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[2021] ZASCA 59
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Oakbay Investments (Pty) Ltd v Tegeta Exploration and Resources (Pty) Ltd and Others (1274/2019) [2021] ZASCA 59 (21 May 2021)
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case no: 1274/2019
In the matter
between:
OAKBAY INVESTMENTS (PTY)
LTD
APPLICANT
and
TEGETA EXPLORATION AND
RESOURCES (PTY) LTD (IN
BUSINESS
RESCUE)
FIRST RESPONDENT
JOHAN
LOUIS KLOPPER NO
SECOND RESPONDENT
KURT ROBERT KNOOP NO
THIRD RESPONDENT
THE COMPANIES AND
INTELLECTUAL
PROPERTY
COMMISSION ("CIPC")
FOURTH RESPONDENT
Neutral
citation:
Oakbay Investments (Pty) Ltd v Tegeta Exploration
and Resources (Pty) Ltd and Others
(1274/2019)
[2021] ZASCA 59
(21 May 2021)
Coram:
PONNAN, WALLIS and SALDULKER JJA and GOOSEN and UNTERHALTER AJJA
Heard
:
11 MAY 2021
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the
Supreme
Court of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 09h45 on 21 May 2021
Summary:
Companies Act 71 of 2008
– business rescue practitioners
(BRPs) – removal under
s 139(2)(
e
) – scope of
section – dispute over intercompany loans – whether
giving rise to a conflict of interest warranting
removal of BRPs
ORDER
On
appeal from:
Gauteng Division of the High Court, Pretoria
(Potterill J as court of first instance):
The
application for leave to appeal is dismissed with costs, such costs
to include those consequent upon the employment of two counsel,
where
two counsel were employed, and the costs of the application to lead
further evidence on appeal.
JUDGMENT
Wallis JA (Ponnan and
Saldulker JJA and Goosen and Unterhalter AJJA concurring)
[1]
In February 2018, eight companies in the Oakbay
Group were placed in
voluntary business rescue after the four major South African banks
decided to terminate their banking facilities,
rendering them
commercially insolvent.
[1]
Among the companies were the first respondent, Tegeta Exploration and
Resources (Pty) Ltd (Tegeta), and its three wholly-owned
subsidiaries, Optimum Coal Mine (Pty) Ltd (OCM), Koornfontein
Mines (Pty) Ltd (Koornfontein) and Optimum Coal Terminal (Pty)
Ltd
(OCT). Oakbay Investments (Pty) Ltd (Oakbay), the applicant and the
company that controlled the group, was not placed in business
rescue.
It was represented in these proceedings, which were commenced on 16
November 2018, by Ms Ragavan, the acting Chief Executive
Officer
(CEO) of the Oakbay Group. She deposed to the founding and replying
affidavits and sought the removal from office of Messrs
Knoop and
Klopper, the second and third respondents and the appointed business
rescue practitioners (the BRPs) of Tegeta. The application
was
dismissed by Potterill J in the Gauteng Division of the High Court,
Pretoria and she refused leave to appeal. This court referred
Oakbay's application for such leave for argument in terms of s
17(2)(
d
) of the
Superior Courts Act 10 of 2013
.
Background to the
issues
[2]
In addition to their appointment as Tegeta's BRPs, Messrs
Knoop and
Klopper were appointed, together with two others, as the BRPs of OCM
and jointly as the BRPs of Koornfontein. Mr Knoop
was appointed as
the sole BRP of OCT. These appointments were said by Oakbay to give
rise to a conflict of interest between their
duties in relation to
Tegeta and their duties, principally in relation to OCM, but
generally to all three subsidiaries. It based
its case for their
removal on
s 139(2)(
e
) of the Companies Act 71 of 2008 (the
Act). First, however, it is necessary to outline the facts said to
give rise to the conflict
of interest.
