the Financial Creditors would be able to benefit
from
an ‘
enhanced reporting regime’
more typical under a private debt instrument. ‘
For
this reason and for reasons of preferred jurisdiction and greater
certainty, Lux Finco 1 was put in place as the issuer of the
new
loans which were ‘exchanged’ for the Convertible Bonds
issued by SFHG’
. He explained
that SIHPL’s obligations in terms of the 2014 Guarantee were
accelerated in terms of the notice dated 12 December
2018, the effect
of which was to ‘
crystallise’
SIHPL’s obligations to the Financial Creditors.
The SIHPL
Contingent Payment Undertaking
[87]
The next relevant document is the SIHPL CPU
dated 12 August 2019 created by SIHPL in favour of the second
respondent acting as agent
of the Financial Creditors under the SFHG
21/22 Facilities Agreement and which runs to some 40 closely typed
pages. The most relevant
portions are the background, certain of the
definitions, certain acknowledgments made by SIHPL in paragraph 2,
the setting out
of its obligations in paragraph 3, as well as the
application of payments in paragraph 3.3.
[88]
To the extent relevant, the background
reads:
‘
(A).
SIHPL provided the SFHG 2021 Guarantee for the benefit of the
Original 2021 Bondholders in connection with
the financial
indebtedness incurred by the Original Issuer (SFHG) pursuant to the
SFHG 2021 Convertible Bonds …
(B).
By entering into the SFHG 2021 Trust Deed, SIHPL agreed to the
following terms of the SFHG 2021 Guarantee
…
(a)
… following the occurrence of an event of default under the
SFHG 2021 Convertible Bonds
and a failure by the Original Issuer to
pay the amount due, SIHPL is required to pay such amount to …
the … Trustee;
(b)
… SIHPL would be liable for such amount as a principal debtor
and not merely as a surety,
and waived the right for demand to be
made on the first Original Issuer;
(c)
… the liability of SIHPL pursuant to the Guarantee would be a
primary obligation to indemnify
the SFHG 2021 Trustee and any holder
of the … Convertible Bonds against any loss suffered by them
as a consequence of any
sum not being paid under the SFHG 2021 Trust
Deed on its date for payment.
…
…
(D).    On 5
December 2017 SIHNV made an announcement regarding an investigation
into financial irregularities within
the Group. As a consequence of
these accounting irregularities, subsequent failures by the Original
Issuer and SIHNV to comply
with the terms of both the SFHG 2021 Trust
Deed … a number of events of default have occurred under each
of the SFHG 2021
Trust Deed … or would have occurred if the
Lock-Up Agreement had not been entered into …
(E).
Prior to the date of this Deed, the SFHG 2021 Trustee on behalf of
the Original 2021 Bondholders notified
the Original Issuer that the
SFHG 2021 Convertible Bonds had, as a consequence … become
immediately due and payable.
…
…
(G).
Following the 2021 Acceleration … and as a condition of the
SFHG 21/22 Facility, in consideration
of the Original Bondholders
deferring and restructuring their claims under the Guarantees and the
Subsisting Defaults being waiv
ed,
such that the debt due under the Original Guarantees will not remain
immediately due and payable, SIHPL has agreed to repay
its
indebtedness under each of the Guarantees on the terms set out in
this Deed.
This
agreement shall also be conditional upon the restructuring of the
financial indebtedness arising under the Original Financing

