2

SYNOPSIS
[2] The respondent was placed under supervision and into business rescue
on 28 February 2024 ( “the business rescue judgment”). The application
was made in terms of section 131 of the Companies Act No. 71 of 2008
(as amended) (“the Act”).
[3] The applicant argues that the Court has thus determined that the
respondent is financially distressed as determined in section 128(1)(f) of
the Act.
[4] On the 29th of April 2024, the applicant served a Rule 47(1) notice on the
respondent, demanding that the respondent furnish security for the
applicant’s costs of the main action, which the respondent has failed
and/or refused to furnish. Accordingly, ten days have lapsed since the
demand was made and the applicant thus launched the present
application in terms of Rule 47(3).
[5] The applicant seeks an order directing the respondent to furnish security
for the applicant’s costs in the main action instituted by the respondent
under the abovementioned case number, including the applicant’s
separated first special plea, in the amount of R750 000,00 (seven hundred
and fifty thousand rand), or in such amount as the Registrar is to
determine. In addition, that the action is stayed pending the security for
costs being furnished by the respondent.
[6] The applicant contends that the respondent is impecunious and the action
is vexatious, reckless and an abuse of process. The respondent is unable
to satisfy a costs order, when granted against it.
[7] The respondent opposes the application and alleges the application is
without basis/merit.

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[8] The respondent submits that:
[8.1] The applicant’s special plea was separated on the 11 th of
October 2023 but not set down. Instead, the above Rule 47(3)
application was issued.
[8.2] The respondent is of the view that Rule 47 proceedings are legal
proceedings.
[8.3] The respondent was placed under business rescue on 28
February 2024 and the applicant argues that the moratorium in
terms of section 133 of the Companies Act 71 of 2008 is not
applicable because Rule 47 is not legal proceedings.
[8.4] Various other issues have been raised. The Court will however
deal with the point in limine as if this application is however legal
proceedings and subject to the section 133 moratorium, as the
respondent submits it is, then this point will be dispositive of the
application.
IN LIMINE
[9] The respondent was placed under business rescue on 28 February 2024
and the applicant argues that the moratorium in terms of section 133 of
the Act is not applicable. Section 133 of the Act reads as follows:
“133(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 –

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(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) as a set-off against any claim made by the company
in any legal proceedings, irrespective of whether
those proceedings commenced before or after the
business rescue proceedings began;
(d) criminal proceedings against the company or any of
its directors or officers;
(e) proceedings concerning any property or right over
which the company exercises the powers of a
trustee; or
(f) proceedings by a regulatory authority in the
execution of its duties after written notification to the
business rescue practitioner.
…
(3) If any right to commence proceedings or otherwise assert a
claim against a company is subject to a time limit, the
measurement of that time must be suspended during the
company’s business rescue proceedings.”
[10] The applicant does not have leave of the business rescue practitioner or
of the Honourable Court for this Rule 47(3) application and it is not the
applicant’s case that one of the exceptions listed above applies.

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[11] The applicant argues that this Rule 47(3) application is not legal
proceedings and therefore that this Court may make an order.
[12] If this application is however legal proceedings, as the respondent
submits it is, then this point will be dispositive of the application.
The applicant’s argument
[13] In Chetty v Hart NO,1 the Supreme Court of Appeal held that the provision
must be broadly interpreted to include arbitration proceedings.
[14] When ascribing meaning to the respective words in legislation, the point
of departure is the meaning of the language itself.2
[15] The applicant contends that in casu, the claim for security is not
proceedings of its own right, but is “collateral to and not directly affecting
the main dispute between the litigants … This relief to be effective if at all
only after judgment …”.3
[16] The applicant argues that as such, the application for security cannot be
“legal proceedings” against the respondent. It is simply incidental to the
main proceedings, as contemplated in Rule 6(11) of the Uniform Rules of
Court,4 which proceedings are instituted by the respondent against the
applicant. The proceedings are certainly not arbitration proceedings
which Chetty5 decided is struck by section 133 of the Act.
[17] Enforcement action is contemplated within what legal proceedings are.

1 2015 JDR 1823 SCA at para 35
2 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at para 18;
Novartis v Maphil 2016 (1) SA 518 (SCA); University of Johannesburg v Auckland Park Theological
Seminary and Another 2021 (6) SA 1 (CC) at para 64 and 65
3 Shepstone & Wylie and Others v Geyser NO 1998 (3) SA 1036 (SCA)
4 With reference to the case of Antares (Pty) Ltd v Hammond 1977 (4) SA 29 (W) at 30D
5 Chetty supra

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The applicant argues that since the application for security is not legal
proceedings, it also cannot be an enforcement action – the larger (legal
proceedings) encompasses the smaller (enforcement action).
Furthermore, in an application for security for costs, nothing is enforced.
[18] The applicant argues that what a security for costs application entails, is
the respondent, if ordered to do so, is to put up security, which may be in
any form that may be determined appropriate. Security may be given in
the form of a bank, institutional or personal guarantee and may also be in
the form of a guarantee over an immovable property.6
The respondent’s argument
[19] The respondent argues that the application is on notice with three sets of
affidavits and this Court is asked to make a ruling. The respondent argued
that it is difficult to understand the applicant’s argument.
[20] The respondent argues that the point of departure is that the respondent
is under business rescue as envisaged in section 128(1)(b) of the Act that
defines “business rescue” as proceedings to facilitate the rehabilitation of
a company that is financially distressed by providing as follows:
“(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