[3]
According to Oakbay, when Tegeta purchased the shares
in OCM,
Koornfontein and OCT, a balance sheet annexed to the sale agreement
reflected that all three subsidiaries were substantially
indebted to
their then holding company in respect of inter-company loans.
[2]
As a result of the sale, Tegeta was said to have stepped into the
shoes of the previous holding company as the party to whom those
loans were owed. Thereafter further transactions occurred between the
four companies. According to Ms Ragavan the outcome of these
was
accurately reflected in the audited annual financial statements for
the three subsidiary companies that she annexed to the
founding
affidavit. These showed that all three companies had substantially
reduced their liability to Tegeta and, in the case
of Koornfontein,
Tegeta had borrowed considerable sums from it by way of inter-company
loans.
[3]
[4]
Ms Ragavan did not deal in any detail with the transactions
that
originally gave rise to the inter-company loans or those that
occurred in the two years and two months that elapsed between
Tegeta's acquisition of OCM, Koornfontein and OCT and the four
companies entering business rescue. There was thus no explanation
for
the changes in the amount of these loans. She explained that the
companies operated as related entities, with often common
shareholders and asserted that the claims based on the inter-company
loans were unassailable. She added:
'…
there was never any contemplation by [Oakbay] that any party could
question the intercompany loans as has now been done
by the BRPs.'
[5]
This latter statement ignored the fact that the auditors
of all four
companies had questioned the correctness of the accounts in relation
to the inter-company loans. All of the audited
annual financial
statements on which Ms Ragavan relied, as well as those of Tegeta,
contained a disclaimer by the auditors based
on a lack of properly
maintained accounting records. Whilst the disclaimers were general
and extensive, in three instances
[4]
the auditors said that they were unable to satisfy themselves of the
'Completeness, Valuation and Validity of Related Party Transactions
and Balances' and in the other that they could not satisfy themselves
of 'All assertions relating to Loans from Group Companies'.
5
In reporting on whether the companies were going concerns, they said
that there was material uncertainty about their going concern
status.
Tegeta had incurred a financial loss of over R80 million for the 2017
financial year. In relation to OCM and Koornfontein
they said:
'We
conclude that the possible effects on the financial statements of
undetected misstatements, if any, could be both material and
pervasive.'
[6]
Hence, even before the BRPs took office, question marks
had been
raised in relation to the inter-company loans. The BRPs had to
investigate these loans as part of their obligation in
terms of s
141(1) of the Act to determine whether there was any reasonable
prospect of the businesses being rescued. When they
sought access to
the offices and records of the companies under business rescue, such
access was denied at the instance of Ms Ragavan.
Urgent proceedings
had to be brought to secure access and these were finalised on 2 May
2018. Thereafter the BRPs commissioned
a report from Mr
Harcourt-Cooke on the flow of funds into and out of Tegeta's bank
account and the inter-company loans.
[7]
Rather than resolving the BRPs' concerns in relation
to the
inter-company loans, Mr Harcourt-Cooke's report exacerbated them. It
reflected transfers from OCM to Tegeta in excess of
R1 billion
between May 2016 and January 2018 and transfers from Koornfontein to
Tegeta of more than R2.7 billion between April
2016 and February
2018. Ms Ragavan informed Mr Harcourt-Cooke that Tegeta performed a
group treasury function. Whilst this is not
unusual, there was no
suggestion that it was being conducted in terms of a sweeping
arrangement with the Oakbay group's bankers.
[5]
The BRPs said, without rebuttal, that the funds were being moved at
Ms Ragavan's discretion. That is not a conventional way in
which to
perform a group treasury function, nor was Ms Ragavan's justification
that these cash flows were to 'pay salaries', convincing.
That would
require very careful and accurate records to be maintained to show
the propriety of the movement of funds and the levels
of
inter-company indebtedness at any particular time. The auditor's
qualifications to the accounts showed that this was not being
done.
