Arqomanzi Proprietary Limited v Vantage Goldfields (Pty) Limited and Others (11/11/2019) [2019] ZAMPMBHC 10; Roelofse AJ (4 December 2019)

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[2019] ZAMPMBHC 10
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Arqomanzi Proprietary Limited v Vantage Goldfields (Pty) Limited and Others (11/11/2019) [2019] ZAMPMBHC 10; Roelofse AJ (4 December 2019)

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
MPUMALANGA
DIVISION, MBOMBELA
(MAIN
SEAT)
CASE
NO:
3651/2019
In
the matter between:
ARQOMANZI
PROPRIETARY
LIMITED
Applicant
and
VANTAGE
GOLDFIELDS (PTY)
LIMITED
First

Respondent
(In
Business Rescue)
AND
ORHERS
Second

to Eleventh Respondents
JUDGMENT
Roelofse
AJ:
[1]
In
1874, Mr. Tom Mc Lachlan found the first traces of alluvial gold in
Barberton.
Fortune seekers
flocked to the area in search of gold.
[1]
History repeats itself in this matter.
[2]
The real discord in this matter is a tug
of war between parties who are after the remaining gold in
Barberton.
[2]
The gold is in the
Lily and Barbrook mines, situated near Barberton, Mpumalanga. The
mines are owned by two companies. Makonjwaan
Imperial Mining Company
(Pty) Ltd (“
MIMCO”
)
[3]
owns the Lily mine and Barbrook Mines (Pty) Ltd (“
Barbrook”
)
[4]
owns the Barbrook mine. Vantage Goldfields (Pty) Ltd (“
the
Company”
)
[5]
,
owns shares in MIMCO and Barbrook.
[3]
The Company, MIMCO and Babrook (“
the Vantage
Companies”
) are in business rescue.
[4]
Arqomanzi
[6]
and Real Win
[7]
have made
offers to get to the gold. Vantage Goldfields SA (Pty) Ltd
(“
VGSA”
)
[8]
presently has an interest in the gold. VGSA obviously wants to block
the offers. The Vantage Companies’ business rescue
practitioners
[9]
sit in the
middle.  They have prepared and published business rescue plans
(“
the plans”
)
for the Vantage Companies and they are duty bund to see that the
plans work and to see them through or else the existence of the

Vantage Companies terminate. The practitioners proclaim that the
plans have failed. The workers who worked the gold
[10]
are scuffled aside - they are the most vulnerable of all involved and
are in misery, observing the spectacle playing out before
them.
Above Arqomanzi, Real Win and VGSA are the power of offshore
companies, who, no doubt, are looking out for a bargain
through their
local subsidiaries.
[5]
When day broke in this matter as I opened the court file for
the first time, I was faced with an opaque veil of mist and cloud. A

multitude of issues and arguments presented itself. The application
was first called before me on 15 October 2019. I issued an
order
whereby the matter was postponed to 25 October 2019 for hearing. The
time lapse brought heat. The heat came when more affidavits
and
argument were filed. After the heat came, most of the mist and cloud
dissipated, the issues became clear and crisp –
only until
clouds yet again appeared on the horizon with an astounding
revelation from VGSA. Despite the crispness of the issues,
I still
deem it necessary to traverse what I saw before the heat, what I saw
after the heat came and what the clouds brought. I
do so because
somewhere, sometime, and, for some reason someone may want to
consider how this judgment and the order that follow
came about.
The
parties and their connections
[6]
Arqomanzi is a wholly-owned subsidiary of Taung Gold
Proprietary Limited (“
TGL
”). TGL is a
non-wholly-owned subsidiary of Taung Gold International Limited
(“
TGIL
”). TGIL is registered in Bermuda –
its issued shares are listed on the Hong Kong Stock Exchange.
Arqomanzi alleges
that it enjoys the financial and technical support
of both TGL and TGIL.
[7]
Vantage Goldfields Ltd (“VGO”), an Australian
company, owns VGSA. VGSA owns 74% of the Company and 42% of MIMCO.
The
Company owns 58% of MIMCO and 100% of Barbrook. The Company is
for its continued existence reliant upon the cash-flows and revenues

of the Lily and Barbrook mines. VGSA, and the Vantage Companies forms
part of the Vantage Group (“
VGA”
).
[8]
Standard Bank
[11]
sold the security that VGSA has pledged to it to Arqomanzi.
[9]
The eighth to tenth respondents are the affected persons,
being the shareholders, employees and trade union employees of the
Vantage
companies (“
the affected persons”
).
[10]
Real Win is the eleventh respondent.
[11]
Arqomanzi seeks no relief against Standard Bank and the
affected persons.
The
dispute – a summary
[12]
The Vantage Companies have been in business rescue (“
rescue”
or “
rescue proceedings”
) since 2016.
Notwithstanding this, their rescue is still ongoing. The
practitioners say that the Vantage Companies’ business
rescue
plans (“
the plans”
) have failed.
[13]
Arqomanzi wants to prevent the practitioners from executing
the plans until the Vantage Companies’ creditors have voted on

revised business recue plans. Arqomanzi says it is entitled to be
recognised by the practitioners as a creditor of the Company
because
Standard Bank has ceded VGSA’s loan account in the Company to
Arqomanzi. Of course Arqomanzi will say so because,
Arqomanzi must be
of the view that by its innovative manoeuvring to become a
substantial creditor of the Company, it that it will
be awarded when
it has the upper hand when votes are counted and weighed on revised
business rescue plans, that is, if revised
plans are allowed.
[14]
VGSA says there is no such thing as a failed business rescue
plan. It also says that, in any event, none of the requirements for

the termination of the rescue of the Vantage Companies have been met,
therefore the practitioners are obliged to act upon the Vantage

Companies’ adopted plans. VGSA will say so for in the plans,
Real Win will have no presence and Arqomanzi may only have
insignificant rights.
[15]
The practitioners confirm that the plans have failed due to
the lack of funding that underpinned the plans. They say that they
are
in limbo and plead that the court assist them. The practitioners’
view is that, by ordering that they are not allowed to consider

offers from other parties interested in acquiring an interest in the
Vantage Companies, will unlawfully prevent them from executing
their
duties.
[16]
The affected persons are divided – some support
Arqomanzi and some support VGSA and Real Win. However, the affected
persons
are all in agreement that the matter should be resolved
without delay.
The
tragedy – Lily mine collapses
[17]
On 5 February 2016, the Lily mine
collapsed. A portion of the crown pillar on level four of the main
mine failed. The collapse occurred
at the upper western portion of
the mine and adjacent to the mine entrance. Fortunately, all
employees working underground at the
time of the incident
[12]
were evacuated. Sadly, three surface employees were tragically buried
in the sinkhole when the container they were in during the
collapse,
disappeared.
[13]
They
are still underground. Despite considerable effort
[14]
,
in the interest of safety
[15]
,
a decision was made to permanently suspend the rescue operations.
[18]
As a result of the tragedy, the Lily mine
had to come to a complete standstill. Its core gold reserves cannot
be accessed.
[16]
The
additional costs that Barbrook had to carry as a result of the Lily
mine collapse caused significant strain on Barbrook’s
cash
flow. In addition, disruptions by the community affected the
production of gold at the Lily mine. MIMCO became financially

distressed as a result of the disaster. Due to the close connection
between the Vantage Companies’ business, the disaster

materially affected each of the Vantage Companies’ prospects to
such an extent that became distressed and require rescue.
Course
of the business rescue
[19]
The Vantage companies resolved to commence
business rescue as provided for in Chapter 6 of the Companies Act
(“
the Act”
).
[17]
The practitioners were appointed as the joint business rescue
practitioners for the Vantage Companies.
[20]
The practitioners prepared business rescue
plans in terms of the provisions of section 150(1) of the Act.  The
Vantage Companies
plans were adopted by their creditors.
[18]
.
These plans still stand as they were adopted.
[21]
The Company’s plan is based the
premise that Lily and Barbrook mines re-open, achieve production
capacity and profitability.
[19]
An important feature of the MIMCO plan is, obviously, that the Lily
mine re-open. For this, according to MIMCO’s plan, and
as a
pre-condition, an amount of R200 million needs to be raised by way of
loan or equity or both within the Vantage Companies
to develop the
access decline and re-open the Lily mine. The Barbrook mine needs to
re-capitalised for it to reopen and to operate
at a profit.
[20]
Capitalization would come from private funding, an Industrial
Development Corporation Loan (“
the IDC
loan”
)
[21]
and the recovery of gold from Barbrook’s significant tailings
reserves.
[22]
On 24 December 2019, the practitioners
issued a notice to all affected parties, and the Vantage Companies
(“
the first notice”
).
In the first notice, the practitioners record that the Vantage
Companies’ plans have failed. They also say that they are
of
the opinion that there is a reasonable prospect that the “
Business
”
can be rescued and allude to a “
Transparent
bidding process
” which would be
published and that a creditors’ meeting is to take place. In
addition, they indicate that they would
convert the rescue to
liquidation proceedings if they do not secure an offer by 31 January
2019.
[22]
[23]
On 8 February 2019, the practitioners addressed a further
notice to all the affected parties (“
the second notice”
)
and the Vantage Companies. In this notice, the practitioners repeat
that plans have failed. They also say that nothing concrete
has
materialized “……
In terms of our time line set
out in our last report…..
”. This is clearly a
reference to the bidding process that was anticipated, the
publication of the new business rescue plans
and the creditors
meeting that was envisaged. They blame the Flaming Silver transaction
and the lack of funding for the inability
to keep to the time frames.
[24]
In the second notice, under the heading “
Conclusion
”,
the practitioners recorded as follows:
“
Given the circumstances above the
Practitioners have taken the following to [sic] account;
-
No proof of funds to reopen the mines have been forthcoming
-
The lack of post commencement funds and the deterioration of the
assets is exasperated by the fact that we don’t know when
the
mines will open
-
We have not been approached to revise the
plans”
[23]
Nothing
is mentioned in the second notice by the practitioners over a
conversion of the rescues to liquidations.
[25]
The Flaming Silver agreement referred to by the practitioners
in their notices was poised to obtain funding for the re-opening of

the Lily and Barbrook mines upon Flaming Silver acquiring VGSA’s
shares and loans in the Company. The Flaming Silver agreement
is
linked to the IDC Loan and Flaming Silver agreeing to make their own
money contribution as condition for the IDC Loan. The Flaming
Silver
agreement contained certain suspensive conditions which were later
either deemed to be fulfilled or sought to be extended.
[26]
On 17 July 2019, this court gave judgment
in an application (“
the Flaming Silver
application”
) in terms of which Flaming
Silver sought specific performance of the Flaming Silver agreement.
The respondents in the Flaming Silver
application were VGSA, the
practitioners and VGSA’s attorneys
[24]
.
One of VGSA’s directors, Mr F Dippenaar was granted leave to
intervene in the Flaming Silver application. Mr. Dippenaar
sought the
following relief:
“
3. It is declared that:
3.1.
The resolution dated 12 November 2018, by the Board of Directors of
the Applicant (in the main application) to ratify the signing
of the
Fourth Addendum to the Sale of Shares Agreement is null and void;
3.2.
The Sale of Shares Agreement dated 1 November 2017
[the Flaming
Silver agreement]
is null and void due to the non-fulfilment of
the suspensive condition contained in Clause 3.1.3 thereof and
costs.”
[27]
In the Flaming Silver application, this court, amongst other
orders, declared that the purported ratification of the signing the

fourth addendum to the Flaming Silver agreement is null and void. The
effect of this court’s order was that the Flaming Silver