6 Erasmus, The Superior Court Practice, RS22, 2023, D1, Rule 47-19

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rescue the company …”
[21] The respondent submits that the temporary moratorium envisaged in
section 128(1)(b)(ii) has been enacted by means of section 133 of the Act.
In support of its contentions the respondent has referred to case law set
out hereunder.
[22] The meaning of “legal proceedings” was considered in Murray NO and
Another v Firstrand Bank Ltd t/a Wesbank:7
“[30] In Natal Joint Municipal Pension Fund v Endumeni
Municipality 2012 (4) SA 593 (SCA) para 18, this court reiterated
that the inevitable point of departure in interpreting a statute is
the language of the provision itself, read in context and having
regard to the purpose of the provision and the background to the
preparation and production of the document. It should, however,
be borne in mind that, if the words of the relevant provision are
unable to bear the meaning contended for, then that meaning is
impermissible. See Firstrand Bank Ltd v Land and Agricultural
Development Bank of S outh Africa 2015 (1) SA 38 (SCA) para
27. It is also important to note that s 39(2) of the Constitution,
which compels an interpretation of legislative provisions in the
light of the values enshrined in the Bill of Rights, applies only
where the language of the statute is not undul y strained.
See South African Airways (Pty) Ltd v Aviation Union of South
Africa & others 2011 (3) SA 148 (SCA) paras 25-26.
[31] Section 133(1) of the Act places a moratorium on ‘legal
proceeding, including enforcement action’. In the Afrikaans text
the reference is to ‘geregtelike stappe, insluitende
afdwingingsaksie’. The Act does not contain a definition of these

7 2015 (3) SA 438 (SCA)

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terms. However, the term ‘legal proceeding’ is well -known in
South African legal parlance and usually bears the meaning of
a lawsuit or ‘hofsaak’. …”
[23] In Timasani (Pty) Ltd (in business rescue) and Another v Afrimat Iron
Ore (Pty) Ltd:8
“[25] Section 133 must be read as a whole: the different subsections
of a provision dealing with the same subject matter must not be
considered in isolation but read together so as to ascertain the
meaning of the provision.
Section 133(1) is a general moratorium provision that applies in
relation to the assets and liabilities of the company at the stage
when business rescue comes into effect. It protects the
company against legal action in respect of claims in general,
save with the written consent of the business rescue practitioner
and failing such consent, with the leave of the court. This Court
has stated the purpose of s 133(1) as follows:
‘It is generally accepted that a moratorium on legal proceedings
against a company under business rescue is of cardinal
importance since it provides the crucial breathing space or a
period of respite to enable the company to restructure its affairs.
This allows the practitioner, in conjunction with the creditors and
other affected parties, to formulate a business rescue plan
designed to achieve the purpose of the process.’”
[24] The Supreme Court of Appeal in Ergomode (Pty) Ltd v Jordaan NO and
Others9 found that “to perfect security is legal proceedings” as mentioned

8 (91/2020) [2021] ZASCA 43; [2021] 3 All SA 843 (SCA) (13 April 2021)
9 (643/2022) [2024] ZASCA 10 (29 January 2024)

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in the Act quoted herein.
“[33] Accordingly, s 133 is meant to grant a company placed in
business rescue a moratorium to provide it, in popular parlance,
with breathing space whilst every attempt is made to rescue the
company in financial distress, by designing and implementing a
business rescue plan.[10] The term ‘legal proceedings’ in s 133
include claims in general, but also claims instituted, as in this
instance, to perfect security. Consequently, Ergomode was, as
a matter of law, obliged, as a preliminary step, to seek leave of
the BRPs or of the cour t to commence proceedings against
Sakhile (in business rescue). This, it failed to do. Instead, it
heedlessly embarked on legal proceedings against Sakhile in
the face of the unequivocal prohibition contained in s 133(1) of
the Act.”
[25] The applicant subsequently submits that this application is legal
proceedings, and section 133(1) of the Act applies and accordingly that
the application should be dismissed with costs.
EVALUATION
[26] Section 133 makes provision for a general moratorium (in some
jurisdictions a moratorium is known as a “stay” or “staying of
proceedings”) on legal proceedings commenced or proceeded with,
including any enforcement action, against a company or in relation to any
property belonging to the company, or lawfully in its possession, while the
company is subject to business rescue proceedings.11

10 Cloete Murray and Another NNO v Firstrand Bank Ltd t/a Wesbank supra para 14
11 African Bank Corporation of Botswana v Kariba Furniture Manufacturers (Pty) Ltd and Others 2013
(6) SA 471 (GNP), para 6 (reversed on appeal on other grounds); African Bank Corporation of
Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd and Others 2015 (5) SA 192 (SCA)