[8]
Mr Harcourt-Cooke's conclusion to his third and final
report dated 20
June 2018 made it clear that the figures in respect of inter-company
loans were, at the lowest, highly debatable
and the legitimacy of the
inter-company transfers was open to question. The summary of his
findings read:
'
We have been unable to verify the validity and accuracy
of the inter-company balances at
20
February 2018 being the date OCM and 7 other companies were placed in
Business Rescue for the following reasons:
•
In certain instances, the opening inter-company balances
at 28 February 2017 do not agree.
•
A number of the loan account balances have substantial
opening balances carried forward from prior years.
•
We are unable to place reliance on the opening balances
at 28 February 2017 as a number of the audit reports in the Audited
Annual
Financial Statements "AFS" express a "disclaimer"
of audit opinion at that date.
•
Jan Tolmay has not finalised the OCM books to 28
February 2018. He currently has no access to the SAP accounting
system and is unable
to retrieve the detailed debtors and creditors
sub-ledgers at 28 February 2018.
•
Not all supporting documents are available and have not
been provided to support payments made.
•
There are no
documents available/provided to support journal entries passed.
•
Where payments were made by third parties to other
companies in business rescue these transactions have not been
recorded in the
respective entities books.
•
We have noted in certain instances payment descriptions
on the bank statements as "Tegeta" where in fact the funds
were
paid [to] "Oakbay Investments".
•
We have not been provided with all the loan agreements
to support transactions between OCM and the other companies in
business rescue,
and certain loan agreements provided the agreements
to not stand up to scrutiny and do not appear to be on an arm's
length basis.
•
We have not been
provided with all management agreements between Oakbay and OCM and
other companies in business rescue, and those
provided do not stand
up to scrutiny and do not appear to be on an arm's length basis eg
Oakbay charging Koornfontein R1 m per
month, and TNA Media (Pty) Ltd
agreement with Koornfontein signed on 2 May 2017 for a sponsorship
agreement of R 24 m.’
[9]
Apart from the investigation by Mr Harcourt-Cooke, the
BRPs obtained
copies of Tegeta's bank statements with the Bank of Baroda for the
period from 1August 2016 to 28 February 2018.
These showed a pattern
of funds flowing in and out with bewildering frequency and for no
apparent reason. The following are examples.
On 25 January, a few
weeks before the companies were placed in business rescue, OCM
deposited R13 million in Tegeta's account,
the bulk of which was used
to pay Eskom. OCM deposited a further R5.5 million on the same day
and this was immediately paid to
a related company, Shiva Uranium
(Shiva), in which the majority shareholding was held by Oakbay. On 25
January OCM deposited a
further R13 million and this was immediately
paid to Koornfontein. On 26 January OCM deposited R1 million and R1.5
million was
paid to Koornfontein. On 29 January OCM deposited R500
000 and this was paid to Shiva. On 31 January Koornfontein deposited
R50
million, of which R35 million was paid to OCM and R2 million to
Shiva. On 1 February two payments of R4 million and R3.5 million
were
made to Koornfontein and a further R5 million to Shiva. The following
day OCM paid R5 million to Tegeta and this was immediately
paid to
Koornfontein. On 5 February OCM paid a further R6.5 million to
Tegeta, which transferred it the same day to Koornfontein.
[10]
The bank statements showed the same pattern of payments in and out of
the Tegeta
account for the entire period they covered. In dealing
with a similar pattern of payments in the bank accounts of one of the
other
companies in business rescue, I remarked that the image of a
washing machine or spin dryer sprang to mind.
[6]
The image is equally apposite here and it was a legitimate matter of
concern to the BRPs. The statement by Mr Knoop, in his answering
affidavit, that 'the Oakbay companies were run with little or no
regard to the separate corporate identities of the individual
companies making up the group' went unanswered. In those
circumstances the BRPs cannot be faulted for viewing the figures in
relation
to inter-company loans with circumspection, if not outright
suspicion.