agreement was no more.
[28]
Flaming Silver launched an application for
leave to appeal the court’s judgment and order. Leave to appeal
was refused. Flaming
Silver petitioned the Supreme Court of Appeal.
According to Arqomanzi, the parties were instructed by the Supreme
Court of Appeal
to present argument to it. Judgment from the Supreme
Court of Appeal is, imminent VGSA said that the Flaming Silver
agreement is
no longer capable of implementation.
[25]
Therefore, even if the Supreme Court of Appeal overturns this court’s
judgment and/or order in the Flaming Silver application,
such
decision will have no practical effect. The appeal is therefore moot.
The
first salvo - the Johannesburg application
[29]
On 18 September 2019, Arqomanzi issued an urgent application
in the Gauteng Local Division of the High Court, Johannesburg under

case number 33012/2019 (“
the Johannesburg application
”)
seeking the same relief it seeks in this application.
[30]
The notice of motion in the Johannesburg application was
published in the Sunday Times, Lowvelder (a locally distributed
newspaper),
Rapport and the Star.
[31]
The urgent part of the Johannesburg application (Part A) was
initially enrolled for hearing on 25 September 2019 in that court.
The fourth to sixth and eleventh respondents requested more time to
consider their positions. An order was made by consent between
the
parties. In terms of the order: Part A of the Johannesburg
application was to be enrolled for hearing on the urgent court roll

of 8 October 2019; pending the final determination of the relief in
Part A, the business rescue practitioners were interdicted
and
restrained from implementing the business rescue plans in whatever
form, that were adopted by the creditors; and, Aqomanzi,
the business
rescue practitioners and Real Win were ordered to deliver their
answering affidavits to Part A of the Johannesburg
application. Costs
were reserved for the determination with Part A of the Johannesburg
application.
[32]
Only VGSA delivered an answering affidavit in the Johannesburg
application. In the answering affidavit, VGSA raised a point
in
limine
that the Johannesburg High Court does not have
jurisdiction to adjudicate the application and that this court is the
only court
vested with the jurisdiction to determine the matter.
Arqomanzi withdrew the Johannesburg application. The notice of
withdrawal
was filed and served upon VGSA on 8 October 2019. The
Johannesburg application was no more.
This
application
[33]
This application was issued by the
Registrar on 10 October 2019. Arqomanzi seeks to rely upon the papers
it and VGSA filed in the
Johannesburg application
[26]
and says that this application is a transfer of the Johannesburg
application to this court.
[27]
[34]
Arqomanzi treated the notice of this
application different from the Johannesburg application. The
practitioners and other respondents
were notified of this application
in an e-mail dated 8 October 2019 to which e-mail the notice of
motion and founding affidavit
were attached.
[28]
Neither the notice of this application nor the notice of withdrawal
of the Johannesburg application were published in any printed
media.
The
relief sought in this application
[35]
This application also consists of two parts. Part A is an
urgent application and Part B is an application to be heard in the
ordinary
course. Besides the urgency prayer in paragraph 1 of Part A
of the notice of motion, Arqomanzi seeks the following relief:
“
2. uplifting the moratorium legal proceedings
against the first, second and third respondents, all in business
rescue, in terms
of
Section 133(1)(b)
of the
Companies Act No. 71 of
2008
, as amended and granting the applicant leave to proceed with
Parts A and B of this application;
3. granting the applicant leave to cite the affected
persons of the first respondent collectively as the eighth
respondent;
4. granting the applicant leave to cite the affected
persons of the second respondent collectively as the ninth
respondent;
5. granting the applicant leave to cite the affected
persons of the third respondent collectively as the tenth respondent;
6. granting the applicant leave to effect service of
the application contained in Part B on the eighth, ninth and tenth
respondents
by means of e-mail;
7. granting applicant leave to publish notice of this
application through publication of the notice of motion in the
following newspapers:
7.1.
The Sunday Times;
7.2.
Rapport;
7.3.
The Star; and
7.4.
The Lowvelder;
8. pending the final determination of the relief in
Part B below, the fourth and fifth respondents be interdicted and
restrained
from implementing all or any of the failed business rescue
plans, in whatever form, that were adopted by the creditors of the
first
respondent on 16 February 2017, by the creditors of the second
respondent on 6 August 2018 and by the creditors of the third
respondent
on 25 May 2016;
9. the costs of Part A be paid by the fourth and
fifth respondents (in their personal capacities), in the event of
[sic] them opposing
this application, alternatively the costs of Part
A be reserved for determination with Part B, further alternatively,
in the event
Part A being opposed, that such opposing parties pay the
cost of Part A which costs shall include costs occasioned by
employment
of two counsels; and
10. further and/or alternative relief.”
[36]
In Part B of the notice of motion, Arqomanzi prays for relief
as follows:
“
1. declaring that the seventh respondent
lawfully and validly ceded all of the six respondent’s loan
claims of not less than
R389,009,887 against the first respondent to
the applicant;
2. declaring that the applicant is an independent
creditor of the first respondent for an amount not less than
R389,009,887;
3. directing the fourth and fifth respondents to
recognise the applicant as a creditor of the first respondent and to
allow the
applicant to participate as a creditor in the business
rescue proceedings of the first respondent to the full extent
provided for
in the
Companies Act No. 71 of 2008
, as amended;
4. declaring that the business rescue plans that were
adopted by the creditors of the first respondent on 16 February 2017,
by the
creditors of the second respondent on 6 August 2018 and by the
creditors of the third respondent on 25 May 2016, have failed;
5. directing the fourth and fifth respondents to
convene a combined meeting of creditors of the first respondent, the
second respondent
and the third respondent within 15 (fifteen) days
from the date of this order for the sole purpose of affording such
creditors
the opportunity to vote on whether they wish to authorise
the fourth and fifth respondents prepare new proposed business rescue

plans for the first respondent, the second respondent and the third
respondent respectively;
6. directing the first to third respondents, the
sixth respondent and any other party that may elect to oppose this
application,
pay the costs of  Part B of this application and,
to the extent that the costs in Part A of this application had not
previously
been decided, the costs of Part A of this application,
jointly and severally, the one paying the others to be absolved, such
costs
to include the costs occasioned by the employment of two
counsels; and
7. further and/or alternative relief.”
[37]
VGSA and Standard Bank delivered notices of their intention to
oppose the application. Standard Bank delivered no papers. The
practitioners
did not deliver a notice to oppose the application.
Initially, they remained tight lipped. On 24 October 2019, the
practitioners
eventually broke their silence and delivered
confirmatory affidavits.
The
first hearing on 15 October 2019
[38]
The matter was called on the urgent roll. Mr Burger SC and Mr
Myburgh appeared for Arqomanzi. Mr Badenhorst SC appeared for VGSA.

Mr. Petrus Maseko (“
Mr. Maseko”
). Mr. Maseko
informed the court that he was representing affected persons. This
was the first sign of heat.
[39]
An affidavit deposed to Mr Nhlanhla Harry Mazibuko (“
Mr.
Mazibuko”
) was handed up by Arqomanzi’s counsel. In
the affidavit, Mr. Masibuko alleges that he was an employee of the
Lily Mine, that
he is the chairperson of Amcu’s Health and
Safety Committee and an executive member of MIMCO’s union
branch committee.
He also alleges that he is a creditor of MIMCO and
therefore an affected person in respect MIMCO. Mr. Masibuko
furthermore alleges
that in December 2018, he was appointed by the
affected ex-employees, the community and the affected families of the
workers who
had died in the lily mine disaster to be their official
spokesperson and since then he has handled all media related matters
on
their behalf.
[40]
I was concerned over the issue that the Johannesburg
application was published in the printed media whereas notice of this
application
was given by e-mail only. In addition, I was concerned
that the Johannesburg application was withdrawn on 8 October 2019
without
any indication that the withdrawal was communicated to all
the affected persons or published, bearing in mind that the affected

persons mainly reside in Mbombela and Barberton.
[41]
I was concerned that affected parties were directed to
Johannesburg where the proceedings were first heard (and later
withdrawn)
and now Arqomanzi launched its application without the
same manner of notice to the affected persons. I requested that the
parties
to find each other and to agree to an order which would
address my concerns. The parties did not find each other. After
hearing
Arqomanzi and VGSA’a submissions regarding this issue,
I made the following order:
“
1.
PART A
of the application is postponed for hearing on
25 October 2019;
2. pending the final determination
of the relief in
PART A
,
the fourth and fifth respondents are interdicted and
restrained from implementing the business rescue plans, in whatever
form, that
was adopted by the creditors of the first respondent on 16
February 2017 and/or by the creditors of the second respondent on 6
August 2018 and/or by the creditors of the third respondent on 25 May
2016;
3. the applicant shall publish the Notice of Motion
as well this order in the Friday, 18 October 2018 edition of the
Lowvelder Newspaper;
4. notice of the date for which the matter is set
down for hearing shall be emailed to all of the respondents;
5. the applicant shall deliver its heads of argument
on 21 October 2019;
6. the sixth respondent shall deliver its heads of
argument on 23 October 2019;
7. those persons forming part of the eighth to tenth
respondents shall deliver their response to the application to the
Registrar
of this Court by no later than 16h00 on Tuesday, 22 October
2019;
8. Costs are reserved for
determination with
PART A
.”
[42]
I saw the publication of the notice of motion and the order as
directed in the Lowvelder of 18 October 2019.
[43]
On 23 October 2019, VGSA filed a
supplementary answering affidavit and a confirmatory affidavit, the
purpose of which, so Mr. McChesney
[29]
alleges, is to “…
place before
the Court an important document, which I am advised, will have a
significant bearing on the issues before the court”.
[30]
[44]
On 23 October 2019, I was furnished with a
document headed “
Heads of Argument by
Affected Person
s”. Mr. Maseko  signed
the heads of argument “….
as an
affected person under the business rescue procedure
…”
Appended to the heads of argument, as annexure “
A
”,
over which Mr. Maseko says
[31]
:
“
We only had a few hours to prepare the
opposing affidavit and could not attach all the signatures of
employees and ex-employees
on whose behalf I make submissions.
Signatures of these persons (additional) hereto attached as Annexure
A.”
[45]
Also annexed to Mr. Maseko’s heads of argument was
annexures “
B1
” to “
B6
”. Mr.
Maseko says that it is the statements of individuals “…
who chose to make their own statements and requested me to submit
it on their behalf
”.
[46]
On 23 October 2019, two lever-arch files containing affidavits
of affected persons.  Volume 1 consists of 117 confirmatory
affidavits. The first three affidavits are by persons who allege that
they are direct family members of the deceased Lily Mine workers.
The
fourth affidavit in Volume 1 is a supplementary affidavit by Mr
Mazibuko. The second lever-arch file contains 117 confirmatory

affidavits. From the sixth affidavit in the first volume up until the
last affidavit of the second volume, all of the affidavits
read the
same. They read as follows:
“
1. I am an adult employee of the Vantage
Goldfields Group (including Lily Mine and Barbrook Mine) and reside
in the Matsulu/Louisville
Area. I am a member of the community
falling under the Lomshiyo Traditional Authority. I am duly
authorised to depose to this affidavit.
2. As an employee/ex-employee of the Vantage
Goldfields Group, I am an affected person with a right to participate
in the business
rescue proceedings of the Vantage Goldfields Group.
3. The facts stated in this affidavit are within my
personal knowledge, except where expressly state to the contrary and
are, to
the best of my knowledge and belief, both true and correct.
4. I have read the affidavit of
NHLANHLA
HARRY MASIBUKO
dated 14 October 2019, and insofar as same
refers to the employees of Lily Mine, the views of the community and
members of the Lomshiyo
Traditional Authority, I confirm the
correctness thereof.
5. In particular I confirm that I agree with Mr
Masibuko’s views that the business rescue plans have failed.”
In each
instance, only the deponent’s names, written in manuscript,
appear in the first paragraph of the further confirmatory
affidavits.
[47]
On 23 October 2019, the practitioners filed confirmatory
affidavits. The fourth respondent deposed to the main confirmatory
affidavit.
The fifth respondent merely confirmed the content of the
fourth respondent’s affidavit.
[48]
Prior to argument commencing on 25 October 2019, Mr. Burger
requested me to accept certain financial statements from the bar.
This
was apparently in order to address some of the allegations of
VGSA’s supplementary affidavit. Mr. Badenhorst objected. I
ruled that I will give an opportunity to the parties to deal with the
practitioners’ affidavits and Mr. Mc Chesney’s
affidavit
before judgment is delivered.
[49]
Arqomanzi filed supplementary heads of argument. The heads of
argument were focussed upon a response to the fourth respondent’s