Agreements and certain other financing agreements pursuant to which
the terms applicable to the financial indebtedness incurred
by the
Original Issuer pursuant to the SFHG 2021 Trust Deed … will be
aligned as set out in the Company Voluntary Arrangement.
[
my
highlighting]
(H).
SIHPL and the Agent on behalf of each Creditor enter into this Deed
in connection with the SFHG 21/22 Facilities
Agreement’
.
[89]
The following clauses of the CPU are
relevant:
‘
2.2
Acknowledgement of SFHG 2021 Convertible Bonds Debt
…
(b)
SIHPL acknowledges that as a consequence of the 2021 Acceleration and
the failure by the Original
Issuer to pay the sum payable …
SIHPL is liable to pay amounts due under the SFHG 2021 Trust Deed as
guarantor pursuant
to clause 5.1 of the SFHG 2021 Trust Deed and
SIHPL is liable as if it were the sole principal debtor pursuant to
Clause 5.2.
...
2.4
Terms of deferral of Accelerated Primary 2021 Debt
The Creditors and
SIHPL hereby agree to the terms of this Deed in consideration for the
deferral of the payment of the Primary 2021
Debt in connection with
the 2021 Acceleration … on the terms set out in this Deed
including the crystallisation of the Primary
2021 Debt at a fixed
amount of the par value of the SFHG 2021 Convertible Bonds.
3.
SIHPL Obligations
3.1
Deferred Contingent Payment Undertaking
(a)
Subject to paragraphs (b) and (c) below and to clause 3.2
(Liability), SIHPL undertakes to pay
to the Agent … the
Payment Amount immediately on demand in writing from the Agent …
(provided that no such demand
may be made by the Agent …
before the Maturity Date (and any demand made or instructions given
prior to the Maturity Date
shall be invalid …)
(b)
The Finance Parties acknowledge that SIHPL’s obligations to pay
under paragraph (a) above
is contingent upon the termination date not
having occurred.
(c)
If the Termination Date has occurred, SIHPL shall cease to be liable
to make any payment under
paragraph (a) above.
…
3.2
Liability Cap
(a)
Notwithstanding any provisions of this Deed or the Finance Documents:
(i)
the aggregate maximum amount that may be recovered from SIHPL by the
Finance Parties under
this Deed shall not exceed the Initial Payment
Amount;
The Initial Payment
Amount is defined as meaning €1,581 300.00 …’
[90]
It is common cause that the above figure
represents the sum of the SFHG 2021 Convertible Bonds i.e. €465mil
and the SFHG 2022
Convertible Bonds i.e. €1 116 300
000. The ‘
Payment Amount’
is defined as meaning an amount equal to the Initial Payment Amount
minus an amount equal to the aggregate amount of Cash Payouts
made by
SIHPL in accordance with Clause 6.9 (SIHPL Cash Payouts). The
‘
Maturity Date’
is defined as meaning the earlier of 31 December 2021 and the date on
which a Notification of Event of Default is delivered to
SIHPL in
accordance with the Deed containing the CPU.
[91]
Clause 3.3 reads, insofar as it is
relevant, as follows:
‘
3.2
Application of Payments
(a)
Payments made by SIHPL pursuant to
this Deed … shall be applied by the Agent in the following
order of priority:
(i)
firstly, towards payment of the
Agent liabilities;
(ii)
secondly, towards repayment pro-rata
and pari passu of interest (excluding for the avoidance of doubt, any
capitalised interest)
accrued on Facility A1 Loans; and
(iii)
thirdly, towards repayment pro-rata
and pari passu of the outstanding principal amount (including any
capitalised interest) of the
Facility A1 Loan, provided that the
aggregate amount of payments made by SIHPL pursuant to this Deed …
shall not exceed
the Capital Recovery Cap … and provided
further that the aggregate amount of payments made by SIHPL pursuant
to this Deed
… shall not exceed the Initial Payment Amount’.
[92]
Clause 3.8 reads:
‘
3.8
Deferral of SIHPL’s rights
(a)
On or prior to the Final Discharge
Date relating to Facility A1, … SIHPL will not exercise any
rights which it may have by
reason of performance by it of its
obligations under this Deed or by reason of any amount being payable,
or a liability arising,
under this Clause 3:
(i)
to be indemnified by any Obligor
(Lux Finco 1
–
my insertion)
or
SIHNV;
(ii)
to claim any contribution from any
Obligor (including any Obligor or SIHNV in respect of any obligations
under the Finance Documents
…).
‘
Obligor’
is defined as the meaning given to that term in
the SFHG 21/22 Facilities Agreement (described below), which is Lux
Finco 1 as borrower
(or a guarantor).
[93]
The final document relevant to the matter
is the so-called Facilities Agreement, the parties to which were
SFHG, as ‘
Parent’
,
Lux Finco 1, as ‘
Borrower’
,
the second respondent acting as ‘
Agent’
and GLAS Trust Corporation Limited acting as ‘
security
Agent’
for the Original Lenders.
It too is a lengthy document, in excess of 200 pages, and was
concluded on 12 August 2019. There is no
dispute as to its meaning
and for present purposes it suffices to quote clause 3 in part:
‘
3.
Purpose
3.1
Purpose
(a)
The parties agree that all amounts borrowed under the …
Facility A1 … shall be applied
towards the restructuring of
certain amounts owing to the Lenders by members of the Group
(including the SFHG 2021 Convertible
Bonds …) in accordance
with the terms of Restructuring;
(b)
the Borrower (Steenbok Lux Finco 1 SARL) shall apply all amounts
borrowed by it … towards
the general corporate and working
Purposes of the SFHG Group … and/or funding litigation costs
of any member of the SFHG
Group or SIHPL’.
[94]
The supplementary affidavits filed by the
parties afforded them the opportunity to refine and restate their
case the main elements
of which were as follows.
Trevo
[95]
Trevo contends that:
1.
The Facilities Agreement was a new loan
granted by the Financial creditors to Lux Finco 1, a related company
to SIHPL, as part of
the CVA process and, further, that it is this
new debt that SIHPL pays off when it makes payments under the CPU by
virtue of clause
3.3 thereof. In form and in substance SIHPL, in
terms of the CPU and the Facilities Agreement, grants financial
assistance to Lux
Finco 1;
2.
Lux Finco 1 is a new entity which did not
exist at the time SIHPL’s board approved financial assistance
by it to SFHG in terms
of the Original SIHPL Guarantee in 2014 with
the obvious result that the Board could not, in 2013, have applied
its mind to assisting
Lux Finco 1 more than five years later;
3.
Lux Finco 1, having no assets of its own
(it being described by the Financial creditors in argument as a
‘
special purpose company’)
,
other than a subordinated intercompany loan, could never itself
realistically have paid its debt but was merely a conduit for
a new
principal obligation owed, in effect, by SIHPL to the Financial
Creditors;
4.
The new financial assistance granted by
SIHPL to Lux Finco 1 with effect from 12 August 2019 was never
approved by SIHPL’s
board in terms of sec 45.
[96]
Trevo contends that SIHPL’s case that
its debt to the Financial creditors under the new SIHPL CPU was the
very same debt as
that owed under the 2014 Guarantee, is contrived
and overlooks the express terms of the CPU, the CVA and the
Facilities Agreement.
Trevo contends also that SIHPL’s case
also overlooks the fact that the resolution granted by its board on 3
December 2013
could not have authorised assistance by SIHPL from 12
August 2019 onwards to a different entity, Lux Finco 1. It contends,
furthermore,
that on its analysis of the CPU, SFHG’s debt to
the Bondholders under the 2021 Bond was replaced by Lux Finco 1’s
debt
to Financial creditors under the Facilities Agreement which
SIHPL guaranteed by virtue of the CPU up to a value of €1.6bil.
[97]
Trevo argues that the SIHPL CPU and the
Facilities Agreement are inextricably interlinked and came into
effect simultaneously on
12 August 2019. It contends that the CPU
became effective, according to its explicit terms, simultaneously
with the Facilities
Agreement at which moment Lux Finco 1 received
the loan from the Facility A1 Lenders. In support of this conclusion
Trevo points
out that both the CPU and the Facilities Agreement are
dated 12 August 2019 and that in terms of clause 2.1 of the CPU it
became
effective only once the conditions precedent to the Facilities
Agreement were fulfilled.
[98]
Trevo
points out other aspects which it claims demonstrates that the CPU
and the Facilities Agreement are inextricably interlinked.
Firstly,
the interconditionality is expressly stated in paragraph (G) and (H)
of the ‘
background’
to the CPU
[11]
bearing in mind
inter
alia
that GLAS was party to both agreements and having regard to the
statement in (H) that they ‘
enter
into this (CPU) in connection with the SFHG 21/22 Facilities
Agreement’
.
Secondly, a number of the defined terms in the CPU, for example,
‘
Total
Facility A1 commitments’
,
‘
Borrower’
and ‘
Final
Discharge Date
’
have the meanings given to them in the SFHG 21/22 Facilities
Agreement. Thirdly, the CPU definition of ‘
Agreed
Form’
provides that SIHPL’s consent is required for various
amendments to the Facilities Agreement ‘
which
could reasonably expect it to affect the rights or obligations of
SIHPL under this (CPU) … including (i) amendments
which have
the effect of increasing SIHPL’s payment obligations under the
(CPU) or reducing the Obligor’s (Lux Finco
1) payment
obligations under the Facilities Agreement)’
.
Fourthly, the final discharge date of the CPU is by reference defined
in the Facilities Agreement as meaning ‘
the
first date on which all Liabilities under that Facility have been
fully and finally discharged (including … through the
(CPU))’
.
Finally, the critical CPU clauses 3.3(a)(ii) and (iii) dealing with
the application of payments, dovetail exactly with Facilities