[11]
On 25 April 2018, before these investigations had been undertaken,
the BRPs
proposed a business rescue plan in respect of Tegeta. The
basis for the plan was the disposal of the business as a going
concern.
It reflected an indebtedness by Tegeta to Koornfontein of
nearly R306 million and lesser amounts owing to other group
companies,
but provided for no dividend to be paid to them whether
Tegeta was under business rescue or placed in liquidation. An
indebtedness
of OCM to Tegeta in an amount exceeding R2.6 billion was
said to be disputed and it was not reflected as an asset of Tegeta.
[12]
Two days earlier the BRPs of OCM had also published a business rescue
plan.
It proposed what was described as a 'Trade Out with a view to
Sell'. This meant that the company would continue to operate in terms
of an operating agreement concluded with a third party and
concurrently a sales process would be held to sell the assets and
business
operations of the mine using a wind down process. The full
plan reflecting all creditors was not before the court, but an
annexure
to the plan showed the Tegeta claim of some R2.6 billion as
a disputed claim.
[13]
The BRPs said that the treatment of the Tegeta claim against OCM was
irrelevant,
because on any basis there would be no free residue
available to pay a dividend to Tegeta after paying all other OCM
creditors.
In dealing with the OCM plan Mr Knoop said that the loan
by Tegeta was irrecoverable and that its voting interest would be
nil,
because in a liquidation scenario there was no prospect of its
receiving a dividend. This was in accordance with the provisions
of s
145(4)(
b
) of the Act. Given the qualifications to the annual
financial statements of OCM it is not possible to accept that it was
solvent
at the time when business rescue commenced.
[14]
The BRPs drew attention to a subordination agreement entered into
between Tegeta
and OCM and witnessed on behalf of both companies by
Ms Ragavan, but not mentioned in the founding affidavit. This
agreement was
concluded at the time Tegeta acquired the shares in
OCM, Koornfontein and OCT, and provided that Tegeta subordinated so
much of
its claim against OCM for the benefit of the other creditors
of OCM, both present and future, as would enable such claims to be
paid in full as and when such claims fell due. The claims of such
creditors were to rank preferentially to the claim of Tegeta
and
Tegeta undertook in any liquidation or business rescue of OCM not to
prove or tender a claim, proof of which would reduce or
diminish any
liquidation dividend payable to other creditors. An examination of
the OCM business rescue plan revealed that neither
employees nor
concurrent creditors were to receive a dividend of one hundred cents
in the Rand. Accordingly, as matters were perceived
to be at that
early stage, without access to the records and accounts of either
Tegeta or OCM, the provisions of the subordination
agreement applied
and Tegeta was precluded from proving a claim in respect of its loan
to OCM, whatever the amount thereof.
[15]
In reply, Ms Ragavan did not attempt to justify the amount of
Tegeta's claim,
nor did she refute the BRPs statements or attempt to
do so. Against that background I turn to deal with her grounds for
seeking
the removal of the BRPs and the issues to which they gave
rise.
Discussion of the
issues
[16]
The application was based squarely and solely on the provisions of s
139(2)(
e
) of the Act, which empowers the court upon the
request of an affected person, or on its own motion, to remove a BRP
from office
on the grounds of ‘conflict of interest or lack of
independence’. The primary contention was that the appointment
of
the same BRPs in respect of companies in a single group was
inappropriate as it had led to conflicts of interest due to the
existence
of intercompany loans and claims. This contention was
advanced as a matter of general principle. The secondary case, if the
general
contention was rejected, was that the facts set out above in
regard to the BRPs treatment of the Tegeta claim against OCM
demonstrated
that they were conflicted because they were acting on
behalf of Tegeta, in which capacity they were obliged to pursue the
claim
with vigour, while on behalf of OCM they were required, with
equal vigour, to resist the claim.
The conflict was said to be both obvious and irresoluble.