affidavit.
[50]
On 30 October 2019, VGSA filed a further supplementary
affidavit. Arqomanzi responded on 1 November 2019 by delivering a
further
affidavit in which it dealt with the allegations in VGSA’s
further supplementary affidavit.
Urgency
[51]
Initially, in the Johannesburg application and in this
application, VGSA challenged urgency.
[52]
The affected persons’ views were expressed by Mr. Maseko
and Mr. Mazibuko.
[53]
Mr Maseko in his heads of argument,
[32]
he sets out as follows:
“
Arqomanzi filed this application on an urgent
basis. Although failing to set out the circumstances to convince the
honourable court
to why this is urgent, we do agree that it is
urgent. We are desperate and cannot wait months or even another year
for these matters
to be placed again before the court.”
[54]
In Mr Mazibuko’s affidavit
[33]
,
he records as follows:
“
We would like the whole of this application
(not just Part A) to be heard urgently by the court and the final
judgment be granted
as soon as possible.”
“
We want the business rescue practitioners to
immediately arrange for the affected persons to vote on whether they
should publish
new business plans incorporating the bids by Arqomanzi
and/or Real Win Investments.”
[55]
It is clear that Mr. Maseko and Mr.
Mazibuko, and those they purport to represent, wish that this dispute
be dealt on an urgent
basis. I agree. The disability under which the
Vantage Companies suffered have taken too long to resolve. Time is of
the essence
in business rescue proceedings. The whole tenor of
Chapter 6 of the Act requires a speedy finalization of business
rescue
[34]
– either the
company in distress must heal or it must terminate. A business rescue
must not endure beyond what is required
to prepare, propose,
authorise and implement a companies’ business rescue plan for a
delay is not in the interest of the
company, any of its stakeholders
or the economy.
[56]
I requested the parties if they were aware of anything that
would prevent me from resolving the entire application and whether
any
one of them would be claiming prejudice if I decide to do so.
VGSA agreed that the entire application be disposed of subject to

caveats in respect of the interim relief sought in prayer 8 of Part A
of the Notice of Motion and in respect of the practitioners’

affidavit. Because I already resolved and made known that I was going
to allow the parties to respond to Mr. Mc Chesney’s
affidavit
and the practitioners’ affidavits before judgment is given, I
saw no possible prejudice for any of the parties.
[57]
In any event, the longer the dispute takes to resolve, the
longer the Vantage Companies are under disability and the longer the
creditors and the affected parties will suffer prejudice. I
considered it to be best if I resolve the entire present dispute to

the extent that the law allows me to do so.
[58]
I first deal with the general moratorium
provided for in
section 133
of the Act.
[35]
Then I proceed to VGSA’a challenge to Arqomanzi’s
standing and thereafter, I address the remaining prayers of Part
A
and Part B of the notice of motion one by one. Finally, I consider
the practitioners’ plight and plea for assistance.
[36]
Prayer
2 of Part A - Moratorium in
section 133(1)
of the Act
[59]
The relief sought by Arqomanzi in terms of
section 133(1)(b)
of the Act in Prayer 2 of Part A of the Notice of
Motion was not seriously challenged by VGSA, the practitioners or the
interested
parties. It is common cause that the practitioners have
not given their written consent for Arqomanzi to commence or proceed
with
this application. Therefore, Arqomanzi seeks the upliftment of
the moratorium on in respect of the Vantage companies and the court’s

leave to proceed with the application. T
he
moratorium is not an absolute bar to legal proceedings being
instituted or continued against a company under business rescue.
[37]
The court has a discretion to lift or to maintain the moratorium.
This discretion, as with all instances where the court is left
with a
discretion, the court’s power must be exercised judicially.
The court must take into account the purpose of
business rescue and
balance the interests of the company, creditors and all affected
parties.
“
Whenever relaxation is
sought, the rights of the company, affected persons and the
practitioner must be protected. It is for the
protection of the
interests of those persons that the moratorium regime was enacted.
This may require an adjournment of the proceedings
to enable these
persons to consider their positions or to place additional material
before the court. In other cases, the opposition
to the request for
relaxation will be self-evidently frivolous and lacking in substance,
an exercise in empty formalism, designed
cynically to perpetuate the
advantages of immunity from the normal processes of the law which a
company can secure for itself under
the business rescue regime in the
new
Companies Act by
a stroke of its own pen, and no more.”
[38]
[60]
In this matter, the rescue proceedings have been ongoing for
years and now. The practitioners say that the plans have failed due

to the Vantage Companies’ inability to recapitalize. The rescue
is in limbo. The practitioners ask the court for advice and
the
affected parties, who suffer the most, seek a speedy resolution of
the dispute. I take these factors into account, exercise
my
discretion, and grant Arqomanzi leave in terms of
section 133(1)(b)
of the Act for I see no other way to bring the present dispute to a
head without any further delay.
Arqomanzi’s
standing
[61]
The
main
thrust of VGSA’s defence is its challenge Arqomanzi’s
standing. VGSA says that Arqomanzi is not a creditor of either
of the
Vantage Companies and therefore it lacks
locus
standi
.
[39]
[62]
For Arqomanzi to demonstrate
standing, Arqomanzi has to establish that it has a direct interest in
the relief that is claimed.
[40]
For this enquiry, the merits and the question of standing must be
separated.
[41]
[63]
Arqomanzi does not found its
standing entirely on it being a creditor of the Company. Arqomanzi,
tucks away what appears to be the
basis upon which it avers that it
has standing.
[42]
Arqomanzi
says the following:
“
The applicant, in its capacity as offeror, has
the right to be treated fairly and equally to any other person that
has made an offer
to the Vantage Companies. In this regard, the
applicant has the right to insist that a fair and transparent process
be followed
by the Practitioners which includes, but which is not
limited to, providing the creditors of the Vantage Companies the
opportunity
to vote on: …”
[64]
The allegation that Arqomanzi, in
its capacity as offeror, has the right to be treated fairly and
equally to any other person that
arises from, what Arqomanzi terms “
A
legally binding offer …”
made by
Arqomanzi to VGSA on 2 May 2019. This offer provided that Arqomanzi
would pay R12 million for the same assets that VGSA
sold to Flaming
Silver for R10 million.
[43]
In
addition thereto, Arqomanzi alleges:
[44]
“
On 22 July 2019, the applicant submitted a
legally binding offer to the practitioners (“the offer”)
on substantially
the same terms as those contained in the non-binding
offer that was submitted to them on 3 May 2019. As the applicant was
aware
of the practitioners’ views as expressed in the notice of
the affected persons of the Vantage Companies of 24 December 2016,

namely that new proposed business rescues plans would only be
prepared if office would receive by them and that those proposed

business rescue plans would have to be presented to the creditors of
the Vantage Companies for voting, the applicant made provision
for
such a process in the Offer…”
“
Following the above exchange of e-mails, the
creditors of the Vantage Companies received notice dated 21 August
2019 from the practitioners
(attached as annexure “FA29”).
At the meeting of such creditors had been convened for 4 September
2019 at which meeting:
94.1.
The offers received from the applicant and RWI would be presented to
such creditors, who would be given an opportunity to
ask questions to
the offerors (no details of the time and venue of the meeting were
given); and
94.2.
The practitioners would seek instructions from the creditors in
respect of publication of new business rescue plans.”
“
On
21 August 2019, the fifth respondent addressed an e-mail to the
applicant to advise that:
95.1.
Meeting of creditors (as per the above notice) had been convened for
4 September 2019;
95.2.
The two offers would be included in a circular to the creditors to be
despatched on 28 August 2019; and
95.3.
Information had been requested from Standard Bank in respect of the
acquisition of the Loan Account by the applicant and that,
once the
information had been received, the practitioners would be in a
position to adjudicate on the applicant’s status
as a creditor
of the Company.”
[65]
On 4 September 2019, a combined
meeting of the creditors of the Vantage Companies was held. Both
Arqomanzi and RWI explained their
respective offers to the creditors
at the meeting and answered various questions which were asked of
them by the attendees.
[45]
According
to Arqomanzi
[46]
, at the
meeting, “…
the very real and
definite impression created by the representative of RWI
–
which was not corrected by the
Practitioners – that RWI will simply revive the failed business
rescue plans and make payments
to the creditors on dictated by RWI.
For example, the RWI representative, Ms Zandile Mdanda, stated to the
meeting that RWI would
commence making payments of dividends to
creditors, including employees, within thirty days of the signing pf
the agreement with
the Practitioners, and would do so before
obtaining approval in terms of Section 11 of the Mineral and
Petroleum Resources Act
No. 28 of 2002.”
[66]
Arqomanzi states
[47]
that the impression was tacitly endorsed by the practitioners through
their concessions and that this tacit endorsement was fortified
in
the letter of 4 September 2019 by the practitioners’ attorneys
and the opinion that was furnished to the practitioners
regarding the
cession of loan account.
[67]
VGSA does not
deny the offer and that the meeting of 4 September 2019 took place.
VGSA does not meet the allegations over
the offer and the meeting head on.
In
its heads of argument, VGSA, over Aquomanzi’s reliance upon the
offer for it to establish standing, argues as follows:
[48]
“
38. The applicant does not
asset any legally cognizable right, for example, qua creditor against
Barbrook and MIMCO. This fact is,
correctly conceded in paragraph 8
of the applicant’s heads of argument.
39. Applicant puts up the argument
in regard to Barbrook and MIMCO that it is ‘an offeror’
who is entitled to be treated
‘equally and fairly’
40. It is trite that a party who
has made (or intends to make) an offer does not acquire any legally
enforceable rights which can
found locus standi
41. It follows that applicant does
not have locus standi to pursue the relief claimed in Part A or Part
B against Barbrook and MIMCO.
It merely claims to be an offeror.
which does not vest it with locus standi to pursue any relief against
Barbrook and MIMCO.
42. On this ground alone, Part A
of the application must fail as against Barbrook and MIMCO”
[68]
I invited Mr.
Badenhorst to furnish the court with authority for the submission in
paragraph 40 of the heads of argument.
He evaded the
invitation. I may be wrong, but I got the impression that he did so
because there is no authority for such a general
proposition. In my
view, whether an offer establishes standing must be considered in
light of the circumstances under which the
offer was made, the object
of the offer, the nature of the parties, including their respective
expectations and the requirement
that parties must act fairly in
their dealing with each other.
[49]
[69]
The Arqomanzi
offer cannot be divorced from the circumstances under which it was
made. The Arqomanzi offer was made to the practitioners
in respect of
the business rescue of the Vantage Companies. The offer was not only
of importance to Arqomanzi and VGSA but also
to the creditors and the
affected persons who are desperately awaiting the future of the
Vantage Companies. In addition, the practitioners
stand in a special
relationship with Arqomanzi, VGSA, the Vantage Companies’
creditors and the affected parties. They have
a statutory duty by
virtue of the provisions of section 140 of the Act.
[50]
In my view, the circumstances under which the offer was made and the
practitioners’ response to the offer entitled Arqomanzi
to at
least a response whether that response was an acceptance of the offer
or a counter-offer or a refusal of the offer, or even,
at least, that
the offer is either considered or not even considered.
[70]
In my view, with
regards to VGSA’s attempt to differentiate between the Company
on the one hand and Barbrook and MIMCO on
the other
[51]
is artificial in light of the undisputed fact that the Vantage
Companies’ plans are interrelated and the success of the one

