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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
Case Number: 2024 -069923
2024 -053300
In the matter between:
ADAM DOUGLAS PIPER 1st Applicant
WEPEX TRADING (PTY) LTD 2nd Applicant
And
GLOSAM MANGANESE (PTY) LTD 1st Respondent
(in business rescue)
FUJAX SOUTH AFRICA (PTY) LTD 2nd Respondent
STEFAN SMYTH N.O. 3rd Respondent
ALISON TIMME N.O. 4th Respondent
THE COMPANIES AND INTELLECTUAL 5th Respondent
PROPERTY COMMISSION
THE AFFECTED PARTIES 6th Respondent
(SECTION 128(1)(a) READ WITH SECTION
130(3)(b) OF THE COMPANIES ACT, 71 OF 2008)
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES:NO
(3) REVISED: NO
DATE 10/01/2025 SIGNATURE
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And in the matter between :
GLOSAM MANGANESE (PTY) LTD Applicant
And
WEPEX TRADING (PTY) LTD 1st Respondent
THE COMPANIES AND INTELLECTUAL 2nd Respondent
PROPERTY COMMISSION
JUDGMENT
FISHER J
Introduction
[1] This judgment deals with two related main applications involving the business
rescue processes and proceedings relating to two associated companies -Wepex
Trading (Pty) Ltd (Wepex) and Glosam Manganese (Pty) Ltd (Glosam) . Both
companies were founded, by and large , by Mr Adam Douglas Piper.
[2] The cases can aptly be described as competing attempts to gain beneficial
control over a valuable manganese mine situated in Kuruman in the Northern
Cape (the mine). The mine is owned by Wepex.
[3] The first application is brought by Piper and Wepex against Glosam and others
under case number 2024 -69923. Its central object ive is to set aside a resolution
which placed Glosam under business rescue and to remove the business rescue
practitioners appointed pursuant to the resolution , Mr Stephan Smyth and Ms
Alison Timme (collectively the BRPs) . I shall refer to this first application as the
“Removal application”.
[4] The second is the application of Glosam against Wepex under case number
2024 -053300 . It is brought by the BRPs acting on behalf of Glosam (in business
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rescue ) to place Wepex under business rescue. I shall refer to this as the
“Business Rescue application /BR application”.
Procedural background and dram atis personae
[5] These applications share a factual complex and were consolidated by an order
of this court of 12 July 2024.
[6] Interim relief was sought urgently on behalf of all parties . These urgent claims
were ultimately resolved on the basis that these matters would be heard as a
special motion on an expedited basis. This is the judgment in this special motion .
[7] There were also interlocutory applications filed as follows – in the business
rescue application, Mazule Mineral and Energy Resources Pty Ltd (MMER) , an
alleged creditor of Wepex sought to intervene in the business rescue application
as co -applicant for business rescue of W epex ; Mazule Holdings (Pty) Ltd
(Mazule), another alleged creditor an d a related company of MMER who sought
to intervene to oppose the Removal application. MMER and Mazule are referred
to collectively as the Mazule parties.
[8] These interventions by the Mazule parties were not ultimately pursued before
me, MMER being in liquidation and Mazule not proceeding therewith for reasons
which are not entirely clear but seem to be as a result of a shar eholders’ dispute .
[9] In addition to these intervention applications, Glosam Manganese Mining (Pty)
Ltd (GMM) and Mr Louis Neethling , its sole shareholder and director have filed
an intervention application as first and second intervening parties respectively in
the BR application (the Neethling application).
[10] The Neethling application is made on the basis that Neethling seeks to place
factual matter before the court relating to the manner in which the business of
the mine is being conducted under his control . He seeks no relief save the
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joinder . He is , however , allied with and makes common cause with Piper in both
applications as to the factual complex . Neethling is also a director of Wepex.
[11] The Neethling application is opposed by the BRPs on the basis only that their
costs and those of Glosam should be paid in the Removal application by
Neethling and GMM jointly and severally with Piper and Wepex.
[12] The BRPs make the point that it was not necessary for Neethling to join the BR
application to provide the information that he proffers in that such information
could have been set out in answer to the BR application by Wepex without the
necessity for any joinder . Neethling , GMM and Wepex are friendly parties as are
Neethling and Piper .
[13] Piper claimed personally , in the Removal application , judgment in the sum of
USD 1 900 000 against Glosam. It was ultimately conceded by Piper that th is
claim was best referred to trial. It was sought, however, on behalf of the BRPs
that the application for such payment be dismissed.
[14] There have been a number of supplementations of the sets of affidavits in each
of the applications, including the applications to intervene. This includes a flurry
of supplementation which occurred up to a day before the hearing.
[15] It seems that , under the banner of urgency , the parties have regarded themselves
to be at liberty to file papers as and when they see fit. This has led to an ever -
growing morass of disputed factual material which was evolving even up until the
day before the special hearing.
[16] This court is , however , charged with the task of cutting through this Gordian knot
in order to come to some semblance of sense so as to do justice to the matter s.
[17] This task is made more difficult by the fact that I am asked by each of the main
parties to decide the disputes on the basis that I disbelieve the respective
versions and reject them on paper.
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[18] The parties were represented as follows. Mr I Miltz SC with Mr JRS Karuaihe
represented Piper and Wepex in both main applications; Mr P Daniels SC with
Mr M Cooke represented Glosam and the BRPs in both main applications; Mr M
Antonie SC represented Fujax SA the second respondent in the Removal
application . Mr van der Merwe represented Mr Neethling and GMM in the BR
application.
[19] As I have said, the factual background is common to both the Removal
application and the BR application.
Prologue
[20] At its most fundamental level this interwoven litigation amounts to a struggle for
power over the rights in and to the mine.