[17]
The primary contention was not pursued in argument because this court
had already
rejected it in a judgment delivered last November in a
case involving an attempt to remove the same two BRPs from office in
two
of the other companies in the Oakbay Group.
[7]
To the exposition of the principles underlying s 139(2)(
e
) in
that judgment,
9
I would add only that I am by no means
satisfied that the complaint being advanced is one falling within
that section.
[18] An examination
of the sub-sections of s 139(2) reveals that each appears to
be
concerned with a personal quality or action of the BRP whose removal
is sought, namely, incompetence; failure to perform their
duties;
failing to exercise due care in the performance of their duties;
engaging in illegal acts or conduct; no longer satisfying
the
requirements of s 138(1) for their appointment; conflict of interest
or lack of independence; or incapacity or inability to
perform their
functions. The ordinary understanding of a conflict of interest as
explained in the previous judgment is a situation
where the private
interests of the BRP conflict with their obligations to the company
in respect of which they have been appointed.
That is not the
complaint in the present case, where the conflict is alleged to arise
as between the interests of Tegeta and OCM,
not between the BRPs and
either company. Whether that also comes within section 139(2)(
e
)
is perhaps debatable.
[8]
[19]
This is not to say that where such an inter-company conflict arises
it may
not necessitate the BRP resigning, or being removed from
office, in respect of one or other company, or possibly both of them.
But the reason for that would be that the conflict prevented them
from performing, or resulted in their failing to perform, their
duties.
11
Alternatively it might render it impossible to
exercise the proper degree of care owed to each company in the
performance of their
duties.
[9]
The invocation of either of those provisions would involve a
consideration of different issues and potentially would mean that
the
BRP should be removed from office in respect of both companies, and
not the somewhat peculiar approach, adopted by Oakbay in
this case,
that they are unfit to continue as BRPs of Tegeta, but remain fit to
continue in office as BRPs of OCM and the other
companies. However,
having made those comments, it is unnecessary to express any final
conclusion in that regard, as it was not
argued, save in response to
some questions from the bench, and the case can be resolved on the
assumption that Oakbay's contentions
can be advanced under s
138(2)(
e
).
[20]
I turn to the secondary ground advanced on behalf of Oakbay. Its
complaint
about the treatment of the Tegeta claim against OCM was set
out in the following paragraphs of Ms Ragavan's founding affidavit:
'‘2.30
What is apparent … is that the BRPs will effectively be forced
to act as mediators between Tegeta and Optimum
Coal Mine whilst
representing both the entities simultaneously.
2.31
At present it seems they are intent on
compromising Tegeta’s claim in Optimum Coal Mine for the sole
purpose of extinguishing
all creditors' claims in Tegeta, to the
extreme detriment of the shareholders and other creditors.
2.32
Put differently, the BRPs are trying to represent
the interest of Optimum Coal Mine (as a debtor of Tegeta) and those
of Tegeta
(as a creditor of Optimum Coal Mine) at the same time.
2.33
Irrespective as to their intentions, the BRPs
cannot simultaneously act for both parties in the face of a dispute
between the parties,
the resolution of which can only be beneficial
to the one and detrimental to the other.
2.34
I respectfully submit that from the above there
can no longer only be a fear of a conflict of interest manifesting
itself, but that
it is unequivocally so that a conflict has arisen.’
[21]
The conflict posited by Oakbay simply did not exist when the two
business rescue
plans were prepared and published. Both adopted
precisely the same approach to the indebtedness of OCM to Tegeta,
namely that it
was not clear and there might be grounds upon which to
challenge either its existence or its amount. Accordingly, both
treated
it as disputed. But that did not mean that the BRPs were
constrained to adopt the hostile adversarial approach that these
paragraphs
were based on. Once the BRPs obtained access to the
accounts of the two companies they would have the opportunity, with
outside
professional assistance, to reconcile them to see whether the
Tegeta claim was valid and, if so, in what amount. There was no need
at the time the business rescue plans were prepared and published for
litigation, or some other form of dispute resolution, to
resolve the
issue. As matters stood it seemed likely to be an academic exercise
given the financial circumstances of the two companies.