depends upon the other. Any order granted in respect of the Company
will invariably also affect Barbrook and MIMCO.
[71]
In Prayer 2 of Part B of the notice
of motion, Arqomanzi seeks a declarator that it is a creditor of the
Company on the basis that
it is declared that Standard Bank has
lawfully and validly ceded all VGSA’s loan claims to
Arqomanzi.
[52]
[72]
The main thrust of VGSA’s opposition to the relief
Arqomanzi seeks is its challenge to Arqomanzi’s standing to
approach
court because, so VGSA says, Arqomanzi is not a creditor of
any of the Vantage Companies. Closely related to VGSA’s
challenge
to Arqomanzi’s standing, is VGSA’s view that
Arqomanzi has failed to establish a
prima facie
right (in
respect of the interim relief sought in prayer 8 of Part A of the
notice of motion) and a clear right (in respect of
Part B of the
notice of motion), also because, so VGSA says, Arqomanzi is not a
creditor of the Company (including MOMCO and Barbrook).
I do not
understand VGSA to have challenged the further requirements for
interdicts.
[73]
If Arqomanzi is declared to be a creditor
of the Company, it must logically follow that VGSA’s defence in
respect of both
standing and the failure by Arqomanzi to establish
the
prima facie
right,
alternatively, a clear right requirement in respect of the final
interdicts Arqomanzi seeks must fail.
[53]
The declaratory orders Arqomani is seeking, if successful, will
confirm its standing to apply for the interdicts it seeks.
[54]
If Arqomanzi has standing it will also be entitled to the declaratory
orders is seeks provided the court exercises its discretion
in
Arqomanzi’s favour.
[74]
In order to determine Arqomanzi’s standing, I need not
decide over the merits of Arqomanzi’s allegation that it is a

creditor of the company by virtue of the cession. In my view,
Arqomanzi has a direct legal interest in the relief it seeks in Part

B of the notice of motion. I find that Arqomanzi has established
standing to approach this court.
Prayer
1 of Part B – The cession and Loan Account Sale Agreement
[75]
VGSA confirms that it has ceded its claim
against the Company to Standard Bank (“
the
cession”
)
[55]
.
It is common cause that Arqomanzi and Standard Bank the Loan Account
Sale Agreement (“
the agreement”
)
pursuant to clause 9.1.4 of the cession.
[56]
It is also not disputed that VGSA’s loan to the Company
amounted to R 389 009 887.00 when the cession was effected.
[76]
VGSA’s challenge is on a different
front. VGSA challenges the cession on the grounds that: the
merx
in the agreement only included Standard Bank’s rights in terms
of the cession (which Standard Bank owned) and not the loan
account
over which VGSA retained a reversionary right
[57]
and that no notice was given by Standard Bank to VGSA of Standard
Bank’s intention to dispose of VGSA’s loan account,

therefore, the agreement is null and void and of no force or effect
as far as VGSA is concerned
[58]
.
Alternatively, VGSA contends that, if notice was given of an
intention to sell VGSA’s loan account, Standard Bank acted
in a
manner which was prejudicial to VGSA and for that reason, the sale is
invalid.
[59]
[77]
In our law, a cession
in
securitatem debiti
of loan accounts
constitutes a pledge of the right to claim performance in terms of,
in this instance, the loan account. The right
to claim performance of
a the loan account is an incorporeal right treated no different from
the pledge of a movable.
[60]
For as long as the secured debt is due, the cessionary is not
permitted to deal with or cede the right to recover payment except
in
the presence of an agreement of
parate
executie
.
[61]
What is important is the content of the right that is ceded being the
right to recover payment of the loan account.
[62]
[78]
I proceed to deal with the
merx
in the agreement. In my
view, the starting point is to consider what was ceded to Standard
Bank by VGSA in terms of the cession
because only that which was
ceded could be sold to Arqomanzi by Standard Bank. Clause 1 of the
cession provides as follows:
“
I/we, [VGSA] …(“Cedent”)
cede make over and transfer in security to
[Standard Bank]
or
anyone who takes transfer of
[Standard Bank]’
s rights
under this cession all the Cedent’s rights in and to all moneys
due and to become due to the Cedent by
[the Company] …
(“loan
debtor”) and in and to all rights of action arising under those
moneys (“claims”), upon the terms
and conditions set out
in this agreement.
”
[79]
The meaning and effect of Clause 1 of the agreement is clear.
What was ceded was all of VGSA rights in and to all moneys due to it

by the Company by virtue of the loan account. That is, the right to
claim performance in terms of the loan agreement between VGSA
and the
Company. The amount of money is not in dispute. Whether payment of
the money was due is not traversed. It does not matter
because
whether payment by the Company was due or not, VGSA retained all of
its rights to claim payment from the Company of the
amount due in
terms of the loan account.
[80]
VGSA argues that Standard Bank was not capable of transferring
or selling to Arqomanzi VGSA’s “…
.rights (i.e.
the Claims or loan account)
.” I do not agree. Standard Bank
sold the rights VGSA ceded to it as that which was ceded by VGSA to
Standard Bank was sold
to Arqomanzi in terms of the agreement i.e.
VGSA’s right to recover the loan account from the Company. By
virtue of the agreement,
Arqomanzi became entitled to recover what
was due by the Company on the loan account, nothing more and nothing
less.
[81]
Arqomanzi retains this entitlement for as long as the Company
owes Standard Bank money for whatever reason for it was this
entitlement
that was ceded. If all of the Company’s
indebtedness to Standard Bank is confirmed to be settled, the loan
account must revert
to VGSA by virtue of the reversionary interest
VGSA still has in the loan account, being the security. The question
is simply this
– who owes who after the agreement and, in
respect of the loan account, how much is owed. It is not disclosed in
the papers
how much is still owed by the Company to VGSA or by the
Company to Standard Bank. In my view, by virtue of the cession and
the
agreement, the Company owes Arqomanzi the present amount of the
loan account subject to VGSA’s reversionary interest in the

loan account. If the Company’s indebtedness to Standard Bank is
settled, VGSA becomes entitled to claim the current amount
of the
loan account from the Company, if and when due, then making VGSA the
Company’s creditor and not Arqomanzi.
[82]
I turn to the alleged lack of notice (or the disability
thereof) given by Standard Bank to VGSA of its intention to sell the
security.
Whether or not Standard Bank was obliged to give notice to
VGSA must be answered by referring to the cession. Clause 9 of the
agreement
dealt with “Realization”. Clause 9.1 entitles
Standard Bank, upon any breach or default in respect of the debts
which
remains unremedied to enforce all or any of the Standard
Banks’s rights, powers and privileges including “…
selling
or otherwise realizing the claims by public auction or private sale
”
subject thereto that, in the case of a private sale, on reasonable
notice to VGSA of not more than ten business days as
Standard Bank
may deem appropriate.
[83]
It is common cause that Standard Bank sold the security to
Arqomanzi by private sale after giving notice to VGSA. Standard Bank
gave notice of its intention to VGSA on 23 July 2019 to sell the
cession (“
the notice”
). The agreement was
concluded on 1 August 2019. Ten business days have not elapsed
between 23 July 2019 and 1 August 2019. VGSA’s
real challenge
to the notice appears to be at another level. I understand VGSA’s
alternative challenge to be that the notice
was defective because
Standard Bank could not sell the Company’s loan account with
VGSA as set out in the notice of 23 July
2019. Notice was therefore
given by Standard Bank to VGSA of its intention to do something it
was not allowed to do (so the challenge
goes) – the selling of
the Company’s loan account. In paragraph 7 of the notice,
Standard Bank notifies VGSA that of
its “
intention……to
endeavour to dispose of its rights to a prospective purchaser.”
Standard Bank did not say that it intends to sell the Company’s
loan account – it said that it intended to sell its
“rights”
under the cession. Standard Bank’s rights can be nothing else
than its right to claim performance by
the Company in terms of the
loan account, a right VGSA no longer had by virtue of the cession and
for as long as the Company owed
Standard Bank. There is therefore no
merit in VGSA’s main and alternative challenge of the notice.
[84]
The supplementary answering affidavit and
the confirmatory affidavit that was filed by VGSA on 23 October
2019
[63]
, proverbially through
the cat amongst the pigeons. In the affidavit, Mr. McChesney says
that it slipped his mind “…
.during
the rushed and chaotic urgent proceedings brought in the Johannesburg
High Court and in this Court….
”
he has not previously informed VGSA’s legal representatives of
a subordination agreement that was concluded between
VGSA and the
Company in respect of VGSA’s loan account against the
Company.
[64]
The subordination
agreement preceded the cession to Standard Bank as well as the Lily
mine disaster.
[85]
The subordination agreement provides that
so much of the loan account as was necessary was subordinated to
enable all the other
creditors of the Company, both present and
future to be paid in full. The effect of the subordination was that
the
merx
of the
agreement was subordinated and subject to the Company’s other
present and future creditors’ claims
[65]
for as long as the Company incurred further operating losses and
until the Company was restored to technical solvency. The Company’s

other creditors will rank preferentially to VGSA’s claim.
[66]
Mr. McChesney later says
[67]
that the signatories of the subordination agreement was intended to
be for the “entire face value” of VGSA’s
claim
against the Company and that the subordination remains in place until
the Company’s auditors certifies that he/she
has been furnished
with evidence which reasonably satisfies him/her that the liabilities
[of the Company] do not exceed its.
[68]
[86]
For obvious reasons, Arqomanzi did not
receive this revelation well for, upon Mr. Mc Chesney’s belated
revelation, the
merx
is worth nothing or very little for as long as the subordination
subsists. This revelation may have brought Arqomanzi’s
innovative manoeuvring to naught, at least so VGSA hopes.
Arqomanzi responded by filing an affidavit in order to challenge
Mr.
Mc Chesney’s evidence in VGSA’s further supplementary
answering affidavit. In my view, I need not deal with Arqomanzi’s

challenge to the evidence because it is not the value of the
merx
that qualifies Arqomanzi to be the Company’s creditor. It is
the value of Arqomanzi’s claim against the Company that
is
affected by the subordination, the least of which, upon a proper
interpretation of the cession, the agreement and the subordination

agreement is the difference between the balance on the loan account
and R 14 million.
[69]
[87]
Standard Bank validly sold (and ceded) all of VGSA’s
loan claims to Arqomanzi. Arqomanzi’s right to claim
performance
by the Company of its obligations in terms of the loan
account remains intact for the agreement was valid and remains in
full force
and effect.
[88]
Consequently, I find that Arqomanzi is a creditor of the
Company. Arqomanzi is entitled to an order in terms of prayer 1 of
Part
B of the notice of motion only to the extent that it confirms
Arqomanzi’s rights in terms of the agreement. In the absence
of
proof of the current amount outstanding in terms of the loan, I am
not going to declare that VGSA’s loan claims are not
less than
R 389,009,887.
Prayer
2 -Arqomanzi (independent creditor)
[89]
Having found that Arqomanzi is a creditor of the Company, the
question Arqomanzi seeks to be determined is whether Arqomanzi is an