Agreement Clause 9.7(b) inasmuch as payments made by SIHPL in terms
of the CPU are applied ‘
towards
payment of interest and repayment of the outstanding principal amount
(owed by Lux Finco 1), in each case, under the Facility
A1 Loans’
.
[99]
Having regard to the wide ambit of
‘
financial assistance’
in terms of sec 45(1) of the Act (which) ‘
includes
lending money, guaranteeing a loan or other obligation, and securing
any debt or obligation’
, and the
interconnected nature of the CPU and Facilities Agreement, Trevo
contends that SIHPL granted Lux Finco 1 financial assistance
in one
or more of the following respects:
1.
the
terms of CPU clause 3.3 whereby SIHPL’s payments thereunder
reduce Lux Finco 1’s liability under the Facilities
Agreement
constitute SIHPL securing an ‘
obligation’
in terms of sec 45(1), an obligation, moreover, quite distinct to any
obligation owed by SFHG under the Original 2021 Bond if only
because
there is a new duty-bearer, namely, Lux Finco 1;
[12]
2.
in
terms of CPU clause 3.8(a)
[13]
whereby SIHPL agrees not to exercise various of its rights against
Lux Finco 1 or Steinhoff NV, SIHPL effectively agrees to subordinate

its claims against Lux Finco 1 in favour of the Financial creditors;
3.
in terms of CPU clause 3.8(c), SIHPL’s
right of recourse against Lux Finco 1 is limited to certain ‘
Recourse
Assets’
as defined in Facilities
Agreement;
4.
CPU clause 7.9 (‘SFHG
Cross
Default
’) provides that a failure
by Lux Finco 1 to pay an amount under the Facilities Agreement, or
any other event of default under
that Agreement that accelerates
payment thereunder, constitutes an event of default under the CPU
which in turn entitles GLAS (the
agent of the Financial creditors) to
demand immediate payment by SIHPL under the CPU.
[100]
Having regard to all these provisions, the
conclusion drawn by Trevo is that when the terms of the CPU and the
Facilities Agreement
are examined closely, and together, the CPU is
in substance and effect a guarantee or underwriting by SIHPL of Lux
Finco 1’s
obligations under the Facilities Agreement. Trevo
seeks to reinforce this conclusion by pointing out that Steinhoff NV
itself,
in its 2020 financial statements, expresses exactly this
view.
[101]
A second major argument made by Trevo is
that SIHPL’s debt under the SIHPL Guarantee was discharged by
virtue of SFHG discharging
its own debt under the 2021 Bond,
whereupon SIHPL incurred a fresh debt to the Financial creditors
capped at the same amount in
terms of the CPU. SIHPL’s
discharge, Trevo contends, was effected in terms of a first principle
of both South African and
English law, namely, that where a primary
obligation is discharged (in this case SFHG’s obligation under
the 2021 Bond),
the obligation of a guarantor is similarly
discharged, namely, SIHPL’s liability under the 2014 Guarantee.
Trevo’s
deponent summarised what came into effect
simultaneously on 12 August 2019 when SIHPL, the Financial
Creditors/Lenders (via GLAS),
SFHG and Lux Finco 1 concluded the CPU
and Facilities Agreements as follows:
‘
36.1
The flow of deemed cashless payments from (i) The Financial
Creditors; (ii) to Steenbok Lux Finco 1; (iii) to SFHG and
(iv) back
to the Financial Creditors discharged SFHG’s debt under the
2021 Bond’.
36.2
That, in turn, had the effect that SIHPL’s
“
crystallised”
obligations under the SIHPL Guarantee
was discharged (this being the case whether SIHPL’s obligation
was merely
“accessory”
or
primary, for in either case the debt guaranteed (the non-payment of
SFHG’s debt to the Bondholders) ceased to exist).
36.3   Steenbok
Lux Finco 1 owed a new debt to the erstwhile Bondholders (now the
Facility A1 Lenders/Financial Creditors)
under the Facilities
Agreement, subject to more onerous terms than those owed by SFHG
under the 2021 Bond (for example 10% interest
owed by Steenbok Lux
Finco 1 – versus 4% interest owed by SFHG -);
36.4   SIHPL
owed a new debt to Financial Creditors under the CPU, carefully
structured so that SIHPL’s paying this
debt under the CPU would
reduce Steenbok Lux Finco 1’s debt under the Facilities
Agreement; and
36.5   The
CPU and Facilties Agreement are inextricably interlinked, with the
inescapable consequence that SIHPL financially
assists Steenbok Lux
Finco to pay its debt, in circumstances where SIHPL’s board
never resolved to assist (that company)
in compliance with sec 45.
[102]
Trevo advances an alternative
argument which does not rely on the premise that the effect of the
CVA, CPU and Facilities Agreement
was to discharge SIHPL’s
accelerated debt under the SIHPL Guarantee and to replace it with a
new debt under the CPU. It contends
that even if this was not the
case it remains so that the CPU constitutes the granting of
unauthorised financial assistance to
Lux Finco 1 since no
significance attaches to SIHPL’s characterisation of its debt
under the CPU being the same as its debt
under the 2014 Guarantee,
albeit ‘
deferred’
,
‘
restated’
or ‘
restructured’
.
Even if this were legally possible, which Trevo disputes, the CPU
nonetheless amounts to unauthorised financial assistance to
Lux Finco
1
inter alia
for the following reasons: SIHPL’s board never considered Lux
Finco 1 as the beneficiary of financial assistance when it
passed its
resolution on 3 December 2013 authorising the granting of financial
assistance by SIHPL to SFHG by way of the 2014 Guarantee;
secondly,
Lux Finco 1 owed the Financial Creditors a new debt under the
Facilities Agreement; thirdly, several of the terms of
the CPU, for
reasons already given, amounted to financial assistance in terms of
sec 45(1)(a) given by SIHPL to ‘
guarantee’
and/or ‘
secure’
Lux Finco 1’s new debt or ‘
obligation
under the Facilities Agreement’.
In
this regard Trevo refers to the CPU clauses 7.9 (dealing with SFHG’s
cross default), 3.3 (providing that  SIHPL debt
payments under
the CPU reduce Lux Finco 1’s debt under the Facilities
Agreement), 3.8(a) (where SIHPL effectively agrees
to subordinate its
claims against Lux Finco 1 in favour of the Financial Creditors),
clause 3.8(c) (which further limits SIHPL’s
right of recourse
against Lux Finco 1 for indemnification or contribution) and clause
3.8(d) which provides for circumstances in
which SIHPL is obliged to
release Lux Finco 1 from (1) any obligations it may owe SIHPL arising
from the CPU.
[103]
In light of all these above provisions
Trevo contends that even if SIHPL’s liability to the Financial
Creditors as Bondholders
under the 2014 Guarantee is merely
‘
crystallised’
,
‘
deferred’
and/or ‘
restructured’
,
the particular terms of the crystallised deferred or restructured
debt that SIHPL now owes under the CPU exposes it to different
risks
in relation to a new entity, Lux Finco 1, which were never considered
nor authorised by SIHPL’s board in terms of sec
45. SIHL’s
board’s authorisation of the 2014 Guarantee to SFHG cannot,
Trevo argues, be ‘
extended or
transferred’
to apply to the
different risks attendant upon assisting Lux Finco 1.
Hamilton’s
contentions
[104]
For their part, Hamilton emphasised certain
points in their supplementary replying affidavit contending that an
examination of the
SIHPL CPU, read with relevant clauses of the SFHG
CVA and notwithstanding references in the CPU to ‘
deferral
of the payment of the Primary 2021 Debt … including the
crystallisation of the Primary 2021 Debt’
(clause 2.4), showed that SIHPL had clearly assumed obligations under
separate agreements: first, in relation to the debt owed
by SFHG
under the 2015 Trust Deed, and then in relation to the debt owed by
Lux Finco 1 under the Facility A1 Loan. Hamilton argues
further, as
does Trevo, that the terms of the SIHPL CPU do not constitute a
deferral of the debt once owed in terms of the 2015
Trust Deed
relating to the SFHG 2021 Convertible Bonds for the reasons that such
debt agreement, on SIHPL’s own version,
was exchanged for the
debt owed by Lux Finco 1 in terms of the new loans and the SIHPL CPU
provides for payment of the debt owed
under the Facility A1 Loan. For
this reason alone, Hamilton contends, the SIHPL CPU constituted the
provision of financial assistance
obliging it to comply with sec 45
of the Companies Act. Hamilton points out, furthermore, that the
terms of the SIHPL CPU are quite
different to the terms of the 2014
Guarantee in the 2015 Trust Deed and refers by way of example to the
obligations and restrictions
imposed upon SIHPL in terms of clauses
3.8, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9 and 6.11 of the SIHPL CPU. These
clauses deal respectively
with ‘
Deferral
of SIHPL’s Rights’
,
‘
Financial Indebtedness’
,
Intra-Group Loans’, ‘Guarantees’,
Repayment of Intra-Group Loans’,
‘
Amendment of Intra-Group loan
agreement’
, ‘
SIHPL
Cash Pay Outs’
and ‘
Restrictions
on Payments’
. A perusal of these
clauses reveal that SIHPL agrees to numerous restrictions of its
rights to be indemnified, to claim any contribution,
to bring legal
proceedings, to incur further debt, to make further loans, to amend
existing intra-group loans and undertakes obligations
to make cash
pay outs and accepts restrictions on its ability to make payments
other than to its Financial Creditors in terms of
the CPU.
[105]
Noting that sec 45(3)(b)(ii) of the
Companies Act provides that the board of a company may not authorise
any financial assistance
unless it is satisfied that the terms under
which the financial assistance is proposed to be given are fair and
reasonable to the
company, and that as the terms of the SIHPL CPU are
substantially different to the terms of the 2014 Guarantee, Hamilton
observes
that SIHPL never conducted the analysis required by sec 45.
It therefore never assessed whether the terms of the CPU were fair
and reasonable to SIHPL. Hamilton contends further that had SIHPL
conducted that enquiry it would for example have had to take into