[22]
Counsel's submission in response to a question from the presiding
judge as
to the basis of his case was that there was a conflict of
interest because in the business rescue plan for Tegeta the BRPs did
not recognise the OCM debt, whilst in the plan for OCM they did
recognise it. When it was pointed out that both plans dealt with
the
debt on precisely the same basis, by treating it as disputed, the
argument shifted to the non-recognition of the debt. Rhetorically,
counsel asked how that was explicable unless there was a conflict.
The short answer is that the debt's existence and amount was
uncertain and it was accordingly dealt with as disputed.
[23]
The misconception underlying the entire argument emerged from a
submission
that the heart of the difficulty lay in the fact that,
when the BRPs were wearing their Tegeta hats, they had a duty to
pursue
the Tegeta claim on behalf of Tegeta. But this was to confuse
business rescue with insolvency, where an obligation rests on the
trustee or liquidator to collect the assets of the insolvent or
company in liquidation, reduce them to monetary amounts and
distribute
them among the creditors. No such obligation rests upon a
BRP. Their obligation is to investigate in order to ascertain whether
there is a reasonable prospect of the company being rescued. It is
established that this means more than that the company will
be
returned to solvent trading. It includes a situation where the
company is wound down on terms that provide a better return for
creditors or shareholders than on an immediate liquidation.
[10]
The responsibility of the BRP is to investigate and ascertain whether
either of these is reasonably possible.
[24]
When dealing with a complex group of companies, all ultimately
controlled by
the same people, there is little point in the BRPs
becoming embroiled in arguments within the group concerning
inter-company indebtedness,
unless a stage is reached when a question
relating to such indebtedness must be resolved in order to address
conflicting interests
of third party creditors. That is the kind of
situation that arose in the case to which we were referred arising
from the liquidation
of the Macmed group of companies.
[11]
There the liquidators, for reasons of their own, recognised a claim
by the holding company of the Macmed group, the effect of which
was
materially to prejudice the position of two banks that had lent
substantial sums to a subsidiary company and who would otherwise
have
made a substantial recovery on their claims. There was accordingly a
fundamental conflict between the claim being advanced
by liquidators
on behalf of the holding company and the interests and claims of the
two banks.
[12]
That was compounded by the fact that the two liquidators of the
subsidiary were also liquidators of the holding company and had
concluded a feesharing agreement with their co-liquidators in the
holding company. The fee share would be affected depending on
the
outcome of the disputes with the two banks over their claims and the
claim by the holding company. The present situation was
entirely
different.
[25]
We received some submissions that the BRPs were in default of their
obligations
in terms of s 145(5)(
b
) of the Act to appoint a
suitably qualified person to appraise Tegeta's claim and value its
voting interest on the basis that it
was a subordinated concurrent
claim. The apparent purpose of this provision, when applied in a
situation such as the present, is
to remove any risk of a conflict
arising over the existence and value of such a claim. If anything,
the existence of this independent
mechanism reduces the possibility
of the BRPs being conflicted as claimed. Accepting that this exercise
would need to be done before
any meeting could be held at which
creditors would have the right to vote, there is no suggestion that
this stage had been reached.
All attempts to convene a meeting were
faced with threats of litigation and, by the time this application
was launched, the BRPs
were both better informed and in the course of
preparing fresh business rescue plans. Had a case of conflict of
interest been made
out those facts would have been relevant to the
exercise of the court's discretion to remove the BRPs. It suffices
for present
purposes to say that the case on a conflict of interest
was not advanced by reference to s 145(5)(
b
).