“
independent creditor….for an amount not less than R
389,009,887
”. For the reasons given under the previous
heading, I decline the request to declare the amount.
[90]
The Act sets out what an independent
creditor is. An independent creditor is a person who is a creditor of
the company [in business
rescue] and who is not related to the
company, a director or the practitioner.
[70]
There are exceptions provided for in sub-section 2 of section 128.
The exceptions relate to employees.
[71]
“Related” in the Act are set out in section 2(1). A
juristic person is related to another juristic person if
either of
them directly or indirectly controls the other, or the business of
the other or either is a subsidiary of the other.
[72]
[91]
Arqomanzi does not fit the description of a related person as
it does not (and in business rescue cannot) directly or indirectly

control the Company and, Arqomanzi is not a subsidiary of the
Company. It follows that Arqomanzi is an independent creditor of
the
Company. Subject to what I set out above regarding the amount, an
order in terms of prayer 2 of the notice of motion must follow.
Prayer
3 – Recognition and participation of Arqomanzi
[92]
In light of the finding that Arqomanzi is an independent
creditor of the Company, I need not dwell much on Arqomanzi’s
right
to be recognised by the practitioners and its right to
participate in the rescue proceedings. Arqomanzi is a creditor of the
Company
and entitled to all the rights afforded to it under Chapter 6
of the Act.
Prayer
4 – Business rescue plans of the Vantage Companies failed
[93]
The Act
[73]
defines business rescue as follows:
“
“
business
rescue”
means
proceedings to facilitate the rehabilitation of a company that is
financially distressed by providing for—
(i)
(i) the temporary supervision
of the company, and of the management of its affairs, business and
property;
(ii)
a temporary moratorium on the rights of claimants against the company
or in respect of property in its possession; and
(iii)
the development and implementation, if approved, of a plan to rescue
the company by restructuring its affairs, business, property,
debt
and other liabilities, and equity in a manner that maximises the
likelihood of the company continuing in existence on a solvent
basis
or, if it is not possible for the company to so continue in
existence, results in a better return for the company’s

creditors or shareholders than would result from the immediate
liquidation of the company;”
[94]
Business rescue has an important purpose. It seeks to
enable a company to continue its existence on a solvent basis or, if
that
is not possible to so continue, to achieve a better return for
the company’s creditors and shareholders as an alternative
to
immediate liquidation. In
Booysen v Jonkheer
Boerewynmakery (Pty) Ltd (in business rescue) and another
[2017] 1
All SA 862
(WCC)
, at paras. 16 and 17,
Sher AJ said as follows:
“
[16] In Cape Point
Vineyards (Pty) Ltd v Pinnacle Point Group Ltd and another,
Rogers AJ pointed out that the business rescue
provisions in the Act
“reflect a legislative preference for proceedings aimed at the
restoration of viable companies rather
than their destruction”.
[17] In Oakdene Square Properties
(Pty) Ltd and others v Farm Bothasfontein (Kyalami) (Pty) Ltd and
others,  the court expressed
the view that the new provisions in
the Act were in line with modern trends in corporate rescue regimes
in that they attempted
to secure and balance the competing interests
of creditors, shareholders and employees, and envisaged a shift away
from only having
regard for creditors’ interests, and are
predicated on the belief that to preserve a business and the
experience and skill
of its employees, might, in the end prove to be
a better option for creditors and enable them to secure a better
recovery of their
debts from their debtor.8  In their work
entitled Companies and Other Business Structures in SA,  the
authors have explained
that whereas it is fundamental to healthy
market-based economies that companies which cannot be competitive
will fail, owing to
the negative social impact such failures can have
on employees and their dependents and considering the effect on
sovereign economies
as a result of the loss of revenue previously
generated by such failed companies, since the 1990s there has been a
shift in approach
in most industrialised nations towards “rescuing”
financially distressed corporate entities rather than liquidating

them, and indeed, the “straightforward” liquidation of
companies has become rather “unfashionable”.”
[Footnotes
omitted]
[95]
Section 128(1)(c) of the Act provides that a business
rescue plan
means a plan contemplated in section
150. Section 150 of the Act provides that t
he business rescue
practitioner, after consulting the creditors, other affected persons,
and the management of the company, must
prepare a business rescue
plan for consideration and possible adoption at a meeting held in
terms of section 151 of the Act. Section
150(2) of the Act sets out
all the information the business rescue plan must contain that is
reasonably required to facilitate
affected persons in deciding
whether to accept or reject the plan or not.
[96]
In
Booysen
supra
[74]
,
the scheme of the
business rescue plan, the adoption thereof and what happens
thereafter is conveniently summarized. I borrow liberally
therefrom:
“
The business rescue practitioner who is
appointed to attend to a company in business rescue is responsible
for preparing a so-called
“business rescue plan” after
consulting creditors and other affected persons (including
shareholders, employees and
management (which is intended to
constitute his plan in terms of which the company will be saved and
rehabilitated), and is responsible
for implementing it once it has
been adopted.  The plan is required to deal pertinently with a
number of issues and must contain
all information reasonably required
in order to facilitate its proper consideration by affected persons
in order to enable them
to decide whether to accept or reject it.
Amongst other things, it must set out all the secured, preferent and
concurrent creditors
and which of them have proved their claims, as
well as the probable dividend which they would receive were the
company to be placed
in liquidation instead. The plan is also
required to propose how the company is going to discharge its debts,
and in this regard
must include details as to how any assets which
are available may be realised in order to settle creditors’
claims, and the
order of preference in terms of which the proceeds
thereof will be applied to pay creditors. In addition, it must set
out a statement
of any conditions which must be satisfied in order
for it to come into operation and to be fully implemented,  and
the effect,
if any, that it will have on the number of employees and
their terms and conditions of employment, as well as the
circumstances
in terms of which the rescue process will come to an
end.
The plan must be published by the company within 25
business days after the appointment of the business rescue
practitioner, and
within 10 business days thereafter the practitioner
must convene and preside over a meeting of creditors and the holders
of voting
interests in the company, which must consider its adoption.
At the meeting which is so convened the practitioner must introduce

the proposed plan to the creditors and shareholders and must provide
employees’ representatives with an opportunity to address
the
meeting,  and must thereafter invite discussion and conduct a
vote on a proposal to adopt or to amend the proposed plan.
If the
proposed plan is rejected by the meeting the practitioner may seek
approval from the holders of voting interests to prepare
and publish
a revised plan, which must be tabled and sanctioned within 10
business days thereafter.
The Act provides that once a rescue plan has been
adopted in meeting, it is binding on the company and on each of its
creditors
as well as the holders of its securities, whether or not
such persons were present at the meeting and voted in favour of the
plan
or not, and irrespective of whether or not such persons, if they
were creditors, had proven their claims against the company.

And once the plan has been adopted, the company is required, under
the direction of the practitioner, to take all necessary steps
to
attempt to satisfy any conditions on which the plan may be
contingent and to implement the plan ‘as adopted’.

After the practitioner has substantially implemented the rescue plan,
he may terminate the rescue proceedings by giving notice
of
substantial implementation to the Commission.
[The references to
individual sections of the Act are omitted]
[97]
In business rescue proceedings, the
business rescue plan is not only mandatory, it fulfils an important
purpose. It guides the company
in distress to the goals of the
business rescue proceedings and there must be a tangible end-result.
The important features of
a business rescue plan in business rescue
proceedings are: The business rescue practitioner must consult
affected parties; he/she
must prepare a plan; the plan must include
the statutory information; the plan must be considered; the plan must
be adopted; the
plan must be published; the plan must be implemented
by the business rescue practitioner – he/she is in control and
he/she
must act swiftly for it is obvious that any inordinate delay
would stifle the business rescue.
[75]
[98]
All of the Vantage Companies’ plans foresaw that the
companies could be saved to trade in solvent circumstances in future
and all of the plans are intertwined. The success or failure of the
one would determine the success or failure of the other.
[99]
The Company’s business rescue plan
is based on two premises: job retention and the ability to re-open
the Lilly and Barbrook
mines and to achieve production capacity and
profitability.
[76]
Certain conditions had to be met for the Vantage companies
business rescue to succeed: Post Commencement Funding is required
in
Barbrook; employees needed to be paid, creditors needed to be paid;
the Barbrook Mine needed to be re-opened and operate at
a profit; and
a management contract between the Company and subsidiaries (MIMCO and
Barbrook) had to be entered into.
[77]
[100]
MIMCO’s business rescue plan is
based on two premises namely, job retention and the ability to
re-open Lilly Mine and achieve
production capacity and
profitability.
[78]
The conditions for MIMCO’s business rescue plan to succeed,
were the following: an amount of R200 million is needed to be
raised
by way of loan or equity or both within the Vantage Companies to
develop the access decline and re-open the mine.
[101]
In terms of Barbrook’s plan, the
Barbrook mine needed to be capitalised to ensure to its
sustainability; employees need to
be paid, creditors need to be paid;
and the mine needs to be re-capitalised and reopen and operate at a
profit.
[79]
The business rescue practitioners deal in Barbrook’s business
rescue plan with the prospect of rescuing the Company. There
appears
to be three conditions. The first condition is an Industrial
Development Corporation Loan and the recovery from gold from

Barbrook’s significant tailing dam. In respect of the IDC Loan
and other funding, the business rescue practitioners, in the

Barbrook’s business rescue plan records as follows:
“
The Industrial Development Corporation has
granted a loan of R119,000,000.00 on 29 March 2018. Details re [sic]
set out in a letter
dated 17 July 2018 by Mac Robert Attorneys. The
loan is to commission the Lilly and Barbrook Mines. Refer to
(Annexure E). The
agreement is subject to a confidentiality clause.
Flaming Silver Trading 373 (Pty) Limited is a special
purpose vehicle through which Siyakuhla Sonke Empowerment Corporation
(Pty)
Limited have acquired 74% of the Vantage Goldfields (Pty)
Limited shares.
The Company has raised further Capital to continue
with the Project and will be addressed by Mr F Arendse the Chief
Executive Officer
at the Creditor Meeting.
This fund will re-open both Mines.
Due to the nature of the re-opening it may be too a
large a task to re-open both Mines simultaneously.”
[102]
It is common cause that the Vantage
Companies are still in business rescue. The practitioners and
Arqomanzi say that the plans of
the Vantage Companies have failed.
The practitioners gave their reasons in the notices they issued
[80]
.
In the fourth respondent’s belated confirmatory affidavit, the
practitioners lay the blame for the delays in implementing
the plans
before the doors of Flaming Silver and VGSA. They say that the delays
were occasioned by the litigation between Flaming
Silver and
VGSA.
[81]
The practitioners
proceed to say that although the Flaming Silver Transaction “…
.took
place outside of the business rescue proceedings…
”,
the Company was unable to source funding from the IDC since the
funding was reliant upon Flaming Silver acquiring VGSA’s
shares
in the Company.
[103]
Arqomanzi echoes the practitioners’
reasons. In addition, Arqomanzi says that all the time-related
milestones that were agreed
to in the plans have failed months and
years ago and for this reason the plans failed
ipso
facto.
[82]
Arqomanzi is of the view that the practitioners were duty bound
either to propose new plans or to wind-up the VGA Companies

when it became evident that the plans could no longer be implemented.
Aqomanzi accuses the practitioners of a dereliction of their

duties.
[83]
[104]
VGSA does not deny that the plans are
still to be implemented. It says that, whereas a business rescue can
fail there is no such
thing as a failed business rescue plan
[84]
and, in terms of the plans themselves (which provides for the
termination of the rescue)
[85]
the circumstances for the rescue to terminate have not occurred. In
addition, VGSA argues that for as long as the plans remain
on foot,
it continues to be binding on all persons referred to in section
152(4) of the Act
[86]
; that
the business rescue practitioner remains responsible to implement the
business rescue plan
[87]
; and,
that the business rescue plan can only come to an end when the
business rescue practitioner files a notice of substantial