account the fact that the effect of the CPU (and the New Lux Finco 1
21/22 Loan) was
inter alia
to ‘
put the bondholders in line
for greater financial recoveries than they stood to receive under the
bonds as originally issued and
to arm them with access to extensive
information, powers and influence over SIHPL’s (and SIHNV’s)
conduct of litigation
and broader operations so as to maximise their
chances of full recovery and the speed at which that recovery would
take place’
.
SIHPL’s
contentions
[106]
SIHPL’s case is based on the
premise that under the CPU’s terms it assumed no further debt
(or provided any financial
assistance); moreover, as any payments
pursuant to CPU would serve to reduce SIHPL’s crystallised
debt, such payments cannot
be regarded as providing further financial
assistance to SFHG. The financial assistance was given when the 2014
Guarantee was issued.
It follows that the conclusion of the SIHPL
CPU, and any payment by SIHPL under the CPU, does not constitute the
provision of new
financial assistance to SFHG. From this summary it
is clear that SIHPL places significance on the fact that its 2018
arrangements
incur
no further debt
than that which it incurred under the 2014 Guarantee and focuses
largely upon financial assistance to SFHG alone. I pause to observe

that the main thrust of the applicants’ case is that the CPU
constitutes financial assistance to Lux Finco 1, not SFHG.
[107]
In argument SIHPL contended that the
question of whether the CPU constitutes the provision of new
financial assistance depends largely
on an interpretive exercise i.e.
an examination of the terms of the CPU read against the provisions of
the 2014 Guarantee. It contended
that the applicants attempts to
characterise the CPU as fresh financial assistance were contrived as
demonstrated by the fact that
if there were no Guarantee there would
have been no CPU.
[108]
SIHPL’s response to the charge that
the CPU is new financial assistance because assistance is now
provided to Lux Finco 1
is to contend that this stems from a
misunderstanding of the CVA and the failure to appreciate an
important issue of timing. The
first Restructuring Step was the
conclusion of the CPU as evidenced by clause 4.6.1 of the CVA. Thus
prior to any other Restructuring
Steps the debt in terms of the
Guarantee was crystallised and deferred in terms of the CPU. SIHPL
refers to clause 8.4 of the CVA
‘
Treatment
of the Existing SFHG Debt’
from
which, it contends, emerges two important features: firstly, the CVA
did not alter the provisions of the CPU and secondly,
the taking on
by Lux Finco 1 of SFHG’s debt (through the Intercompany
Agreement and Loan) did not affect SIHPL’s continuing
liability
under the CPU. Properly interpreted, SIHPL contends, the CPU is an
affirmation of SIHPL’s existing liability and
a deferral
thereof and as such is neither fresh nor new. It submitted further
that through the terms of the CPU SIHPL obtained
‘
a
better deal for itself’
in
relation to a debt already due.
[109]
As regards the payments made by SIHPL under
the CPU resulting in a reduction of the Lux Finco 1 debt, SIHPL
submits that this is
in place to prevent a double recovery. There is
thus, SIHPL argues, no extension of ‘
new
financial assistance’
by SIHPL
because of the treatment of the payments – rather its old
financial assistance is controlled and capped, for its
own benefit.
The Financial
Creditors’ contentions
[110]
The Financial Creditors filed no
affidavits but presented full argument to the Court. Their case too
was that on a proper analysis
of the CPU and the SFHG CVA no new
financial assistance was provided by SIHPL in 2019, the essence of
the transaction being rather
to provide ‘
limited
forbearance’
to SIHPL
inter
alia
by extending the maturity date for
payment of the SIHPL debt. SIHPL received a benefit under the CPU but
did not itself grant any
benefit or financial assistance. The
restructuring of the debt was achieved primarily through the CVA
processes which entailed
the Bondholders agreeing to exchange the
existing bonds, which were listed and publically tradeable, with
private debt issued by
a new special purpose company (Lux Finco 1) in
their favour. This involved no cash being exchanged, the re-financing
being facilitated
by means of ‘
deemed
cashless payments’
which
ultimately resulted in the Bondholders holding debt issued by a new
private entity as opposed to the previous listed structure.
The
refinancing exercise prevented the failure and uncontrolled
liquidation of the entire Steinhoff Group. None of this, however,

affected the existing SIHPL Debt which was simply deferred and
remained due and repayable and, although SFHG’s obligations

were deemed to have been extinguished, the primary obligation of
SIHPL to make payment of the amount of €1.58bil to the Financial