[21] The approaches taken by all parties abound , on all sides , with strategic motives
and disputed facts.
[22] The disputes include various interpretations of a web of agreements relating to
the exploitation of the mining reserves in issue.
[23] This is all regrettable in that it leads to a situation where there are many versions
of the salient features of the narrative relating to the financial position s of the
central companies and who owes whom and what amounts .
[24] There is resort to convoluted mechanisms such as set - off and the extinguishing
of indebtedness for transfer of shares which transfer is subject to complex
restructuring of the shareholding of the companies in issue.
[25] Agreements relating to the restructuring relied on have not been fully complied
with on all versions . This has led to the sense that the interconnecting
relationships relied on are inchoate.
[26] It is common cause that the rights to mine the manganese , which reside in
Wepex , make the mine extremely valuable. It seems that it is not materially in
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dispute that this value exceeds R 1 billion , assuming favourable market
conditions. The mining rights are granted for a period of 10 years which expires
in 2031.
[27] The indications are that the mining reserves available are extensive and that
whomever holds the rei ns to the income flow arising from the sale of the
manganese produced , will be in a position , lawfully or otherwise , to marshal the
funds to the exclusion of others who claim an interest therein.
[28] It is not disputed that the mining enterprise , at stages following the granting of
the mining rights, relied heavily on loan funding and commercial
accommodations from a central figure in the narrative , Mr Christopher Dyason ,
through the entities in respect of which he was a main guiding mind - the Mazule
parties and Fujax SA which is held by Fujax companies registered in the United
Kingdom . Fujax SA and the UK companies are collectively referred to as the
“Fujax parties ”.
[29] The funds invested in the minin g operations were mostly foreign investments .
Such investments have run to hundreds of millions of Rands .
[30] From a general perspective, t he nature and character of indebtedness and
income -flow lies at the heart of business rescue. Th ese case s are no exception.
[31] With this in mind , I turn to the factual background , such as it can be discerned in
the light of the host of disputes.
Factual background
[32] The story involves competing interests in the manganese mine in Kuruman in the
Northern Cape.
[33] The mine had previously been mined over decades, beginning in the 1930’s. The
mining operations ceased in the late 1980’s and the mine was placed on care
and maintenance.
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[34] The mining operations had left large mine dumps and stockpiles of discarded
manganese material.
[35] It has recently become a profitable enterprise to re-open some mine s which have
previously been mothballed . This is due , inter alia, to the rising prices in the
minerals concerned. The mine in issue is such a mine.
[36] Whilst the list of dramatis personae is long and complicated both in relation the
juristic and human protagonists, three men stand at the centre of the narrative. It
is their actions in relation to the mining enterprise which form the skeleton of the
factual complex.
[37] These men are: Piper, Neethl ing, and Dyason.
[38] The case of Piper pivots around a n alleged central conspiracy. He says that
Dyason intends to use his control over what Piper calls the Dyason parties (and
which comprise the Mazule and Fujax parties) to engineer a fraudulent takeover
of the mining enterprise in issue.
[39] The story commences in 2015 when Piper was introduced to the mine by Mr Gert
Olivier .
[40] Around this time, Piper formed the two companies that dominate the two cases
– Glosam, which was to perform the mining operations and Wepex which was to
acquire the property and the rights to mine at the property.
[41] The mining rights were secured in 2021 . Mining operations had , however, been
ongoing since 2018 on the basis that the mine dumps on the property were
mined. The mining rights endure for 10 years meaning that they expire in 2031.
[42] At the stage that the mine and the rights were acquired, Piper was the controlling
mind behind both Glosam and Wepex. Piper was able to use the relationship
between the se two associated entities to achieve maximum efficiency in relation
to best financial arrangement for his own purposes.
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[43] The ability of Piper to control the two entities is relevant because the relationship
of supply and accounting between t hem remains opaque .
[44] There are disputes which have arisen as to the rights of Glosam to perform the
mining enterprise. These disputes are not capable of determination on paper and
are, in any event, not directly relevant at this stage.
[45] The fact is that , when there was a wholly incestuous relationship between the
two companies on the basis that they were controlled by one master – Piper, the
accounting principles adopted between the two were malleable to Piper’s ends .
[46] Neethling was also deeply involved in this phase of the life of the mine. He was
the CEO of Glosam from 2018 and he was essentially the man in charge of the
on the ground day -to-day mining. This meant that he had and still has intimate
commercial relationships with the contractors that worked the mine and the
service providers of skills and equipment to the mine.
[47] Whether Neethling takes his instructions from Piper or whether he has ‘skin in
the game’ in respect of the mining operation is not entirely clear . What is ,
however, clear is that , on whatever basis , Neethling and Piper have taken over
the mining enterprise to the exclusion of Dyason .
[48] Dyason through various entities , has an interest in the mine and has invested
significant resources in the mining enterprise.
[49] The mining industry is unique in that it lends itself to natural stockpiling of
resources which can be accessed , at some expense , over time.
[50] Thus, investment of capital in mining infrastructure and development is thus
made in the hope that it will bear fruit over the time of the licence’s operation.
[51] The Dyason parties obviously provided capital on the basis that they would reap
some benefits of the investment on the basis of a share of the proceeds from the
mining operation over time.
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[52] Certain of the Dyason parties were customers for the manganese during the early
stages of the mining. This is how Dyason came to know of and have an interest
in the mine.
[53] The vagaries of mining being what they are, the mine fell on hard times during
2018. The price of manganese was low , and demand too was low.
[54] Piper required funding to keep the mine running. He approached Dyason who
agreed to lend him a substantial sum of money (approximately R40 million all in
all) in return for preferential terms in relation to the supply of manganese to the
Dyason parties.