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[27] The moratorium granted by this section is designed to provide the
company with a breathing space while the business rescue practitioner
attempts to rescue the company by designing and implementing a
business rescue plan.12 This is a crucial element of any corporate rescue
mechanism, as it allows the company sufficient breathing space to be able
to find a solution to the financial problems it is experiencing at that time.
It is a personal, temporary benefit in favour of a company undergoing
business rescue that cannot be utilised indefinitely to delay the claims of
creditors or result in the extinction of their claims.13
[28] It is clear that the general moratorium created by this section is temporary
and applies only for the duration of the company’s business rescue
proceedings.14
[29] In Investec Bank Ltd v Bruyns 15 the Court described the moratorium
granted by subsection (1) as a general provision that affords the company
protection against legal action on claims in general. Although no definition
of the terms “legal proceeding” or “enforcement action” is provided in
Chapter 6, it is clear that the intention of the provision is to cast the net as
wide as possible in order to include any conceivable type of action against
a company such as liquidation proceedings.16
[30] The Chetty (a quo ) case17 was reversed on appeal in Chetty t/a
Nationwide Electrical v Hart NO and Another 18 on the basis that the

12 Cloete Murray and Another NNO v Firstrand Bank Ltd t/a Wesbank supra para 14; Southern Value
Consortium v Tresso Trading 102 (Pty) Ltd and Others 2016 (6) SA 501 (WCC); 2001 Management
Services (Pty) Ltd and Another v Anappa (88079/14) [2016] ZAGPPHC 353 (20 May 2016), para 33;
Business Partners Ltd v Tsakiroglou and Others 2016 (4) SA 390 (WCC), para 20
13 Timasani (Pty) Ltd (in business rescue) and Another v Afrimat Iron Ore (Pty) Ltd [2021] JOL 5006 3
(SCA); [2001] 3 All SA 843 (SCA), para 28

(SCA); [2001] 3 All SA 843 (SCA), para 28
14 Capitec Bank Ltd v Ubuntu Family Health Centre Grayston (Pty) Ltd (2023/127918) [2025] ZAGPJHC
126 (10 February 2025)
15 2012 (5) SA 430 (WCC)
16 Blue Star Holdings (Pty) Ltd v Anappa (88079/14) [2016] ZAGPPHC 353 (20 May 2016),
paras 40-41; Chetty t/a Nationwide Electrical v Hart NO and Another 2015 (4) All SA 401
(SCA), para 35 (with reference to arbitration proceedings) and Capitec Bank Ltd v Ubuntu
Family Health Centre Grayston (Pty) Ltd (2023/127918) [2025] ZAGPJHC 126 (10 February
2025), para 23
17 2014 JDR 0585 KZD
18 2015 (4) All SA 401 (SCA)

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phrase “legal proceeding” may, depending on the context within which it
is used, be interpreted restrictively, to mean Court proceedings or more
broadly, to include proceedings before other tribunals including arbitral
tribunals.19 In the Chetty SCA case it was inter alia stated that the
language employed in subsection (1) itself suggests that a broader
interpretation commen ds itself, an approach with which academic
commentators concur.20
“[35] To conclude this analysis, the phrase legal proceeding may,
depending on the context within which it is used, be interpreted
restrictively, to mean court proceedings or more broadly, to
include proceedings before other tribunals including arbitral
tribunals. The language employed in s 133(1) itself suggests
that a broader interpretation commends itself, an approach with
which academic commentators concur. Contextual indications
in s 142(3)(b), and the importance of reading these provisions
consistently, also support this interpretation. And finally, the
purpose of the provision, which is to give breathing space to the
practitioner to get the company’s financial affairs in order, also
requires it to be construed widely because arbitrations, like court
proceedings also involve diversion of resources – both time and
money – that may hinder the effectiveness of business rescue
proceedings. To construe it narrowly, as the court a quo did, and
as the respondent contends we should, would be at odds with
its language, defeat its purpose and lead to insensible and
impractical consequences.”
[31] The purpose of a moratorium is to protect the company (and its assets)
and to give it breathing space.

19 Also see Cloete Murray and Another NNO v Firstrand Bank Ltd t/a Wesbank supra para 40 in respect
of tribunal
20 Chetty t/a Nationwide Electrical v Hart NO and Another supra para 35; Panamo Properties (Pty) Ltd
and Another v Nel NO and Others (35/2014) [2015] ZASCA 76 (27 May 2015), para 14

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Delivered: This judgment was prepared and authored by the Presiding Officer
whose name s are reflected and is handed down electronically by
circulation to the Parties/their legal representatives by email and by
uploading it to the electronic file of this matter on CaseLines. The
date for hand-down is deemed to be on 12 August 2025.

HEARD ON: 14 May 2025
DATE OF JUDGMENT: 12 August 2025
FOR APPLICANT:
Advocate M Desai instructed by Ln P Beyon d
Legal
FOR RESPONDENT:


Advocate R F De Villiers instructed by Deneys
Zeederberg Attorneys Inc