Creditors remained intact.
[111]
The Financial Creditors argued that the
question whether SIHPL granted financial assistance in terms of the
CPU must be determined
from SIHPL’s vantage point and by asking
the question whether it gave up something more than that which had
originally been
approved by its board in December 2013. The answer to
this question was that SIHPL’s debt had already been
accelerated prior
to the 2019 restructuring and the CPU merely showed
forbearance to SIHPL. The fact that repayments to the Financial
Creditors under
the CPU are applied to reduce Lux Finco’s debt
in terms of the Facility A1 Loan did not mean that the CPU
constitutes new
financial assistance to Lux Finco 1 since if the
Financial Creditors were to recover fully under both SIHPL CPU and
the Facility
A1 Loan this would amount to a double recovery of the
amount originally owed.
[112]
In summary the Financial Creditors submit
the SFHG Debt under the Convertible Bonds was restated, revised and
reissued by Lux Finco
in the form of the Facility A1 Loan. That
transaction was entered into separately from the CPU and SIHPL’s
claims against
each entity are separate and different. It was
contended that as a matter of English law a sanctioned CVA does not
discharge the
liabilities of the debtors’ guarantors unless,
properly construed, the CVA provides otherwise and it was not open to
this
Court to interfere with the English sanctioning of the CVA,
including the legal effect thereof in English law which governs both

the 2014 Guarantee and the CPU.
Discussion
[113]
As a starting point and with reference to
jurisdictional point raised on behalf of the Financial Creditors (in
para 112 above),
it must be said that the present application is
concerned with the validity or lawfulness of a guarantee and an
undertaking given
by a South African company in respect of a foreign
company, SFHG, an issue which falls squarely within this Court’s
jurisdiction.
The fact that the foreign company has subsequently
concluded a court-sanctioned CVA under English law is of incidental
interest
and certainly cannot operate to deprive this Court of
jurisdiction which it otherwise has.
[114]
By
way of commencement, it is appropriate to have regard to the purpose
of sec 45 in regulating a company’s ability to
render
financial assistance to a related party. The authors of Commentary on
the
Companies Act of 2008
[14]
observe that those in control of a company’s finances are in a
position of power, one that has the potential for abuse, particularly

where the company provides the controllers with loans or security.
This potential for abuse was recognised in the 1973 Act which

prohibited certain loans and provisions of security (sec 226) and
imposed strict liabilities on directors in certain circumstances
(sec
37). The corresponding provisions of the present Act appear
inter
alia
in sec 45, which regulates the giving of financial assistance by
prohibiting it unless certain requirements are satisfied. The
authors
note that the new provisions cast the net far wider, drawing in a far
more extensive range of transactions, as well as
parties thereto such
transactions. They observe that sec 45 of the 2008 Act governs the
provision of ‘
financial
assistance’
and that the use of the word ‘
includes’
in sec 45(1)(a) indicates that the types of transactions referred to
are not an exhaustive list of what constitutes financial assistance.

The term ‘
financial
assistance’
is wide ranging and accordingly sec 45 is generally more extensive in
its ambit than the transactions covered by sec 226 of the
1973 Act.
Dealing with the ‘
fair
and reasonable’
requirement, the authors note that the solvency and liquidity
requirements are already there to protect creditors so it seems
unlikely that it is their protection that is the concern of the fair
and reasonable test but that ‘
it
seems that it is more likely the shareholders who are being
protected’
.
[115]
The respondents contend, for many reasons,
that SIHPL’s primary debt under the CPU was no more than a
restatement of its debt
under the 2014 Guarantee and accordingly
there was no creation of a fresh debt. This is an
over-simplification, however, which
fails to take into account that
the restatement of a debt on different terms and conditions and
involving at least one different
party, is in terms of law the
creation of a fresh debt. SIHPL appears to confuse a specific debt
with
exposure
to debt when it argues that, provided that its maximum liability is
no greater than that which it assumed under a prior debt, any
further
related debt it contracts is not new debt and does not fall foul of
the provisions of sec 45. As the applicants argue,
the concept of
‘
restructuring’
a debt has no legal implication in and of itself without a
consideration of the manner in which the debt is to be
‘
restructured’
.
If the debt is ‘
restructured’
on new terms, and is owed to a new and different party (in this case
the Facility A1 Lenders) and guarantees the obligation of
a new party
(Lux Finco 1) it is, axiomatically, a fresh obligation. The mere fact
that the new obligation/debt would not have existed
but for the old
debt does not detract from its character as a new obligation, even if
the object of it being incurred was to replace
the old debt.
[116]
SIHPL’s contention is further that,
since its debt under the 2014 Guarantee became ‘
crystallised’
and is ‘
capped’
at that level in terms of the CPU, the provisions of the CPU cannot
be construed as SIHPL giving fresh financial assistance with
the
corollary that sec 45 of the Act is not triggered. In my view,
however, this is based on a misinterpretation of the provisions
of
sec 45 and in particular sec 45(3). These make it clear that before a
board may authorise financial assistance as contemplated
in
subsec (2) it must ensure that the solvency, liquidity and the
fair and reasonable tests are complied with in respect of
the
proposed financial assistance to the proposed specific recipient or
category of potential recipients. A board cannot authorise
financial
assistance having regard only to the financial ceiling of such
assistance but obviously must have regard to the actual
or potential
recipient and the terms of such assistance. SIHPL’s central
argument in the present matter is tantamount to
stating that,
provided any financial assistance which it gives does not exceed the
limit of debt already incurred in terms of the
2014 Guarantee, it is
entitled to provide financial assistance to a party other than that
authorised by the resolution approving
the 2014 Guarantee. It would
appear to be for this reason that SIHPL repeatedly seeks to refute
the applicants’ case by denying
that it ever provided ‘
fresh’
financial assistance which resulted in the creation of a ‘
fresh’
or ‘
new’
debt. This approach is, in my view, based on an inappropriately
narrow interpretation of sec 45 as permitting the giving of financial

assistance to a related party provided only that it does not exceed
the ceiling of financial assistance previously authorised in
relation
to another party.
[117]
The minutes of SIHL’s board meeting
held on 3 December 2013 make it clear that the financial assistance
which was authorised
was for SIHL to act as Guarantor for the
obligations of the issuer (SFHG) in respect of the Convertible Bond
issue to foreign investors.
SIHL’s board did not purport to
approve such assistance to a category of potential recipients and
even if it had, such authorisation
would have lapsed by the time the
SIHPL CPU was concluded, falling as it did outside of the two-year
term of any resolution as
provided by sec 45(3)(b) of the Act.
[118]
SIHPL contends that its payments under the
CPU in reduction of Lux Finco 1’s debt serve merely to prevent
a double recovery
by the Financial Creditors. However, this raises
the question of how the Financial Creditors could obtain recovery
from both Lux
Finco 1 and SIHPL when ultimately there was only ever
one debt, being the €465mil. Furthermore, if Lux Finco 1 repaid
its
Facility A1 Loan, the Financial Creditors could hardly look to
SIHPL to make good on its CPU obligations as well.
[119]
In
Treasure-General
v Lippert,
[15]
Smith J said, in a different context ‘
the
Court should look to what a transaction is intended to be, and really
is, rather than what it is described as being’
.
Such an approach is particularly appropriate in the present
circumstances where the documents recording the parties’
obligations
are not only complex and voluminous but in key areas are
obtuse or confusing. Adopting this approach to a consideration of the
CPU, read together with the CVA and the Facilities Agreement, it
becomes apparent in my view that the CPU replaces or purports to