[55] The loan was between the Mazule parties and Glosam and Wepex, but the
corporate identities are not that relevant in that , behind the lender entities , stood
Dyason and, behind the borrowers , stood Piper.
[56] As I have said, the relationship between G losam and W epex which were sibling
companies was smooth sailing from a management and accounting perspective
when they were both controlled by Piper. However, with the need for funding
came a new interest holder in the form of Dyason.
[57] Dyason, had lent Piper a lot of money. For this he wanted security and some
control of the income stream which flowed from the mine.
[58] Dyason , an experienced businessman in the mining industry , would presumably
have in sisted that his parting with the loan funding would bring some advantage
in due course when the wheel spun and the market changed. Such is the way of
investment in mines. It is a long game hence the long periods of the mining rights.
It is in the interests of all concern ed in a mine to take maximum benefit out of the
period of the mine. This costs money.
[59] To protect his interests , Dyason appointed executives from his fold of Dyason
parties to sit on the board of Glosam. Enter Russel Lamming and Andre w
Malashewsky.
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[60] Things did not improve for the mine. Inevitably , in the bad manganese market of
that time, Piper couldn’t service the debt to the Dyason entities. The inevitable
threat of litigation loomed. With it came the prospect of foreclosure on the loans.
[61] It seems that Piper now had little option but to give Dyaso n, again through his
entities , some form of shareholder control in relation to the mine. This led , in
October 2022 , to what has been termed a “debt for equity swop”.
[62] This involved a restructuring of what was termed the “Glosam group of
companies ” which were essentially under the control of Piper . This group
comprised G losam , Wepex and NC Manganese (Pty) Ltd .
[63] Terms were agreed to between Dyason and Piper and laid down in a term sheet
(the 2022 Term Sheet) . These terms are complex and entail plans by Dyason
and Piper to establish companies to hold their interest s in the mine off-shore.
[64] Not all of what was agreed under the 2022 Term Sheet came to fruition . However ,
one of the upshots was that a shareholder’s agreement was concluded on 08
December 2022 . The shareholder ’s agreement had the effect that Fujax SA
acquired 51% of Glosam which owns 100 % NC Manganese which owns 43% of
Wepex.
[65] The balance of Wepex is owned by an empowerment concern to the extent of
23% and the Yolandy Trust to the extent of 33%. As an aside I mention that Piper
attempted to gain ownership of the percentage shareholding belonging to the
Yolandy Trust, on the basis that he made allegations of fraud against Olivier , the
mind behind the Trus t, and the person who introduced the property to Piper .
Arbitration p roceedings by Piper to take over the Trust’s shares based on these
allegations of fraud failed. The balance of the shareholding is held by these
shareholders as fractions of their shareholding , which I have rounded down.
[66] Unsurprisingly , the forced marriage between Dyason and Piper in relation to the
spoils of the mining enterprise was not a happy one. It was marred by conflict
predominantly over the non -payment of amounts owing to the Dyason parties .
This conflict has led to the applications which are now before me.
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[67] On 04 January 2024 Piper emailed Graham Ferns, then the Financial Officer of
both Glosam and Wepex , informing him that there was a shareholders/ lenders
dispute brewing. Glosam and Wepex were unable to keep up with the loan
repayments to the M azule parties and Dyason.
[68] On that same day, the CEO of MMER, Sean Rowan wrote to Ferns and Neethling
complaining of the non-payment of this indebtedness.
[69] The inevitable threat of litigation by MMER was then forthcoming.
[70] By this stage , Piper suggests that he was confused as to the persons involved
in the dispute. He sated the following in writing to Ferns and Neethling : “who is
this maze of Mazule/ Fujax/ Glosam and who is acting for who?”
[71] To my mind this confusion seems unlikely. Piper is a seasoned mining executive
– he is well versed in the use of corporate identity to facilitate relationships and
ownership structures in the mining industry.
[72] What Piper clearly knew was that , in whatever form , funding had flowed from
what he refers to as the Dyason parties to keep the mine afloat at a time when it
could not pay its debts . He was aware also that repayments of these amounts
were significantly in arrears.
[73] By the beginning of January 2024, the breakdown in the relationship between
Piper and Dyason was intensifying . There is no doubt that the battle lines had,
by this stage , been drawn.
[74] A major problem was that there had been no income to pay the vital cohor t of
contractors and suppliers which was established at the mine . The se contractors
and suppliers had threatened to stop work and demobilise the equipment which
had been installed at considerable investment .
[75] Piper and Neethling allege that the contractors refused to work for Glosam any
longer. They , however , allegedly trusted Neethling .
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[76] It was agreed that Neethling would use a company established by him , being
GMM , to be the interface with these vital creditors on the basis that it was he and
not Glosam that was their direct employer. They were guaranteed that they
would be paid what was owed them as a priority and that they would be paid in
good order going forward.
[77] It was thus agreed by Dyason and the board of Glosam, which at that stage
included Piper and the directors who had been appointed by Dy ason , Lamming
and Malashewsky , that GMM would be formed to act as a subcontractor of
Glosam .
[78] The sub -contractor st atus of GMM in this arrangement is vital to th ese cases.
[79] It was agreed further that there would be a management of deposits of
manganese at the mine , known as detritus , which was less expensive and
quicker to mine . The more immediate income from this product would be
earmarked for the debts of the contractors and suppliers which would be given
preference in relation to the payment.
[80] The breakdown in relationship and mutual distrust of Dyason and his team on
the one hand and Piper and Neethling on the other continued notwithstanding
this accommodation .