implementation with the CIPC or the court orders the conversion of
the business rescue to liquidation proceedings. VGSA argues
that none
of the conditions for the ending of the plans have been met.
[88]
[105]
VGSA places further reliance upon what the
plans themselves provide in respect of namely for the ending of the
plans. The practitioners
refer to the circumstances under which the
plans will end in the heading in paragraph 6.6 of the Company’s
plan. The body
of the text refers to the end of the business rescue
itself and not only the plans. What is furthermore set out in the
body of
the text echoes the provisions of sections 132(2)
[89]
and 153
[90]
of the Act and
nothing more. In addition, section 132 of the Act deals with the
duration of business rescue proceedings and not
the duration of the
business rescue plan. Section 153 of the Act deals with the
consequence of a failure to adopt a business rescue
plan which is the
termination of the business rescue proceedings and not the duration
and termination of the business rescue plans.
It must be so because
some-times plans, no matter how good their intentions are and no
matter how easy they appear to follow or
to execute, can fail. This
happens, not only in everyday life, but may also invariably happen
during business rescue proceedings.
[106]
The Act does not expressly provide for
amended business plans or for the ending of a business rescue plan.
The Act provides for
notification to CIPC once a business plan is
substantially implemented.
[91]
This does not mean that everything that was set out to be implemented
was indeed implemented. The threshold the Act provides is
substantial
implementation. It therefore presupposes that although substantially
implemented, some steps may still need to be implemented.
In my view,
the Vantage Companies’ plans are far from substantially
implemented. as a matter of fact, the plans still need
substantial
implementation. The failure of the Flaming Silver transaction had a
disastrous effect on the implementation of the
plans and the entire
business rescue. The plans are still there, the money is not.  The
plans have not failed. Consequently,
prayer 4 of Part B of the notice
of motion cannot be granted.
[107]
As an aside, I say that the absence of money for the plans to
be implemented must, in all fairness, be laid at the door of the
practitioners.
They demanded proof of funds in the course of the
Flaming Silver transaction from Flaming Silver. Why did they not
consider demanding
irrevocable guarantees in some form or the other?
In this way, those who proclaimed to have money would have had to put
their money
were there moths were. Well, that is water under the
bridge. More important is to consider what must be done now in the
best interest
of the Vantage Companies, their creditors and other
affected parties, the most vulnerable of which is their employees who
continues
to suffer.
[108]
Does this mean that the only option open is the immediate
liquidation of the Vantage Companies? I think not. What is clearly
needed
is funds to implement the plans for no one denies that the
plans are still there and achievable if there is money. The Flaming
Silver and IDC funding fell through and cannot be miraculously
resurrected. The Vantage Companies and the practitioners will have
to
look elsewhere for money. Both Arqomanzi and Real Win see the pot of
gold buried in the Lily mine and and there for the taking
in Barbrook
mine. If the ultimate goal of business rescue proceeds to prominence,
I see no reason why the existing plans cannot
be amended to disregard
the Flaming Silver and IDC funding and to consider Arqomanzi and Real
Win’s offers (or any other
genuine offers for that matter). Of
course, the Flaming Silver transaction and IDC funding took centre
stage in the adopted plans.
The Flaming Silver transaction and the
IDC funding is no more. Therefore, the practitioners will have to
consult the Vantage Companies’
creditors, other affected
persons, and the Vantage Companies’ management in order to
prepare amended plans to put forward
to the Vantage Companies’
creditors and shareholders for adoption.
Prayer
5 – Combined meeting of creditors
[109]
Arqomanzi wants the court to order the practitioners to
convene a combined meeting of the Vantage Companies’ creditors
for
the sole purpose of affording the creditors an opportunity to
vote on whether they wish to authorise the practitioners to prepare

new proposed business rescue plans for the Vantage Companies.
[110]
Once a business rescue plan is adopted, it
is binding on the company, on each of the creditors of the company
and every holder of
the company’s securities.
[92]
The business rescue practitioner must implement that plan throughout
the business rescue proceedings.
[93]
Provision is only made in the Act for an amended proposed business
rescue plan prior to the adoption of the final plan in terms
of
section 140(2)(4) of the Act.
[111]
In this matter, there are adopted plans. The adopted plans
still need to be implemented. The plans were not implemented because
an important element of the plans, being funding, is still to
materialise. I therefore do not see why new plans must be prepared

where plans exist and only one part of the plans has failed. To put
it differently, save for the funding requirement, there is
no
indication that any of the other elements of the approved plans have
to change. With funding, employees can be paid and the
mines can
re-open. What amount will now be required to achieve this must
obviously be determined due to the delay in the implementation
of the
plans.
[112]
In my view, the practitioners must start
to own up to their obligations. They must recalculate what is needed
to achieve the goals
in the plans and source funding to do so. In any
event, the practitioners say in the fourth respondent’s belated
affidavit
that they oppose the relief sought in Part A because it
will prevent them from sourcing funding from any other party than any
of
the parties in this application.
[94]
I agree – it will wrong to restrain the practitioners and I am
not going to do so. They have a duty to comply with. What
I deem that
needs to be done is to order the practitioners to consult those they
must; come up with amended business plans for
consideration by the
Vantage Companies’ creditors and other affected parties and to
call a meeting for purposes of approval
of the amended business
plans.
[113]
I see no reason why the practitioners must be ordered to call
a creditors’ meeting to authorise them to prepare new business

rescue plans – the plans are there and were approved. Their
amendment must be authorised. After all, Arqomanzi and Real Win

already stand in line with promises of funding and by the look of
things, they are serious for what other reason would Arqomanzi
mount
this challenge.
The
practitioners’ plight.
[114]
The practitioners say that they abide this
court’s decision in respect of Part B of the notice of
motion.
[95]
The practitioners
proclaim their plight should the court grant Arqomanzi the relief it
seeks. They say that they anticipate “…
.certain
legal difficulties surrounding the issue of drawing and/or voting on
new business rescue plans.”
I agree for
there is a real possibility that the loser of any future offer to
challenge the process or decision made by the practitioners
to accept
or reject another potential offer. I simply do not foresee that, in
light of the facts of this matter, either Arqomanzi
or Real Win, if
they remain contenders, will accept defeat. Clearly in anticipation
of disputes, the practitioners seek directives
from the court in this
regard. They pose three questions:
“
8.1 Whether a shareholder’s claim on
loan account, which has not and could never have previously been
considered to be that
of an independent creditor, can by means of a
cession on that claim to a third party be considered to be an
independent claim for
purposes of voting on a new Business Rescue
Plan;
8.2 Whether, taking into account the rights provided
to shareholders as provided for in section 37(3)(b)(i) and
37(3)(b)(i) (read
with the definition of “all or the greater
part of the assets or undertaking”), the applicants [sic]
proposed new Business
Rescue Plan requiring the disposal of the first
respondent’s shares in the second respondent – which
shares constitute
all or the greater part of the first respondent’s
asset/s (as defined in the Act) and which disposal is contemplated by
the
applicant’s offer to myself and my co-practitioner vide
page 130 to 141 of the Applicant’s founding affidavit –

would have the effect of altering the rights of the shareholders of
the first and/or second respondent; and
8.3 should the directive to 8.2 above be in the
affirmative, then whether any vote on any such plan/s must be
conducted in accordance
with the provisions of sections 152 (1) of
the Companies Act, 71 of 2008 (“the Act” read with
Section 152(3)(c) of
the Act and, if so, issuing a directive to that
effect.”
[115]
The first question is whether the court should assist the
practitioners in their plight for what they seek, albeit couched in
the
form of “directives”, are declarators. The second
question is should the court accede to the practitioners’
request,
will the court not them be usurping the practitioners’
functions – i.e, would the court not be trespassing on the
practitioners’
turf?
[116]
Section 21(1)(c)
of the
Superior Courts Act No. 10 of 2013
,
empowers the court to “…
.in its discretion, and at
the instance of any interested person, to enquire into and determine
any existing, future or contingent
right or obligation,
notwithstanding that such person cannot claim any relief
consequential upon the determination.”
[117]
The practitioners are interested persons and it is they who
ask for the court’s guidance. Not only are they parties to
these
proceedings, the order that will issue imposes certain duties
upon them. The practitioners therefore satisfy the interested person

threshold.
[118]
What is more difficult is to determine whether what the
practitioners request will require the determination of any existing,
future
or contingent right or obligation. Whether the practitioners
will be able to claim any relief consequential of the determination

is, by definition, irrelevant. At first glance, one might be tempted
to say – off course, for the order directs them to convene
a
creditors’ meeting where the issue of the voting rights of each
creditor will be at issue and, Arqomanzi’s deal,
which may be
voted upon, involves the disposal of the Company’s shares in
Barbrook which may or may not affect the rights
of certain
shareholders.
[119]
However, the point is this – the
further creditor’s meeting is yet to take place, what the
practitioners question and
fear in paragraphs 8.2 and 8.3 of the
fourth respondents’ affidavit may or may not be an issue.
[96]
These disputes are in my view not ripe.
[97]
[120]
Even if what the practitioners foresee transpire, the court
still has a discretion not to grant the declaratory orders the
practitioners
seek.  This is accordance with the clear wording
of
section 21(1)(c)
of the
Superior Courts Act. I
exercise my
discretion against the order sought by the practitioners because they
require me to predetermine possible decisions
which they must first
consider and determine. For this court to decide on the
practitioners’ behalf would be wrong for the
court will venture
upon their terrain.
Costs
[121]
There is no reason why costs must not follow the result. Save
for prayer 4, and a modified prayer 5 of Part B of the notice of
motion,
Arqomanzi was successful in the application. In light of the
substantial volume of papers that were ultimately filed, and the
complexity
of the issues raised therein, Arqomanzi’s use of two
counsel was warranted.
In the
premises, I make the following order:
1. It is hereby declared that:
1.1
the seventh respondent lawfully and validly ceded all of the sixth
respondent’s loan claims against the first respondent
to the
applicant;
1.2
the applicant is declared an independent creditor of the first
respondent.
2 The fourth and fifth respondents (“
the
respondents”
) are directed to, within 14 (FOURTEEN) days of
this order, consult with first, second and third respondents’
(“
the companies”
) creditors, the affected persons,
and the management of the companies for purposes of proposing
amendments of the first, second
and third respondents’ business
rescue plans dated 16 February 2017, 6 August 2018 and 25 May 2016
respectively (“
the plans”
).
3 The respondents are directed to prepare amendments to
the plans (“
the amended plans”
) and to publish
same within 10 (TEN) days after the date in paragraph 2 above;
4 [The respondents are directed to] convene a creditors’
meeting of the companies within 10 (TEN) days of the date in
paragraph
3 above for purposes of considering and voting on the
amended plans.
5 The sixth respondent is ordered to pay the applicant’s
and the eighth to tenth respondent’s costs which costs, in
respect of the applicant, shall include the costs consequent upon the
employment of two counsels.
Roelofse AJ
Acting Judge of the High Court
DATE
OF HEARING: 15 and 25 October 2019
DATE
OF JUDGMENT: 11 November 2019
APPEARANCES
FOR
THE APPLICANT: Adv. Burger SC and Adv Mÿburg instructed by Hogan
Lovells (South Africa) Inc.
FOR
THE SIXTH RESPONDENT: Adv. Bagenhorst SC instructed by Mervyn Taback
Incorporated Attorneys
[1]
South frican History Online:
https://sahistory.org.za/place/barberton
[2]
The Lily mine has or reserves
estimated to be 4.9 million tonnes with the life of the mine to be
approximately 11 years. –
page 38 of MIMCO’s business
rescue plan. The tailing storage facility of the Barbrook mine
estimates 1736 kg of gold –
para. 9.2.2 of Barbrook’s
business rescue plan.
[3]
The third respondent.
[4]
The second respondent.
[5]
The first respondent.
[6]
Arqomanzi (Pty) Ltd, t
he
applicant.
[7]
Real Win Investment (Pty)
Ltd.
[8]
T
he sixth respondent Vantage
Goldfields SA (Pty) Ltd who owns shares in the Company and MIMCO.
[9]
Fourth and fifth respondents.
[10]
The workers cited as part of
the eighth to tenth respondents mostly residing at Lily Valley near
the mines.
[11]
The seventh respondent.
[12]
Seventy-five.
[13]
Mr. Solomon Nyerende, Ms.
Yvonne Mnisi and Ms. Pretty Nkambule.
[14]
Mine Rescue Services were deployed and MIMCO employees with the
assistance of the proto teams spent the next eight days in a