replace the SIHPL Guarantee and becomes in effect a guarantee for Lux
Finco’s obligations under the Facility A1 Loans. This
must be
the case since the agreements expressly provide that SFHG’s
debt to the Bondholders is discharged and which debt
was treated by
both the Financial Creditors and SIHPL as having been so discharged.
However, the circular flow of funds from the
Financial Creditors to
Lux Finco 1, to SFGH and back to the Financial Creditors, has in
effect replaced one debt with another.
Furthermore, having Lux Finco
1 step into the shoes of SFHG is to introduce a new party into the
arrangements, one which did not
exist at the time that the 2014
Guarantee was approved by SIHPL’s board.
[120]
The further consequence of these
arrangements/agreements is that, by guaranteeing Lux Finco 1’s
obligations under the Facilities
Agreement, SIHPL gave financial
assistance to a related company as contemplated by sec 45 of the Act.
It matters not in my view
that SIHPL’s liability in respect of
the CPU is capped in an amount so as not to exceed its obligations or
liabilities in
terms of the 2014 Guarantee. Section 45 contains no
qualification to the effect that a local company, pursuant to a prior
resolution
that financial assistance be given to entity A, can give
financial assistance to entity B provided that the company’s
liability
or potential liability to entity B does not exceed the
previously approved financial assistance to entity A. To allow or to
read
in an exception to this effect would, in my view, be to subvert
the purpose of sec 45 and in effect to provide the local company
with
a running account in terms of which it could provide financial
assistance on an indefinite basis without complying with the

provisions of sec 45. This does not accord with the structure of sec
45 which lays down tight guidelines in terms of which financial

assistance is given to a specific party or a certain category of
parties, in specific circumstances, for specified purposes and
which
authorisation does not extend beyond a two-year period.
[121]
In this regard it is worth noting that sec
45 regulates the giving of financial assistance which in itself may
not necessarily involve
the incurring of debt although that may well
be a consequence of giving the financial assistance. In the present
matter SIHL’s
board of directors authorised the provision of
the 2014 Guarantee which, at worst for SIHPL, could have exposed it
to liability
for €465mil and in the result did. Nonetheless, the
resolution of SIHL’s directors in December 2013 neither
envisaged
nor authorised the company, in the event of SFHG
defaulting, negotiating fresh terms in restructuring the debt which
would include
replacing its co-debtor and the guaranteed party, SFHG,
with a special purpose vehicle Lux Finco 1 and, in so doing giving
financial
assistance to that entity.
[122]
In
its affidavit and in argument, SIHPL repeatedly contended that
through the debt ‘
restatement’
or ‘
restructuring’
it had obtained a ‘
better
deal’
.
There are at least two answers to this proposition. Firstly, it is by
no means evident from the SIHPL CPU that it did in fact
obtain more
favourable terms. Both Trevo and Hamilton have convincingly argued
that, in terms of the CPU, SIHPL is subjected to
a series of
limitations and deprivations of rights the equivalent of which are
not found in the 2014 Guarantee.
[16]
These include limitations on its rights of recourse against Lux Finco
1, subordinating its claims against Lux Finco 1 to the Financial

Creditors and limitations on its ability to make payments other than
to the Financial Creditors. Most importantly, in terms of
the CPU,
SIHPL is now guarantor to a different entity, Lux Finco 1, which
appears to be no more than a shelf company without any
assets or
financial backing other than that provided by SIHPL. Clearly, a
capping of liability does not address the prejudice which
may be
suffered by a guarantor or co-debtor where the original issuer of the
Convertible Bonds is replaced by a man of straw. The
second answer to
the proposition that the CPU offered SIHPL a ‘
better
deal’
is that where its provisions trigger sec 45, that determination is
one ultimately to be made by the directors, in particular by
applying
the ‘
fair
and reasonable’
test in sec 45(3)(b)(ii) and, in so doing, laying themselves open to
the consequences of such a decision, as envisaged by sec 45(7)
of the
Act. Furthermore, even before the directors can authorise the
guaranteeing of a new related party’s loan obligations,
as in
the present matter, sec 45(3)(a)(ii) requires that the company’s
shareholders be given an opportunity to consider the
proposed
financial assistance and, if they approve same, pass a special
resolution to this effect.
[123]
Having regard to the substance of the debt
restructuring exercise as a whole it would appear that the effect of
the SFHG CVA, pursuant
to which the SIHPL CPU was concluded, was that
the obligations and liabilities of SFHG to the Bondholders under the
2021 Bond were
discharged. That Bond was replaced with new
obligations owed by Lux Finco 1 to the Bondholders or their
successors (the Facility
A1 Lenders) pursuant to the latter having
advanced the Facility A1 Loan. It is significant that in its notes to
the separate financial
statements for the period ended 30 September
2020, SIHNV appears to share the above view when it stated as
follows:
‘
9.
BORROWINGS (CONTINUED)
9.1
Financial liabilities (continued)
Recognition
of financial liabilities as determined by CPU’s (continued)
9.1.3
SFHG 21/22 CPU
The
2021 and 2022 convertible bond previously issued by SFHG have been
replaced by the 21/22 facility held by Steenbok Lux Finco
1 SARL
under which €2.0billion (2019:
€1.8billion) is outstanding as at 30 September 2020.
The
21/22 facility is secured by the SIHPL CPU, whereby SIHPL guarantees
€1.6billion,
and the SFHG
21/22 CPU, whereby the Company guarantees the principal amount of
€1.7billion’.
[my
underlining]
[124]
Both
in terms of South and English law, if a party guarantees a debt owed
by a second party to a third party and the second party
discharges
its debt to the third party in full, then the guarantor is discharged
from any liability to the third party under the
guarantee. In [the
English] Law of Guarantees
[17]
,
the following appears under the heading ‘
Discharge
of surety by discharge of the principal’
:
‘
Since
the purpose of a guarantee is to secure the performance of the
principal’s obligations towards the creditor, the surety
will
be discharged from his liability under the guarantee if the principal
pays the debt or performs the obligation which the surety
has
guaranteed, or if the principal’s liability is forgiven. This
is an aspect of the principal of co-extensiveness of liability,

discussed elsewhere in this work. The position is different where the
contract is on its true construction one of indemnity, under
which
the surety assumes an independent liability from that of the
principal which may often be greater in scope. Accordingly,
he may
not necessarily be discharged by reason of the performance by the
principal of his obligations, or otherwise by its discharge.
[125]
Although clause 5 of the original 2014
Guarantee refers to a
‘Guarantee
and Indemnity by SIHL’
, the key
provision, clause 5.2 does not appear to alter the position that the
guarantor would be discharged upon the principal
(SFHG) paying the
debt or performing the obligation which SIHPL guaranteed. Clause 5.2,
insofar as it is relevant, reads ‘
SIHL
will be liable under this Clause 5 as if it were the sole principal
debtor and not merely a surety. Accordingly, it will not
be
discharged, nor will its liability be affected, by anything that
would not discharge it or affect its liability if it were the
sole
principal debtor’.
There
follow seven instances when it would not be discharged but none which
is applicable to the present circumstances.
[126]
The
position of a surety in South African law  was recently
discussed in
Van
Zyl v Auto Commodities (Pty) Ltd
[18]
where the following was stated:
‘
The
General Principle
[11]
A contract of suretyship is distinct
from the contract or contracts between the principal debtor and the
creditor that give rise
to the principal indebtedness, but it is
accessory to that contractual relationship and the principal debtor's
obligations under
it. Subject to any specific limitation, such as a
suretyship in a limited amount, the surety’s obligations are
coterminous
with those of the principal debtor. Where the surety
signs as co-principal debtor, as Mr van Zyl did, the addition of
those words
shows that the surety is assuming the same obligations as
the principal debtor. In other words, the obligation of the surety is