[81] A major cause of thi s enmity arose mainly from the historical indebtedness
arising out of the supply of manganese to the Dyason parties .
[82] The supply terms were , according to Piper , not conduc ive to the making of a
profit for the mine . On the other hand, t he Dyason parties that were being
supplied , complained of quality and quantity deficiencies in the manganese
supplied.
[83] There are various accusations made by Piper and Neethling against Dyason
Lamming and Malashewsky in relation to sub -optimal management of the mine.
This includes th at they purchased manganese emanating from the neighbouring
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Kitso mine in which Dyason and Malashewsky had an interest , thus impacting
negatively on the profitability of Glosam .
[84] What can be in no doubt , however, is that there were significant amounts owing
to the Dyason parties by Glosam and Wepex at this stage .
[85] It is not precisely clear how the debts mounted up and how they were structured.
These accounting structures are , like much else in this case , opaque. To unravel
them , however, even if it were possible on the morass of papers before me which
have grown incrementally , is not important.
[86] The upshot is that it is not denied that , at a stage , there was a substantial amount
which ran to in excess of hundreds of millions of Rand s owed by Glosam and
Wepex to the Dyason parties .
[87] There was a blame game going on – with Piper accusing Dyason of orchest rating
a situation where the mine was deliberately being driven into failure because of
the Dyason debt squeeze and Dyason demanding repayment of the significant
outlay made in relation to the funding of the mining operations.
[88] On 24 January 2024 a meeting of the shareholders of G losam was called in order
to remove Piper as director of Glosam. The reasons for Piper’s removal included
that he had breached his fiduciary duties as a director of Glosam by causing
Glosam to become over - indebted ; that he was misappropriating company funds
and that he had mismanaged Glosam and Wepex resulting in debt levels that put
Glosam at risk of insolvency .
[89] By this stage , Piper had already engaged the services of his attorneys , Andre w
Miller & Associates (AMA ) who have acted for him throughout the matter.
[90] Thus , the writing was on the wall. This seems to have been a culminating period
from the perspective of the legal positionings which were to be adopted by the
respective parties. The litigation phase thus began.
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[91] The Dyason parties and specifically MMER and Mazule began calling up the
loans advanced and other debts due to them .
[92] The repayment of these loans was resisted by Piper on the basis of the 2022
Term Sheet and specifically the equity for debt swap envisaged thereby.
[93] Whether the Mazule loans were or were not extinguished under the 2022 Term
Sheet is not a dispute which I care to unravel and it is not appropriate that I do
so here. What is clear is that Dyason sought to marshal this alleged indebte dness
in order to preserve the position of the Dyason parties .
[94] It is this marshalling of this indebtedness which has been branded by Piper as a
fraudulent scheme.
[95] I do not believe that the machinations relating to the debt recovery can be said
to rise to the levels of fraud and corruption alleged by Piper. I make no finding in
this regard , however , as this matter will, no doubt, have another life in
proceedings to follow.
[96] It is common cause that the financial health and viability of the mine was and is
dependent on the means of production which was itself depend ent on the
vagaries of the price of manganese , which in turn was depend ent on national
and international drivers. For example, one of the reasons for the recent surge
in the price of manganese is the fact that an Australian entity which was a
dominant supplier in the industry was effectively sterilized by a tornado in that
region.
[97] Whatever the reasons, it is now common cause that the mine is generating a
substan tial income for Piper for the first time since it was acquired.
[98] Once Piper learned of the steps to oust him as a director of Glosam at the
beginning of January 2024 , it seems that he and Neethling , as their next move
on the board, contrived to divert the interest stream flowing from the mining
enterprise away from Glosam and into GMM.
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[99] It is not seriously in dispute that Glosam’s position as mining contractor was
unceremoniously changed by Neethling and Piper at the end of January 2024 .
GMM and Wepex under the control of Neethling and Piper began diverting the
now substantial income generated by the mine directly to GMM.
[100] It is conceded that this was not in accordance with what had been agreed by the
Board of Glosam . This concession is central to the cases.
[101] GMM continues to pay the creditors of Glosam and Wepex. Neethling and Piper
have contrived a model in terms of which they allege that indebtedness which
was owing by Wepex to Glosam has been extinguished by set -off in that the
debts of Glosam have been settled by GMM which has in turn ceded its rights to
repayment by Glosam to Wepex.
[102] As I have said, locus standi in business rescue is , at its heart , about
indebtedness. Th us, one sees that tactically Piper has attempted to achieve a
scenario where Glosam is no longer indebted to its creditors and Wepex is no
longer indebted to Glosam. The complexity of this “arrangement” suggests a
manipulation of the company structures and the income flow.
[103] This contrivance is unimpressive to this court . What has , in fact , occurred i s that
there has been a diversion of income from the mine into GMM where the funds
are used by Piper and Neethling as they see fit. This is prima facie unlawful.
[104] What makes the position all the more troubling is that Piper and Neethling refuse
to provide any proper financial accounting as to the income and expenditure. The
amounts being paid to Neethling and/or Piper from the income of the mine are
not disclosed.
[105] Neethling says that he has taken up a position of management of the major
creditors which are servicing the mining operation. This suggests that he , as
GMM is paying creditors in which he has an interest . As I have said , significant
income is now being generated from the mine and Piper and Neethling are in a
position of control over this income.
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[106] Thus , it appears that Dyason and his various entities , having funded a large
portion of the establishment of the mine at a time when the mine was not
profitable, are now being kept from the benefits when the mine has become
profitable.
[107] No monies have flowed to Glosam from the mine since February 2024. Glosam
has been rendered a shell because of the diversion of income into GMM.