desperate attempt to rescue the missing employees. Rescue operations
were conducted from the emergency outlet shaft but were
suspended
when ground conditions were declared unsafe. A new rescue hole was
drilled in an attempt to provide a safer second
outlet.
[15]
The business rescue plans
provide for compensation of the employees who were trapped
underground and for compensation to the familied
of those employees
who died.
[16]
I rely on the Business Rescue
Plan and the Business Rescue Information of MIMBCO (Annexure “MC2”
to the company’s
answering affidavit.
[17]
Act No. 71 of 2008.
[18]
As contemplated in section 152(1) of the Act o
n
on 16 February 2017, 6 August 2018 and 25
May 2016 respectively.
[19]
Paragraph 6.2 of the
company’s business rescue plan.
[20]
Paragraph 6.3 of the MIMCO’s
business rescue plan.
[21]
In respect of the IDC Loan and other funding, the practitioners, in
the Barbrook’s plan records as follows:
“
The Industrial Development Corporation has
granted a loan of R119,000,000.00 on 29 March 2018. Details re [sic]
set out in a letter
dated 17 July 2018 by Mac Robert Attorneys. The
loan is to commission the Lily and Barbrook Mines. Refer to
(Annexure E). The
agreement is subject to a confidentiality clause.
Flaming Silver Trading 373 (Pty) Limited is a
special purpose vehicle through which Siyakuhla Sonke Empowerment
Corporation (Pty)
Limited have acquired 74% of the Vantage
Goldfields (Pty) Limited shares.
The Company has raised further Capital to continue
with the Project and will be addressed by Mr F Arendse the Chief
Executive
Officer at the Creditor Meeting.
This fund will re-open both Mines.
Due to the nature of the re-opening it may be too a
large a task to re-open both Mines simultaneously.”
[22]
The notice included a report for the “
Month
ended November 2018
”. The
practitioners recorded as follows:
“
The Joint Business Rescue Practitioners
(“BRPs”) believe all three Business Rescue Plans
have
failed
(the practitioners’ emphasis)
.
The BRPs are however still of the opinion that there
is a reasonable prospect that the Businesses can be rescued or for
them to,
at least, create a better outcome for creditors than under
liquidation circumstances. The conversion of Business Rescue
proceedings
to liquidation would not be in the interest of the
affected parties.
The timelines the BRPs have established are as
follows:
-
Transparent bidding process to commence on 19
January 2019 and this will end on 31 January 2019. The BRPs may,
with support from
affected persons for shareholders under approved
conditions to accept changes in shareholding. Similarly, the BRPs
remain empowered
to deal with the assets including shares in
subsidiaries in the ordinary course of business rescue.
-
New business rescue plans to be published by 7
February 2019 and respective creditors meeting to be held on 19
February 2019.
-
Should the plans be sanctioned it must be
implemented by no later than 31 March 2019,
In the event of the BRPs not securing an offer in
respect of the opportunities by 31 January 2019 they will
immediately convert
to Business Rescue proceedings to liquidations.
This will also be the case if the plans are not sanctioned or in the
event of
a successful party not being able perform [sic] in line
with the sanctioned Business Rescue plan.”
[23]
The notice purports to be a “
Report–Month
ended as at 31 December 2018 and 31 January 2019
.
Under a heading “
The Business Rescue
Plans
” the joint business rescue
practitioners record as follows:
“
The Joint Business Rescue Practitioners still
believe all three Business Rescue Plans
have failed
(the practitioners’ emphasis).
In terms of the timelines set out in our last report
interest has been shown but nothing concrete has materialised due to
the
Sale of Shares Agreement between Vantage Goldfields SA (Pty) Ltd
and Flaming Silver The lack of progress in respect of these parties

this agreement is prejudicing the respective business rescue
proceedings. As the appointed business rescue practitioners, we
have
supported this transaction in an attempt to create value for all the
stakeholders concern.”
Under
heading “
Funding
” the business rescue
practitioners record as follows:
“
We have no proof of funds to re-open the
mines in the immediate short term despite asking for this on a
regular basis.
We have not been appraised of the status of the new
financial model to re-open the mine a critical issue for
practitioners.”
[24]
Hogan Lovells South Africa Inc.
[25]
During the hearing by Mr.
Badenhorst.
[26]
In paragraph 13 of Arqomanzi’s founding affidavit in this
application, the following is recorded:
“
The applicant accordingly requests that Part
A of the application be enrolled for hearing on this court’s
urgent roll and
that the affidavits that were delivered by the
applicant and the sixth respondent [in the Johannesburg application]
stand mutandis
as the founding affidavit, answering affidavit and
replying affidavit in this application. Arqomanzi annexed all of the
papers
founding papers in the Johannesburg application to this
application.”
[27]
In paragraph 14 of the founding affidavit in this application,
Arqomanzi alleges as follows:
“
As this application is for all intents and
purposes a transfer of the application that was initially launched
in the Johannesburg
High Court, the respondents had since 18
September 2019 to oppose the application and/or deliver answering
affidavits although
it is not foreseen that any of the other
respondents would oppose this application, the applicant shall
nevertheless ensure that
this application, together with a new case
number and a date on which the case is to be heard, is served on all
of the respondents.”
[28]
The e-mail notice recorded as follows:
“
Please be aware that in terms of Section 144
(for ….trade unions), Section 145 (for employees) and Section
146 (for shareholders)
of the
Companies Act, you
are entitled, if
you so wish, to participate in these court proceedings.”
Please send any questions you may have by replying
to this e-mail
.”
[29]
Mr. McChesney deposed to
Arqomanzi’s affidavits.
[30]
I shall address the document,
being an alleged subordination agreement, Mr. Mc Chesney thought
would have a significant bearing
on the issues before the court
pater in this judgment.
[31]
In paragraph 1.2 of the heads of argument.
[32]
Paragraph 4 under heading “Urgency”
[33]
Paragraphs 21.4 and 21.5.
[34]
Section 150(4)
– A
business rescue plan must be published within 25 business days after
the appointment of the business rescue practitioner;
Section 151(1)
- practitioner must convene and preside over a meeting of creditors
and any other holders of a voting interest, called for the
purpose
of considering the plan within 10 days after publication of the
business rescue plan;
Section 153(1)(b)(i)(bb)
and sub-section
2(a) - the practitioner has 5 days to apply to the court to set
aside the result of the vote by the holders of
voting interests or
shareholders on the grounds that it was inappropriate; or
[35]
Section 133(1) of the Act, in relevant part, reads as follows:
“
General moratorium on legal proceedings
against company.—(1)  During business rescue proceedings,
no legal proceeding,
including enforcement action, against the
company, or in relation to any property belonging to the company, or
lawfully in its
possession, may be commenced or proceeded with in
any forum, except—
(a) with the written consent of the practitioner;
(b) with the leave of the court and in accordance
with any terms the court considers suitable;
(c) ….”
[36]
I do so under that heading
below.
[37]
Arendse and Others v Van der Merwe NO and
Another
[2016] 4 All SA 48
(GJ) at para. 15.
[38]
LA Sport 4X4 Outdoor CC and Another v
Broadsword Trading 20 (Pty) Limited and Others (A513/2013) [2015]
ZAGPPHC 78 (26 February
2015)
at para. 29
[39]
I deal with the manner in which Arqomanzi says it has become the
Company’s creditor and VGSA’s challenge thereover
later
in this judgment.
[40]
The common law position regarding standing is that only a person who
has a direct interest in the relief sought can claim a remedy
-
Scippers Four Wheel Drive CC v Leshni Rattan
NO (1048/17)
[2018] ZASCA 124
(26 September 2018)
at para. 10.  In
Dalrymple & others
v Colonial Treasurer
1910 TS 372
at 379,
Innes CJ said as follows: “
The general
rule of our law is that no man can sue in respect of a wrongful act,
unless it constitutes a breach of a duty owed
to him by the
wrongdoer, or unless it causes him some damage in law
.”
[41]
In
Giant Concerts CC v Rinaldo Investments
(Pty) Ltd and Others
2013
(3) BCLR 251
(CC)
, the following was said
over standing in respect of an own-interest litigant:
“
32. And in determining Giant’s
standing, we must assume that its complaints about the lawfulness of
the transaction are
correct. This is because in determining a
litigant’s standing, a court must, as a matter of logic,
assume that the challenge
the litigant seeks to bring is justified.
As Hoexter explains:
“
The issue of standing is divorced from the
substance of the case. It is therefore a question to be decided in
limine [at the outset],
before the merits are considered.”
33. The separation of the merits from the question
of standing has two implications for the own-interest litigant.
First, it signals
that the nature of the interest that confers
standing on the own-interest litigant is insulated from the merits
of the challenge
he or she seeks to bring. An own-interest litigant
does not acquire standing from the invalidity of the challenged
decision or
law, but from the effect it will have on his or her
interests or potential interests. He or she has standing to bring
the challenge
even if the decision or law is in fact valid. But the
interests that confer standing to bring the challenge, and the
impact the
decision or law has on them, must be demonstrated.”
[Footnotes omitted].
[42]
In paragraph 119 of its founding affidavit.
[43]
Paragraphs 64, 94 and 95 of the founding affidavit.
[44]
Paragraph 68 of the founding affidavit.
[45]
Paragraph 112 of the founding affidavit.
[46]
Paragraph 113 of the founding affidavit.
[47]
Paragraph 114 of the founding affidavit.
[48]
Pages 17 and 18 of VGSA’s
heads of argument.
[49]
[1] To act fairly is entrenched in the Constitutional values. In
Everfresh Market Virginia (Pty) Ltd v
Shoprite Checkers (Pty) Ltd
2012 (1) SA 256
(CC),
at
paras. 22 and 23, Jacoob J, writing for the minority, said as
follows:
“
Everfresh contends that the common law should
be developed in terms of the Constitution to oblige parties who
undertake to negotiate
with each other to do so reasonably and in
good faith. The contention of Shoprite is that a provision of this
kind should not
be enforceable because the concept of good faith is
too vague. Good faith is a matter of considerable importance in our
contract
law and the extent to which our courts enforce the good
faith requirement in contract law is a matter of considerable public

and constitutional importance. The question whether the spirit,
purport and objects of the Constitution require courts to encourage

good faith in contractual dealings and whether our Constitution
insists that good faith requirements are enforceable should be

determined sooner rather than later. Many people enter into
contracts daily and every contract has the potential not to be