the same as that of the principal debtor. It follows from the
accessory nature of the surety’s undertaking that the liability

of the surety is dependent on the obligations of the principal
debtor.
[12]
A consequence of this is that if the principal debtor’s debt is
discharged, whether by payment or release,
the surety’s
obligation is likewise discharged. … This will be subject to
any terms of the deed of suretyship that
preserve the surety's
liability notwithstanding the release or discharge of, or any other
benefit or remission afforded to, the
principal debtor.
[127]
Mr Du Preez stated in his supplementary
affidavit that:
‘
(f)ollowing
the acceleration, SIHPL’s
(sic)
incurred a primary obligation to make
full and immediate payment of the amount owing’
and that the effect of the CPU was ‘
simply
to defer payment of that debt and restructure it on terms’
.
Mr Du Preez added that ‘…
it was fundamental that SIHPL was willing to agree that its
restructured obligations under the CPU would not be discharged as a
result of the subsequent cashless exchange of SFHG’s debt to
the Bondholders for the New Lux Finco 21/22 Loan. Were it otherwise,

the Bondholders would have been left with no claim at all
.’
[128]
This latter explanation appears to
recognise that in the ordinary course the effect of the granting of a
loan by the Financial creditors
to Lux Finco 1 which then on-lent it
to SFHG which in turn settled its Convertible Bond obligations to the
Financial Creditors
by deemed payment of the proceeds of that loan
back to the Financial Creditors would, unless special provisions were
made, be to
discharge SIHPL from its liability or obligations under
the SIHPL Guarantee and leave the Financial creditors with no more
than
their claim against Lux Finco 1 for the loan.
[129]
Another major argument made by SIHPL was
that the conclusion of the SIHPL CPU, and thus the crystallisation
and deferral of SIHPL’s
debt under the 2014 Guarantee, was the
first restructuring step, indicating that the SFHG CVA did not alter
the provisions of the
CPU. But this flies in the face of the normal
consequences of a principal debtor’s obligations being
discharged. Secondly,
finding a sequence of separate steps in the
debt restructuring exercise is an artificial exercise. In reality all
the key elements
or steps are interlinked and to all intents and
purposes, simultaneous. This much was convincingly argued by the
applicants as
set out in paras 91 and 92 above.
[130]
A telling indication that SIHPL gives
financial assistance to Lux Finco 1 is the provision in clause 3.3 of
the CPU whereby SIHPL’s
payments under the CPU are to be
applied to Lux Finco 1’s debt to the Lenders. SIHPL sought to
rationalise this as being
intended to prevent a double recovery by
the Financial Creditors, an argument I have already dealt with. It is
clear in this regard
that had SIHPL not concluded the CPU, Lux Finco
1 would not have been granted the loan funding to advance to SFHG in
order to discharge
its obligations to the Financial Creditors.
[131]
The applicants argue, convincingly in my
view, that the CPU and the Facilities Agreement are inextricably
linked and came into effect
simultaneously on 12 August 2019. They
point out that both the CPU and the Facilities Agreement are dated 12
August 2019 and that
the CPU became effective – according to
its explicit terms – simultaneously with the Facilities
Agreement, at which
moment Lux Finco 1 received the loan from the
Facility A1 Lenders. Also relevant in this regard is that Lux Finco 1
had no assets
of its own and realistically could never itself have
repaid the loans it was granted. It is clear, furthermore, that the
loan would
never have been granted to Lux Finco 1 by the
Bondholders/Financial Creditors unless its obligations were
guaranteed by SIHPL under
the CPU.
[132]
In
attempting to explain the interlinked nature of the CPU and
Facilities Agreement, SIHPL contended that ‘
such
terms were desirable from SIHPL’s perspective because they
meant that, to the extent that the quantum of the debt owed
to its
CPU Creditors could be satisfied by Lux Finco 1, SIHPL would not have
liability in that respect’.
[19]
But this statement is disingenuous in the absence of any indication
of an ability on the part of Lux Finco 1 itself to reduce that
debt.
It was rather a case that, to the extent that the quantum of the debt
owed by Lux Finco 1 to its Facilities Agreement’s
Creditors
could be satisfied by SIHPL, Lux Finco 1 would have no liability in
that respect. Put differently, SIHPL’s payments
would redeem
Lux Finco 1’s debt. SIHPL also contended that ‘
in
short, such terms operated to SIHPL’s benefit as a limitation
on the quantum of its liability in respect of its restructured
debt
under the CPU’
.
Once again the true position appears to be that the terms of the CPU
operated to Lux Finco 1’s benefit as a limitation on
the
quantum of its liability in respect of its newly assumed debt under
the Facilities Agreement.
[133]
It must be borne in mind that it was always
possible for SIHPL to receive the ‘
forbearance’
which the Financial Creditors were extending to it. Quite why SIHPL
needed to ‘
restate’
its liability in terms of the 2014 Guarantee through the discharging
of SFHG’s liabilities and ‘
restating’
them in the form of obligations owed to Lux Finco 1, is unclear. The
stated reasons, which include rendering the public tradeable
debt
private and to provide a better ‘
reporting
regime’
, seem less than
compelling. The restructuring appears to have been designed to assist
SFHG gain approval of its CVA both from creditors
and from the Court
(the Nominees). Trevo contends that the CPU was created in its
present form (and is contended by SIHPL not to
amount to the
provision of fresh financial assistance) because SIHPL was aware at
the time that it could not pass the solvency
and liquidity test in
compliance with sec 45 of the Act. It is notable in this regard that
a legal opinion obtained by SIHPL from
a firm of attorneys as
required by the Lux Finco 1 21/22 Loan Agreement was expressly stated
to exclude an opinion on sec 45 of
the Act.
[134]
It appears that at the time of concluding
the SIHPL CPU, SIHPL’s directors would, at the least, have had
difficulty in satisfying
themselves, acting reasonably, that the
company would satisfy the solvency and liquidity test immediately
after replacing or amending
the SIHPL Guarantee by way of the SIHPL
CPU. In this regard it is noteworthy that SIHPL did not respond to
the challenge put up
by Trevo to produce financial statements for the
relevant period should it dispute that it was in fact insolvent. Be
all this as
it may, for the purposes of determining whether the CPU
breaches sec 45 of the Act it is not necessary for the Court to find
what
SIHPL’s motives were in following the path they did.
[135]
If, as SIHPL insists, it obtained a ‘
better
deal’
through the restructuring,
it would have had no difficulty in its directors passing a resolution
to this effect and in its shareholders
approving such a resolution at
an annual or special general meeting. At the very least the directors
and shareholders would want
to apply their minds to the question of
whether the new entity, whose debt or obligations the company would
now guarantee, presented
any risks or advantages in comparison to the
previous beneficiary of the guarantee. Here one bears in mind that
Lux Finco 1 is
a special purpose vehicle, presumably without any
existing liabilities or assets. The shareholders and directors would
also wish
to consider whether the terms of the CPU were fair and
reasonable vis-à-vis the company. In this regard it is again
disingenuous
to suggest that the restructuring really merely replaced
one debtor with another without any other terms and conditions being
changed.
The CPU is replete with provisions dealing with indemnity,
recourse assets, cash pay outs, subordination of SIHPL’s rights