[108] On 14 May 2024 attorneys Falcon & Hume (F&H) acting for MMER emailed Piper
an application for the winding up of W epex on the basis of various amounts owing
under purchase agreements with W epex .
[109] It seems that this application was more of a threat than a promise. All parties
accept, as they must, that the liquidation of Wepex will lead to the termination of
the mining rights held by Wepex. This will effectively kill the proverbial golden
goose.
[110] The conflicted positions of Lamming and Malashewsky being what they were at
the time (i.e. they were directors of Glosam and had cl ose involvement with
Dyason parties) , they resigned and Prieu r du Plessis and Paul Bushell were
installed as directors.
[111] Of course, Piper claims that this switch out was part of Dyason’s scheme and
that du Plessis and Bushell are Dyason’s puppets as were Lamming and
Malashewsky.
[112] On the day following the threat of winding -up of Wepex by MM ER, Glosam
launched an application to urgently put W epex into business rescue.
[113] Five days later , on 20 May 2024 , MMER represented by F&H brought an
application to join in these urgent business rescue proceedings brought by
Glosam against Wepex.
[114] On the same day , the directors of Glosam - du Plessis and Bushell took the
resolution to place Glosam under b usiness rescue.
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[115] As I have said, according to Piper , the BRP’s are not independent and are part
Dyason’s alleged scheme .
[116] Piper was and remain s the third director of Glosam. He was invited to the Board
meeting convened for the purpose of the resolution to put Glosam under
business rescue but chose not to attend.
[117] At that stage , Piper felt himself to be ousted as director illegitimately and did not
accept that the meeting to deal with his removal was properly convened. He
remains a director of Glosam.
[118] Piper alleges that the resolutions taken to put Glosam into business rescue and
to seek the placing into business rescue of Wepex are part of the fraudulent
scheme of Dyason to oust him from involvement in the mine for the purposes of
Dyason acquiring control over the mine .
[119] Piper points out that Dyason had been a director of MMER and Mazule until 05
March 2024 when he resigned from both companies and that Malashewsky and
Lamming who had both previously been directors of Glosam shared the Boards
of Fujax UK with Dyason.
[120] This notwithstanding , F&H was at pains to point out that there was no link
between MMER and Fujax. This seems unlikely . In any event , these links do not
serve to establish the central conspiracy relied on by Piper.
[121] Webber Wentzel was then employed by Glosam , ostensibly to advise on the
claims made by MMER and Mazule in relation to the indebtedness of Glosam
and Wepex.
[122] Clearly, if judgments were allowed to be taken against Glosam for these debts ,
this would add to Glosam’s negative financial position – which Piper alleges
would have served the alleged strategy which was afoot.
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[123] Piper instructed his attorneys , AMA to file appearance to defend the actions .
Webber Wentzel questioned Piper’s authority to do so. Webber Wentzel later
withdrew as attorneys for the Mazule parties .
[124] Essentially , Piper alleges that Malashewsky and Lamming planned to allow
judgment to be taken by the Mazule parties against Glosam as part of the
fraudulent scheme .
[125] As I have said , the conflict of interest alleged against Malashewsky and
Lamming , apparently led to them resigning and being replaced by du Plessis and
Bushel l.
[126] Piper alleges that this was part of the conspiracy and that du Plessis and Bushell
take instructions from Dyason, Malachewsky and Lamming. This is denied by du
Plessis and Bushell who maintain that they acted and still act independently.
[127] AMA were then informed in relation to the pending litigation between Glosam ,
MMER and Mazule that Norton Rose Fullbright (NRF) had been appointed to
represent Glosam.
[128] Kiara Barker , who is a director of Fujax SA, makes the affidavits on behalf of
Fujax SA . She was involved in the resolutions for the appointment of NRF and
the swopping out of the directorships of Malashewsky and Lamming for Bushell
and du Plessis. Again, on the version of Piper , this is proof of the alleged
conspiracy to allow Dyason to gain control of the mine.
[129] Piper sought in June 2024 in the urgent “A” portion of the Removal application
the urgent suspension of the BRPs function pending the setting aside of the
resolution to place Glosam under business rescue and the removal of the BRPs.
It was also sought urgently in terms of section 163 of the Companies Act1 (the
Act) to put Neethling and an independent director on the board of Glosam.
[130] This urgent relief was refused and the BRPs have continued in office.
1 Act 71 of 2008.
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[131] The BR application was, in the meantime, taking its course. It seems that Fujax
SA and the other Dyason parties wished to get the BR application decided
urgently in the interim.
[132] Piper argues that the placing of Wepex into business rescue will entail the
appointment of pliable business rescue practitioners who it is alleged will do the
bidding of Dyason. This is a vital part in the structure of the conspiracy case of
Piper.
[133] Piper alleges that once Wepex is in the hands of business rescue practitioners
who will do the bidding of Dyason, this will allow for the “stealing ” of the mine.
[134] As I have said, the elaborate conspiracy theory involving the business rescue
proceedings of Glosam and the business rescue application before me is
advanced by Piper as central to his case . In short, he says that the BRP’s of
Glosam will conspire with the business rescue practitioners of Wepex once
appointed to allow for the Dyason parties to take control of the mine.
[135] This conspiracy theory is obviously disputed by the BRPs . The point is made in
the BR application that this court cannot attribute dishonesty to the business
rescue practitioners yet to be appointed. This seems to me to be a sound
observation . There are irresoluble disputes of fact on this question which
obviously cannot be decided on paper.
[136] Piper and Wepex applied for a consolidation of the two applications so that they
could be heard pari passu so to obviate a situation where Wepex was under the
control of what they contend will be Dyason -friendly business rescue
practitioners before the removal of the BRPs could occur in terms of the Removal
application.