performed in good faith. The issue of good faith in contract touches
the lives of many ordinary people in our country.
The values embraced by an appropriate appreciation
of ubuntu are also relevant in the process of determining the
spirit, purport
and objects of the Constitution. The development of
our economy and contract law has thus far predominantly been shaped
by colonial
legal tradition represented by English law, Roman law
and Roman Dutch law. The common law of contract regulates the
environment
within which trade and commerce take place. Its
development should take cognisance of the values of the vast
majority of people
who are now able to take part without hindrance
in trade and commerce. And it may well be that the approach of the
majority of
people in our country place a higher value on
negotiating in good faith than would otherwise have been the case.
Contract law
cannot confine itself to colonial legal tradition
alone.”
[50]
Section 140 of the Act
provides as follows:
“
General powers and
duties of practitioners.
—(1)  During
a company’s business rescue proceedings, the practitioner, in
addition to any other powers
and duties set out in this Chapter—
(a) has full management control of the company in
substitution for its board and pre-existing management;
(b)  may delegate any power or function of the
practitioner to a person who was part of the board or pre-existing
management
of the company;
(c) may—
(i)  remove from office any person who forms
part of the pre-existing management of the company; or
(ii)  appoint a person as
part of the management of a company, whether to fill a vacancy or
not, subject to
subsection
(2)
;
and
(d)  is responsible to—
(i) develop a business rescue plan to be considered
by affected persons, in accordance with Part D of this Chapter; and
(ii)  implement any business rescue plan that
has been adopted in accordance with Part D of this Chapter.
(1A)  The practitioner must, as soon as
practicable after appointment, inform all relevant regulatory
authorities having
authority in respect of the activities of the
company, of the fact that the company has been placed under business
rescue proceedings
and of his or her appointment.
(2)  Except with the approval of the court
on application by the practitioner, a practitioner may not appoint a
person
as part of the management of the company, or an advisor to
the company or to the practitioner, if that person—
(a)  has any other relationship with the
company such as would lead a reasonable and informed third party to
conclude that
the integrity, impartiality or objectivity of that
person is compromised by that relationship; or
(b)  is related to a person
who has a relationship contemplated in
paragraph
(a)
.
(3)  During a company’s business
rescue proceedings, the practitioner—
(a) is an officer of the court, and must report to
the court in accordance with any applicable rules of, or orders made
by, the
court;
(b) has the responsibilities, duties and liabilities
of a director of the company, as set out in sections 75 to 77; and
(c) other than as contemplated in
paragraph
(b)
—
(i) is not liable for any act or omission in good
faith in the course of the exercise of the powers and performance of
the functions
of practitioner; but
(ii) may be held liable in accordance with any
relevant law for the consequences of any act or omission amounting
to gross negligence
in the exercise of the powers and performance of
the functions of practitioner.
(4) If the business rescue
process concludes with an order placing the company in liquidation,
any person who has acted as practitioner
during the business rescue
process may not be appointed as liquidator of the company.”
[51]
Paragraph 41 of VGSA’s
heads of argument.
[52]
Prayer 1 of Part B of the
notice of motion.
[53]
In p
rayer 8 of Part A of the
notice of motion, Arqomanzi seeks an interim interdict. In prayers
3,5 and 6 of Part B of the notice
of motion, Arqomanzi seeks final
interdicts.
[54]
Prayers 1,2 and 4 of Part B
of the notice of motion.
[55]
On page 5 of VGSA’s
heads of argument VGSA says that “……
[VGSA]
accepts ….that on 6 September 2016 [VGSA] ceded its claim
against the Company to [Standard Bank] in terms of the
cession in
securitatem debiti.
”
[56]
Annexure “FA21”.
[57]
The position is summarized in
paragraph 23 at page 12 of VGSA’s heads of argument where the
following is said: “
There
is obviously a material difference between ‘the Claims’
(loan account) over which VGSA retains ownership and
in respect of
which [VGSA] has a reversionary right, on the one hand, and
[Standard Bank]’s rights in terms of the cession
which are
owned by [Standard Bank] and which [Standard Bank] has not disposed
of in terms of FA21.”
[58]
Paragraph 26 at page 13 of
VGSA’s heads of argument.
[59]
Paragraph 28 at page 13 of
VGSA’s heads of argument.
[60]
See: Graf v Buechel
2003 (4)
SA 378
(SCA) at para. 8.
[61]
See: Grobler v Oosthuizen
2009 (5) SA 500
SCA at pages 507 to 508.
[62]
See: Grobler
supra
;
See: Picardi Hotels Ltd v Thekwini Prop (Pty) Ltd
[2008] ZASCA 128
;
2009 (1) SA 493
(SCA) at para. 3.
[63]
The affidavit was deposed to
on 22 October 2019.
[64]
Paragraph 10 of the
supplementary affidavit.
[65]
Clause 2.1 of the
Subordination Agreement.
[66]
Clause 2.3 of the
Subordination Agreement.
[67]
In paragraph 9.10 of a
further supplementary answering affidavit filed by VGSA on 30
October 2019.
[68]
Paragraph 9.13 of the further
supplementary affidavit of VGSA.
[69]
The cession stood as
continuing covering security “…even if the debts [of
the Company] are temporarily settled at
any time,…” –
Clause 3 of the cession. Arqomanzi purchased all  Sandard
Bank’s right, title and
interest in and to the [Comoany’s]
lon account – Clause 1.10 read with clause 2.3 of the
agreement.
[70]
Section 128(1)(g)(i) and (ii)
of the Act.
[71]
This is not relevant for the present determination.
[72]
Section 2(1)(c)(i) and (ii).
[73]
Section 128(1)(b).
[74]
At paragraphs 20 to 22.
[75]
See:
Advanced Technologies
and Engineering Company (Pty) Ltd (in Business Rescue) v
Aeronautique et Technologies Embarquees
Sas and
Others (GNP) Case No 72522/2011
at para. 26 where Fabricius J said: “…
..a
substantial degree of urgency is envisaged once a company has
decided to adopt the relevant resolution beginning business
rescue
proceedings.”
[76]
Paragraph 6.2 of the
company’s business rescue plan.
[77]
Paragraph 6.3 of the
company’s business rescue plan.
[78]
Paragraph 6.2 of
MIMCO’s business rescue plan.
[79]
Paragraph 6.3 of the MIMCO’s
business rescue plan.
[80]
See paragraphs 22 to 25
supra
.
[81]
Paragraph 3 of the fourth
respondent’s affidavit.
[82]
Paragraphs 39 and 40 at pages
15 and 15 of Arqomanzi’s heads of argument. Arqomanzi relies
on the dictum in
Kransfonrein
Beleggings (Pty) Ltd v Combrink Twenty Five (Pty) Ltd 2017 JDR 1577
(SCA)
at para. 19.
[83]
Paras. 41 on page 15 of
Arqomanzi’s heads of argument.
[84]
In footnote 10 of VGSA’s
heads of argument, VGSA argues as follows
:
“Nowhere in the Act is there any recognition of the concept of
a ‘failed’ business rescue plan
.”
[85]
As set out in paragraph 6.6
of the Company’s plan.
[86]
Section 152(4) of the Act
provides as follows:
“
A business rescue plan
that has been adopted is binding on the company, and on each of the
creditors of the company and every
holder of the company’s
securities, whether or not such a person—
(a) was present at the meeting;
(b) voted in favour of adoption of the plan; or
(c) in the case of creditors, had proven their
claims against the company.”
[87]
Section 140(1) provides as
follows:
General powers and duties of practitioners.—(1)
During a company’s business rescue proceedings, the
practitioner,
in addition to any other powers and duties set out in
this Chapter—
(a)…..
(d)
is
responsible to—
(i) develop a business rescue plan to be considered
by affected persons, in accordance with Part D of this Chapter; and
(ii) implement any business rescue plan that has
been adopted in accordance with Part D of this Chapter.”
[88]
Therefore, so VGSA argues,
prayer 8 of the notice of motion has no basis – paragraph 51
of VGSA’s heads of argument.
[89]
Section 132(2) of the Act provides as follows:
“
Business rescue proceedings end when—
(a) the court—
(i) sets aside the resolution or order that began
those proceedings; or
(ii) has converted the proceedings to liquidation
proceedings;
(b) the practitioner has filed with the Commission a
notice of the termination of business rescue proceedings;…..”
[90]
Section 153(1) of the Act
provides as follows:
“
Failure to adopt business
rescue plan.—(1)  (a)  If a business rescue plan has
been rejected as contemplated in
section 152 (3) (a) or (c) (ii)
(bb) the practitioner may—
(i)  seek a vote of approval from the holders
of voting interests to prepare and publish a revised plan; or
(ii) advise the meeting that the company will apply
to a court to set aside the result of the vote by the holders of
voting interests
or shareholders, as the case may be, on the grounds
that it was inappropriate.
(b)  If the practitioner does not take any
action contemplated in paragraph (a)—
(i) any affected person present at the meeting may—
(aa) call for a vote of approval from the holders of
voting interests requiring the practitioner to prepare and publish a
revised
plan; or
(bb) apply to the court to set aside the result of
the vote by the holders of voting interests or shareholders, as the
case may
be, on the grounds that it was inappropriate; or
(ii) any affected person, or combination of affected
persons, may make a binding offer to purchase the voting interests
of one
or more persons who opposed adoption of the business rescue
plan, at a value independently and expertly determined, on the
request
of the practitioner, to be a fair and reasonable estimate of
the return to that person, or those persons, if the company were to

be liquidated.”
Section
153(5) provides as follows:
“
If no person takes any
action contemplated in subsection (1), the practitioner must
promptly file a notice of the termination
of the business rescue
proceedings.”
[91]
Section 152(8) of the Act.
[92]
Section 152(4) of the Act.
[93]
Section 140(1)(d)(ii).
[94]
Para.  of the fourth
respondent’s confirmatory affidavit.
[95]
Paragraph 8 of the fourth
respondent’s affidavit.
[96]
The question in paragraph 8.1
of the fourth respondent’s affidavit have already been
answered in this judgment.
[97]
[1] This is what Murphy J said in
Afriform
NPC and Others v Eskom Holdings SOC Limited and Others
[2017] 3 All SA 663
(GP)
at paras. 104 to 109 over the doctrine of justiciability:
“
104. The doctrine of justiciability permits
courts to avoid rendering decisions where an insufficient legal
interest is impacted.
Justiciability is not a legal concept with
fixed content. Courts apply it in response to subtle pressures
regarding the appropriateness
of the issues for decision and the
actual hardship to the litigants of denying them the relief sought.
105.  The doctrine teaches that the courts
should decide only cases entailing a real, earnest and vital
controversy between
litigants and not entertain merely hypothetical
cases or cases that are only of academic interest. The business of a
court is
generally retrospective; it deals with situations or
problems that have already crystallised, and not with prospective or
hypothetical
ones. Any claim to be justiciable must present a real
and substantial controversy which unequivocally calls for the
adjudication
of the rights asserted. Litigants should not approach a
court if they have not been actually subjected to prejudice or face
the
real threat of prejudice as a result of legislation or conduct
alleged to be unconstitutional or illegal.
106.  The rules regarding mootness and ripeness
are sub-rules of the doctrine which relate to the timing of an
application
– ripeness discourages a court from deciding an
issue too early, mootness prevents a court from deciding an issue
when
it is too late. Ripeness requires a litigant to wait until a
judicial decision can be grounded in concrete relief. A case is moot

if it no longer presents an existing or live controversy. The rules
apply equally in constitutional and administrative law.
107.  The mootness barrier therefore usually
arises from events arising or occurring after an adverse decision
has been taken
or a lawsuit has got underway, usually involving a
change in the facts or the law, which allegedly deprive the litigant
of the
necessary stake in the pursued outcome or relief. The
doctrine requires that an actual controversy must be extant at all
stages
of review and not merely at the time the impugned decision is
taken or the review application is made.
108.  The ripeness barrier arises usually in
applications for anticipatory relief. Courts are often reluctant to
grant declaratory
or interdictory relief without a clearly defined
record to assure informed and narrow adjudication. The courts must
be astute
to distinguish between a fear resting on speculative
apprehensiveness and a probable threat of specific future harm; and
should
refuse to give advance expressions of legal judgment upon
issues which remain unfocused “because they are not pressed
before
the court with that clear concreteness provided when a
question emerges precisely framed and necessary for a decision from
a
clash of adversary argument exploring every aspect of a
multi-faceted situation embracing conflicting and demanding
interests”.
109.  Courts therefore avoid giving advisory
opinions on matters in the abstract. In applications for declaratory
relief,
mootness and ripeness are considered against the statutory
requirement that the relief sought must have its basis in an
existing,
future or contingent right or obligation.”