Conclusion
[26]
I am accordingly satisfied that Oakbay's complaints was not
established. Nothing
more than the possibility of conflict in some
unlikely circumstances in the future emerged from these papers. In
those circumstances
there is no reasonable possibility of an appeal
succeeding and the application for leave to appeal must be dismissed.
That must
carry with it an order for payment of the costs, including
the costs of two counsel where two counsel were employed.
[27]
One final matter arose from Oakbay lodging an application to lead
further evidence
on appeal on 3 May 2021. Counsel sought to deal with
this application at the outset of the argument, but desisted after it
was
pointed out that the application was academic at the stage of
considering the application for leave to appeal. Until leave was
granted there could be no question of leading further evidence on
appeal. In order to obtain leave he had to show that a case of
conflict of interest justifying the removal of the BRPs appeared from
the existing papers. Accordingly, the application seemed
to have
little purpose. If that case was established, there was no need for
further evidence to establish it. If it was not, it
was too late to
rescue the original case and the evidence in the application to lead
further evidence on appeal would only be relevant
if a fresh
application for the removal of the BRPs were made. In the
circumstances the application was not pursued. On any basis
Oakbay
must pay the costs of that application.
[28] In the result
the following order is made:
'The
application for leave to appeal is dismissed with costs, such costs
to include those consequent upon the employment of two
counsel, where
two counsel were employed, and the costs of the application to lead
further evidence on appeal.'
M J D
WALLIS
JUDGE
OF APPEAL
Appearances
For appellant:
MR Hellens SC
(with him L van Gass)
Instructed by:
Van der Merwe & Van der Merwe, George;
Honey Attorneys,
Bloemfontein
For respondent:
G D Wickens SC (heads of
argument prepared by
P Stais SC and G
D Wickens SC)
Instructed by:
Smit Sewgoolam
Attorneys, Johannesburg
McIntyre Van der Post, Bloemfontein.
[1]
Murray and Others NNO v African Global Holdings (Pty) Ltd and
Others
[2019] ZASCA 152; 2020 (2) SA 93 (SCA).
[2]
In round figures the amounts given in the affidavit were R4,3
billion in the case of OCM; R360 million in the case of
Koornfontein;
and R225 million in the case of OCT.
[3]
The amounts in round figures were now said to be R2,6 billion for
OCM; R291 million owing to Koornfontein; and R45.5 million
for OCT.
[4]
Tegeta, OCM and Koornfontein.
5
OCT.
[5]
MV Fonarun Naree: Afgri Grain Marketing (Pty) Ltd v Trustees for
the time being of Copenship Bulkers A/S (in liquidation)
[2019]
ZASCA 67
;
[2019] 3 All SA 321
(SCA) paras 38 and 50-58.
[6]
Knoop NO and Another v Gupta (Tayob as intervening party)
[2020]
ZASCA 163
;
2021 (3) SA 88
(SCA);
[2021] 1 All SA 726
(SCA) para 137.
[7]
Knoop NO and Another v Gupta (Tayob as intervening party)
ibid,
paras 140 and 141.
9
Ibid, para 23.
[8]
C/f
American Natural Soda Ash Corp and Another v Botswana Ash
(Pty) Ltd and others
[2007] ZACAC 1
, a case of side shifting and
Prince Jefri Bolkiah v KPMG (a firm)
[1998] UKHL 52
;
[1999] 1
All ER 517
(HL).
11
In the case of a clear conflict, they
might be unable to move forward with the business rescue in respect
of either company.
[9]
A decision that favoured the one over the other could give rise to a
contention that they had not exercised due care in relation
to the
disadvantaged party.
[10]
See s 128(
b
)(iii) of the Act.
[11]
Standard Bank of SA Limited v The Master of the High Court
(Eastern Cape Division)
[2010] ZASCA 4; 2010 (4) SA 405 (SCA);
[2010] 3 All SA 135 (SCA)
[12]
The liquidators had refused to recognise either bank's claim and had
engaged in protracted and unsuccessful litigation in resisting
them.