[137] Fujax resisted this arrangement. The consolidation application came before
Yacoob J. Yacoob J accepted that the two applications were intricately involved
with one another. She found that the urgency contended for by Fujax SA in
relation to the delay oc casioned to the Wepex application was somewhat
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assuaged by the fact the Wepex’ indebtedness to Glosam was being reduced by
the payments of GMM of the costs of running the mine.
[138] Fujax SA, aggrieved by this position sought to appeal the judgment of Yacoob J
but this process was withdrawn on the basis of this special alloca tion.
[139] The BRPs admit that by October 2022 the financial situation of G losam was dire.
It is further not in dispute that , at that stage , major creditors and contractors
operating on the mine refused to continue mining and threatened to liquidate
Glosam.
[140] It seems furthermore not to be in dispute that , as at October 2022 , Glosam had
debts to trade creditors in the amount of R247 263 896 and a tax liability of
approximately R55 000 000.Thus , its debts totalled approximately R 302 million
at that stage.
[141] Prior to February 2024 business was operating in the normal course in relation
to the supply arrangement between Wepex and Glosam.
[142] The BRPs acknowledge that , as at 30 April 2024 , Glosam had debts of
approximately R142 million.
[143] Thus , the position from October 2022 to April 2024 had improved. This was
because the mine was generating income which was being funnelled into GMM
which paid the creditors.
[144] The BRPs state that they are investigating the allegations that the Dyason parties
are acting in concert with one another to execute a hostile take -over of the mine.
They state that , to this end , they have had meeting with , inter alia , Sean Rowan
who is CEO of Mazule ; Ryan Moss who is a director of the Mazule parties , Barker
Lamming, Malashewsky and Ferns.
[145] Ferns, Moss and Rowan initially supported Dyason in these proceedings.
[146] There latterly appears to be a break down in the relationship between Moss and
Rowan on the one hand and Dyason on the other. This led to the eleventh -hour
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recantation by Moss and Rowan of previous ly favourable evidence given for
Dyason. Thus previous disputes of fact on crucial issues are now found to be
reversed in favour of new disputes . The unravelling of these aspects in favour of
one or another of the parties is clearly impossible.
[147] The BRPs provide no details as to what they have gleaned from th eir
investigation. They complain bitterly however that Piper and Neethling have been
uncooperative.
[148] This complaint does seem to have a foundation when reference is had to the
correspondence between Piper and Neethling’s respective attorneys and those
of the BRPs .
[149] At this stage , it is not in dispute that the mine is profitable and that the sale of the
manganese generates a massive cash flow. Wepex however under the
directorship of Piper and Neethling does not receive in any monies. Instead, the
funds flow from Wepex directly to GMM – and Glosam is thus bypassed in the
scheme.
[150] Glosam , on any version , has been rendered a shell by virtue of the diversion of
the funds earned from the mine.
[151] The BRP’s make the salient point that, in the event that Glosam is ultimately
successfully rescued, Piper as shareholder, will benefit and participate in the
profits generated by Glosam in the future, or at the very least, obtain a better
return than throu gh the immediate liquidation of Glosam.
[152] The BRPs undertake that they will fulfil their duties as BRPs to the best of their
abilities and in good faith.
[153] There is no basis on which I cannot accept these undertakings. The y are
experienced BRPs with some reputation and are officers of this court.
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[154] It cannot be denied by Piper that Glosam and thus he, being the main beneficial
holder of equity , was ba iled out financially by Dyason and his entities at a time of
need.
[155] There can be no doubt also that this was not an act of altruism on the part of
Dyason . Rather it was an investment to be recouped when the market improved.
[156] The 2022 Term Sheet promised potential returns from the mine. The clear
imperative lying at the heart of the Term Sheet was that profits and funds would
be generated in Glosam. This was security for the Dyason investment – which
initially took the form of loan capital under the loan arrangement in the 2018 Term
Sheet and was extended to a trading credit and other debt forms.
[157] There is no doubt that it was anticipated by the Dyason parties that this income
stream into Glosam would in due course turn a profit for Glosam and thus for its
shareholders , Fujax SA and Piper through NC Manganese.
[158] There are att empts to suggest that Glosam did not have the rights under the
relationship between Glosam and Wepex to be the actual mining contractor. This
is disputed. It appears , in any event , that Glosam acted in the structure as mining
contractor and the debt for equity financing arrangement in the Term Sheets was
dependent on this position.
[159] Against this background I turn to deal with each of the applications in turn.
The Removal application .
[160] Piper and by him Wepex seek in terms of Section 130(1) an order setting aside
the resolution to place Glosam into business rescue .
[161] This can be achieved “ on the grounds that (i) there is no reasonable basis for
believing that the company is financially distressed (ii) there is no reasonable
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prospect for rescuing the company; or (iii) the company has failed to satisfy the
procedural requirements set out in section 129 .”2
[162] Furthermore th e the appointment of the BRPs may be set aside – ie they may
be removed , on the ground , inter alia , that they are not independent of the
company or its management or lack the nec essary skills3.
[163] Piper and Wepex seek the setting aside of the resolution on the bases that there
is no reasonable basis for believing th at it financi ally distressed and that the
procedural requirements of section 129 have not been complied with .
[164] They seek the removal of the BRPs on the ba sis that they are not independent
because of the conspiracy re lied on.
[165] They contend in addition that the BRP’s, on the facts , lack the necessary skills
and information.
[166] Piper seeks also to impugn the resolution on the basis
[167] I will deal with each of these contentions in turn.
Financial distress
[168] Section 128(1)(f) defines the term “financially distressed ” to mean that it appears
to be reasonably unlikely that the company will be able to pay all of its debts as
they become due and payable within the immediately ensuing six months; or it
appears to be reasonably likely that the company will become insolvent within
the imm ediately ensuing six months.