etc, all of which required a determination of whether these terms and
conditions were, as SIHPL’s directors contend in these
papers,
more favourable to SIHPL. If this were the case i.e. that such terms
were more favourable to SIHPL, then the directors
should have no
difficulty in being party to a resolution to this effect and
untroubled by the prospect of incurring personal liability
by virtue
of the provisions of sec 45(7).
[136]
Returning to the issue of the true
construction of the various agreements, the discharge of SFHG’s
liabilities under the 2021
Bond would also have discharged SIHPL’s
obligations under the SIHPL Guarantee, for otherwise the Bondholders
would have double-benefitted
but this would have left the Bondholders
with only a claim against Lux Finco 1 in respect of the loan
originally provided. Accordingly,
the SIHPL Guarantee was replaced
with the SIHPL CPU. However, this constituted new financial
assistance by SIHPL to a company or
corporation related or
interrelated to it, namely, Lux Finco 1.  I consider thus that
the SIHPL CPU constitutes financial
assistance to Lux Finco 1 inter
alia inasmuch SIHPL came under a fresh debt to the Facility A1
Lenders (the Financial Creditors)
on different terms and conditions
to those applying in terms of the 2014 Guarantee.
Conclusion
[137]
For all these reasons I consider that in
concluding the CPU, SIHPL gave financial assistance to Lux Finco 1 in
breach of the provisions
of sec 45 of the Act. In the circumstances,
by virtue of sec 45(6) of the Act, the resolution of SIHPL’s
board authorising
the conclusion of SIHPL CPU is void as is the CPU
itself and the applicants are entitled to a declaration to this
effect.
Interdictory relief
[138]
The applicants sought an interdict
restraining SIHPL from making any payment pursuant to the SIHPL
Guarantee, the SIHPL CPU or the
compromise proposed by SIHPL in terms
of
sec 155
of the
Companies Act and
from providing any security in
respect thereof. In terms of this judgment the SIHPL Guarantee stands
and clearly no interdictory
relief in relation to it can be granted.
As far as the balance of the interdictory relief is concerned, the
applicants made out
no case that any payments pursuant to the SIHPL
CPU were imminent. Insofar as any payments made based on the CPU
might conceivably
follow upon the acceptance of the
sec 155
proposal,
not only might that proposal be revisited following this judgment,
but the
sec 155
process has some way to go before it can be
sanctioned by a Court. Before that stage is reached the applicants
will have adequate
opportunity to voice their opposition to any such
proposal or interdict any prior payments which they regard as
unlawful. Accordingly,
the applicants have failed to make out any
case for interdictory relief.
Costs
[139]
As far as costs are concerned, although the
applicants have not succeeded in obtaining any relief in relation to
the SIHPL Guarantee
nor any interdictory relief, they have obtained
substantial and material relief through this Court’s
declaration that the
SIHPL CPU and authorising resolution are void.
In the result I consider that the applicants are entitled to their
full costs. The
papers in this matter were voluminous and raised
complex issues of law and fact which justified the applicants
employing the services
of three counsel.
[140]
In the result the following order is made:
1.
The Contingent Payment Undertaking
concluded between the First Respondent (SIHPL) and the Second
Respondent on or about 12 August
2019 (the SIHPL CPU) as well as the
board resolution authorising the entry by the First Respondent into
the SIHPL CPU are declared
void in terms of
sec 45(6)
of the
Companies Act, 71 of 2008
;
2.
The first and third respondent shall pay
the costs of the applicants, including the fees of three counsel.
BOZALEK
J
For 1st Applicant

Adv AR Sholto-Douglas SC
Adv BJ
Vaughan
Adv
A Price
As
instructed by

Larry Stein Attorneys
For 2nd & 3rd
Applicant

Adv W Lüderitz SC
Adv P
Farlam SC
Adv H
Pretorius
Adv J
Moodley
As
Instructed by

Adams & Adams
For 1st
Respondent

Adv A Subel SC
Adv AM
Smalberger SC
Adv A
Govender
As
Instructed by

Werksmans Attorneys
For 3rd
Respondent

Adv MJ Fitzgerald SC
As instructed
by

Bowman Gilfillan Inc
[1]
[2020]
ZAGPJHC 145.
[2]
2020
(5) SA 419 (SCA).
[3]
2011
(4) SA 420
(SCA) para 29.
[4]
2012
(4) SA 593
(SCA).
[5]
2015
(2) SA 232
(CC) at para 136 and note 138. See also
First
Rand Bank v KJ Foods
CC
2017 (5) SA 40
(SCA) at para 75 being an instance of the SCA
applying the principle specifically in relation to the construction
of the
Companies Act.  That
passage was applied by the
Constitutional Court, also construing the
Companies Act, in
Diener
NO v Minister of Justice
2019 (4) SA 374
(CC) at para 52.
[6]
1947
(2) SA 37 (AD).
[7]
2020
(2) SA 109 (GP).
[8]
This
interpretation is, moreover supported by academic commentators. See
Business Tax and Company Law Quarterly (Vol 4 Issue 1
March 2013),
Exploring sections 44 and 45 of the Act: The Perils of providing
Financial Assistance’ by Milton Seligson
SC at page 8 and
Commentary on the
Companies Act of 2008
, Yeats et al, Original
Service 2018 2-390 at footnote 5.
[9]
Henochsberg
on the Companies Act 71 of 2008.
[10]
2017
(4) SA 107
at paras [34] and [35].
[11]
See
para 88 above.
[12]
See
para 91 above.
[13]
See
para 92 above.
[14]
Yeats,
Volume 1, Juta Original Service, 2018 at 2–403 – 405.
[15]
(
1880)
ISC 29. See also
Dadoo
Ltd v Krugersdorp Municipal Council
1920 AD 530.
[16]
See
paras 93, 96 and 98 above.
[17]
7
th
edition, (Thomson Reuters, 2021) Chapter 9.
[18]
(279/2020)
[2021]
ZASCA 67
(3 June 2021) paras 11 and 12.
[19]
SIHPL’s
Supplementary Affidavit, Record page 1406, para 63.