[169] To my min d, on the facts of this case , the suggestion that Glosam is not financially
distressed is untenable.
2 Section 130(1)( a) (i) to (iii) .
3 Section 130(1)(b) (ii) and (iii).
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[170] The attempt by Piper to suggest that the debts of Glosam are extinguished
because of the contrived cession arrangements which have purportedly been
executed between Piper and Neethling to suit their narrative is without any merit.
[171] In any event, on all versions , there is an indebtedness of more than R55 million
which is owing to SARS.
[172] It is common cause that Glosam cannot pay this debt because its income is being
diverted into GMM by Piper and Neethling.
[173] Glosam , thus, has no income and is unable to conduct its business on the basis
that it has autonomy over the payment of its debts.
[174] A more glaring example of financial distress is hardly conceivable.
[175] That Piper remains as a director of Glosam whilst orchestrating this scheme
against its solvency is of concern to this court .
Compliance with section 1 29
[176] The first complaint of non -compliance is that Glosam failed to comply with section
129(3) which provides for the publishing by the company of notice of the
resolution putting the company under business rescue to every affected person
within five days and the appointment of business rescue practiti oners.
[177] It appears from the papers that the impugned resolution was adopted on 20 May
2024 and was filed with the CIPC on 22 May 2024. Given the fact that 29 May
2024 was a public holiday (election day), the five-business day period expired on
30 May 2024.
[178] The BRPs were appointed on 27 May 2024, which is within the five business day
period contemplated in section 129(3)(b) of the Act.
[179] The notice to affected persons, was issued by the BRPs on 30 May 2024.
[180] It is relevant that Piper , as a director , owes Glosam certain fiduciary duties.
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[181] Once Glosam was placed in business rescue, it was , in terms of sub -sections
137(2) and (3), incumbent upon Piper to make contact with the BRPs , tender his
services to them and provide them with all relevant information (including a list
of affected persons).
[182] As I have said, the indications are that he has been singularly unco -operative.
This lack of co -operation obviously stems from the fact that he is disaffected.
[183] The BRPs allege that they had virtually no access to Glosam’s accounting
systems or information and within the short time available to them, took all
practical and reasonable steps to identify all potentially affected persons and
obtain contact details.
[184] On 27 May 2024, the Sheriff attended at the mine, being Glosam's principal place
of business, and served and displayed the resolution to Ms Wildebees, a HR
Clerk.
[185] Piper waited until 7 June 2024 to advise the BRPs , via his attorneys , of certain
alleged affected persons who had not been notified of the business rescue
proceedings.
[186] On Piper's version, he had taken the time to make contact with those
affected persons and discussed the business rescue proceedings with them . I
am satisfied that t hey were , thus, made aware of the proceedings .
[187] Section 130(5)(a) provides:
“(5) When considering an application in terms of subsection (1)(a) to set aside
the company’s resolution, the court may –
(a) set aside the resolution –
(i) on any grounds set out in subsection (1); or
(ii) if, having regard to all of the evidence, the court considers that it is
otherwise just and equitable to do so.”
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[188] Mere failure to comply with procedural requirements will, after the decision in
Panamo Properties (Pty) Ltd and Another v Nel and Others N NO4, not result in
the resolution under section 129 being a nullity ipso facto .
[189] In Panam o Properties the SCA (per Wallis JA) found that section 130(5)(a) of
the Act must be read conjunctively.
[190] Accordingly, a court is empowered to set business rescue proceedings aside
only where one or more of the grounds in section 130(1) of the Act are present
and it is just and equitable to do so on the evidence presented.
[191] To my mind the resort to technical non -compliance alleged by Piper is ill founded.
[192] It is unnecessary for the court to enter into a painstaking exercise involving the
the counting of days and the unravelling of disputes as to when the various time
periods begin and end. It suffices to state that, on my assessment of the manner
in which the formalities were met , there is no non -compliance .
[193] If I am wrong , any non -compliance is slight and no prejudice has been
established.
[194] Furthermore , the contentions offered by Piper regarding why it would be just and
equitable to set aside the resolution are unrelated to the alleged non-compliance
with section 129. All of the reasons proffered relate , in some way , to the alleged
conspiracy .
[195] I conclude on this point that t here is no reason in justice or equity for the business
rescue of Glosam to be set aside.
[196] This conclusion is compounded by the fact of Glosam’s evident financial distress
which has , at least in part , been orchestrated by Piper himself.
[197] To set aside the business rescue for slight and technical non -compliance with
section 129 of the Act in such circumstances would , to my mind, not only offend
4 Panamo Properties (Pty) Ltd and Another v Nel and Others N0 2015 (5) SA 63 (SCA).
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against the principles of justice and equity, but would also subvert the purpose of
Chapter 6 of the Act.
[198] Piper furthermore seeks to impugn the resolution on the alleged ba sis that the
BRPs do not have the requisite s kills to deal with the complexity of the situation
because the are not properly apprised of the financial position of the company.
Lack of independence
[199] I have dealt at length with the fa ilure to establish the con spiracy theory. There is
no basis on which I am entitled to find on these papers that there is a lack of
independence on the part of the BRPs .
[200] The contention is made on behalf of the BRP’s that the alleged scheme is
outlandish and appears to grow to include anyone who opposes the diversion of
the mine’s income. This contention has some merit. Recall, that on Piper’s
version the scheme was hatched long before the appointment of the BRP’s
Necessary skills
[201] There are indications that the manner in which Piper has behaved in relation to
the furnishing of information which is peculiarly within his knowledge may in due
course suggest that there has been deliberate obstruction. Piper ’s attack on the
validity of the resolution is , to my mind, nothing more than obstruction.
[202] This notwithstanding , the BRPs are expe rienced in their trade. They will be well
apprised of mechanisms at their disposal to obtain the necessary information
both under the Act and at common law. Indeed , it seems that they have
undertaken the B R application in a bid to obtain some redress of this nature,
albeit misguided.
The Wepex Business Rescue application
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[203] A Section 131(4) provides that, after considering an application to place a
company under business rescue, the court may:
“(a) make an order placing the company under supervision and commencing
business rescue proceedings, if the court is satisfied that –
(i) the company is financially distressed;
(ii) the company has failed to pay over any amount in terms of an obligation
under or in terms of a public regulation, or contract, with respect to employment -
related matters; or
(iii)it is otherwise just and equitable to do so for financial reasons, and there is
a reasonable prospect for rescuing the company; or
(b)dismissing the application, together with any further necessary and
appropriate order, including an order placing the company under liquidation.”
[204] According to section 128(1)(h), “rescuing the company” means
“achieving the goals set out in the definition of “business rescue ” in sub- paraph
(b).
[205] Section 128(1)(b) in turn provides:
”‘Business rescue’ means proceedings to facilitate the rehabilitation of a company that
is financially distressed by providing for –(i)the temporary supervision of the company,
and of the management of its affairs, business and property;(ii)a temporary morat orium
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 imme diate liquidation of the company;”
[206] Thus , it stands to reason that for a business rescue application to succeed the
company must be shown to be fin ancially distressed.
[207] The central problem with the BR application is that it is not founded on financial
distress.
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[208] By every account , the market is favourable, the mine is up and running, and there
is substantial income flow from the mine.
[209] The problem is not financial distress . Rather it is the imposition of a scheme
whereby the income is kept away from Glosam. The business rescue procedure
is not meant to be employed in these circumstances.
[210] The lawfulness or otherwise of the diversion of the income generated from the
mine is a matter of contractual , delictual , statutory and possible criminal remedy.
[211] It is clear that there are numerous protections afforded to shareholders under
the Act which do not involve business rescue .
[212] The business rescue process is not designed to be used for the wresting of
control from directors of a company where there is no financial distress.
[213] In the circumstances, the application for business rescue must fail.
Conclusion and costs
[214] In relation to the Removal application, the attempt to seek findings of dishonesty
on heavily disputed facts is to be deprecated .
[215] Piper does not come to court with clean hands. His diversion of the funds
belonging to the mining enterprise to be dealt with outside of the normal company
structure is , prima facie, unlawful.
[216] The Removal application was ambitious. Some may call it reck less. The
likelihood of establishing the conspiracy on which it depended on paper was slim
if it was existent at all. To my mind the Removal application is abusive.
[217] In the circumstances , the Removal application must be dismissed in all its parts
and punitive costs are warranted.
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[218] In relation to the B R application, whilst the basis therefor is not established, to
my mind the BRP’s can be forgiven for seeking some redress . In fact , they are
obliged to act.
[219] Their predicament is exacerbated in that they are faced with a complex operation
involving the illegal diversion of the funds of the company they are called on to
administrate and where they are afforded no co -operation from those who have
taken control of the revenue stream which flows from the mine.
[220] Worse still is the fact the Piper and Neethling have arrogated to themselves the
right to manage Glosam’s financial affairs.
Orders
I make the following orders :
Removal application (case: 2024 -069923 )
1. The application is dismissed .
2. The costs of the first to fourth respondents , which are to include all reserved
costs in relation to any part of the application , are to be paid by Piper and
Wepex (the applicants) on the scale as between attorney and client , such
costs to be joint and several the one paying the other to be absolved and to
include the costs of two counsel where employed .
3. The costs of the business rescue practitioners (BRP’s) and Glosam in the
Neethling application brought under case 2024 -053300 are to be paid by
Neethling , GMM and Piper jointly and severally on the scale as between
attorney and client such costs to include the costs of two counsel where
employed.
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The B usiness Rescue application (case: 2024 -053300
1. Neethling and GMM are joined to as parties to the BR application
2. The BR application is dismissed with costs on the party and party scale to be
taxed in accordance with scale C and to include the costs of two counsel
where employed.
______
FISHER J
JUDGE OF THE HIGH COURT
JOHANNESBURG
This Judgment was handed down electronically by circulation to the
parties/their legal representatives by email and by uploading to the electronic
file on Case Lines. The date for hand -down is deemed to be 10 January 2025.
Heard: 14 & 15 October 2024
Delivered: 10 January 2025
APPEARANCES:
Applicant’s counsel
in the Piper Application : Adv. I Miltz SC
1st Respondents counsel
In the Wepex Application : Adv. JRS Karuaihe
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Applicant’s Attorneys
In the Piper Application : Andrew Miller & Associates
First, Third and Fourth
Respondent’s Counsel
in the Piper Application : Adv. P Daniels SC
Applicants’ Counsel in
the Wepex Application : Adv. M Cooke
First, Third and Fourth
Respondent’s attorneys
in the Piper Application : Bowman Gilfillan Incorporated
Applicant’s attorneys
in the Wepex Application: Bowman Gilfillan Incorporated
Second Respondent’s
Counsel in the Piper
Application : Adv. M Antonie SC
Second Respondent’s
Attorneys in the Piper
Application : Werksmans Attorneys
Intervening parties’
(GMM and Louis Neeethlng)
Neethling) counsel in
the Wepex Application : Adv. Christo van der Merwe
Intervening parties’
Attorneys in the Wepex
Application : Darryl Ackerman Attorneys
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