THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 945/2024

In the matter between:

TONGAAT HULETT LIMITED (IN BUSINESS RESCUE) FIRST APPELLANT

TONGAAT HULETT SUGAR SOUTH AFRICA (PTY) LTD
(IN BUSINESS RESCUE) SECOND APPELLANT

TREVOR JOHN MURGATROYD N.O. THIRD APPELLANT

PETRUS FRANCOIS VAN DEN STEEN N.O. FOURTH APPELLANT

GERHARD CONRAD ALBERTYN N.O. FIFTH APPELLANT

and

SOUTH AFRICAN SUGAR ASSOCIATION FIRST RESPONDENT

S.A. SUGAR EXPORT CORPORATION (PTY) LTD SECOND RESPONDENT

MINISTER OF TRADE, INDUSTRY AND COMPETITION THIRD RESPONDENT

SOUTH AFRICAN SUGAR MILLERS’ ASSOCIATION
NPC FOURTH RESPONDENT

SOUTH AFRICAN CANE GROWERS’ ASSOCIATION
NPC FIFTH RESPONDENT

SOUTH AFRICAN FARMERS’ DEVELOPMENT
ASSOCIATION NPC SIXTH RESPONDENT

RCL FOODS SUGAR & MILLING (PTY) LTD SEVENTH RESPONDENT

ILLOVO SUGAR (SOUTH AFRICA) (PTY) LTD EIGHTH RESPONDENT

2

UMFOLOZI SUGAR MILL (PTY) LTD NINTH RESPONDENT

GLEDHOW SUGAR COMPANY (PTY) LTD TENTH RESPONDENT

HARRY SIDNEY SPAIN N.O. ELEVENTH RESPONDENT

UCL COMPANY (PTY) LTD TWELFTH RESPONDENT

ALL REGISTERED GROWERS THIRTEENTH TO TWENTY-THREE THOUSANDTH
RESPONDENTS

THE AFFECTED PERSONS IN TWENTY-THREE THOUSANDTH AND FIRST RESPONDENT
THL’S BUSINESS RESCUE AND FURTHER RESPONDENTS

Neutral citation: Tongaat Hulett Limited and Others v South African Sugar Association
& Others (945/2024) [2025] ZASCA 190 (15 December 2025)
Coram: DAMBUZA, GOOSEN, SMITH and COPPIN JJA and BASSON AJA
Heard: 12 November 2025
Delivered: This judgment was handed down electronically by circulation to the parties’
representatives by email, published on the Supreme Court of Appeal website, released
to SAFLII. The date and time for hand -down is deemed to be 11h00 on 15 December
2025.
Summary: Sugar Act 9 of 1978 – nature of Sugar Industry Agreement – whether an
agreement within the meaning of s136(2) of the Companies Act 71 of 2008 – Companies
Act – interpretation of s 136(2) – Constitutional Law – whether s 136(2) of the Companies
Act 71 of 2008 (the Companies Act) contravenes the principle of equality enshrined in s
9 of the Constitution.

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ORDER


On appeal from: KwaZulu-Natal Division of the High Court, Durban (Vahed J sitting as
court of first instance):
1 The appeal is dismissed.
2 The appellants are to pay the costs of appeal of the first, second, third, fourth, seventh,
eighth and twelfth respondent. Such costs are to include the costs of two counsel where
so employed.


JUDGMENT


Smith JA (Dambuza, Goosen and Coppin JJA and Basson AJA):


Introduction
[1] This appeal concerns the interpretation of s 136(2) of the Companies Act
71 of 2008 (the Companies Act). This provision allows a business rescue practitioner
temporarily to suspend a company's payment obligations under pre-existing agreements
during business rescue proceedings. The main issue is whether the Sugar Industry
Agreement (SI Agreement), which was promulgated by the Minister in terms of s 4 of the
Sugar Act 9 of 1978 (the Sugar Act), qualifies as an ‘agreement’ under s 136(2)(a) of the
Companies Act, thereby permitting the suspension of payment obligations owed under it
while business rescue is in progress. Unless specified otherwise, all statutory references
in this judgment pertain to the Companies Act.

[2] Given the large number of parties in the KwaZulu-Natal Division of the High Court,
Durban (the high court) proceedings – totalling more than twenty-three thousand and one
respondents – a comprehensive description of each would unnecessarily encumber the
judgment. Accordingly, I focus on outlining the principal parties and reference others only
when necessary to provide relevant context.

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[3] The first and second appellants are Tongaat Hulett Limited ( in business rescue)
(THL) and Tongaat Hulett Sugar South Africa (Pty) Limited (in business rescue) (THSSA),
respectively. Both are public companies in business rescue. THSSA is a wholly owned
subsidiary of THL. I refer to them collectively as THL. The third, fourth and fifth appellants
are the joint business rescue practitioners (the rescue practitioners) of THL.

[4] The first respondent is the South African Sugar Association (SASA), a juristic entity
incorporated in terms of s 2 of the Sugar Act. The second respondent is the S.A. Sugar
Export Corporation (Pty) Limited (SASEXCOR). The third respondent is the Minister o f
Trade, Industry and Competition (the Minister).

[5] The fourth respondent is the South African Sugar Millers' Association NPC
(SASMA). All domestic sugar millers and refiners are required to be members of SASMA,
which represents all domestic millers and refiners in sugar industry engagements,
negotiations, agreements, and arrangements, including when it participates in SASA
matters.

[6] The fifth and sixth respondents are the South African Cane Growers' Association
NPC (SACGA) and the South African Farmers' Development Association NPC (SAFDA),
respectively. All domestic sugarcane growers must join either SACGA or SAFDA, which
represent them in industry discussions and participation in SASA. Under SASA’s
Constitution, SACGA and SAFDA have equal representation. Together, they are called
‘the Growers’ Section’ and are parties to the SI Agreement and related arrangements.

[7] The seventh respondent (RCL Foods Sugar & Milling (Pty) Ltd (RCL Foods)), the
eighth respondent ( Illovo Sugar (South Africa) (Pty) Ltd ( Illovo Sugar )), the ninth
respondent ( Umfolozi Sugar Mill (Pty) Ltd ( Umfolozi Sugar )), the tenth respondent
(Gledhow Sugar Company (Pty) Ltd (Gledhow Sugar)), and the twelfth respondent (UCL
Company (Pty) Ltd (UCL)) are sugar milling companies that operate their own production

Company (Pty) Ltd (UCL)) are sugar milling companies that operate their own production
mills. Illovo Sugar, UCL and Gledhow Sugar also operate as sugar refiners. They are all

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members of SASMA. The eleventh respondent is the business rescue practitioner of
Gledhow Sugar.

[8] The thirteenth to twenty -three thousandth respondents are members of SACGA
and SAFDA and comprise all the registered sugar cane growers. The twenty -three
thousandth and first respondent s and further respondents are the affected persons in
THL's business rescue.

[9] On 26 October 2022 , the board of THL determined that the company was
financially distressed and resolved to commence business rescue proceedings. At that
time, THL owed significant debts to SASA under the SI Agreement. On 24 February 2023,
THL’s rescue practitioners decided to suspend payment obligations to SASA, contending
that such payments threatened the possibility of rescuing the company. This suspension
was invoked under s 136(2)(a).

[10] The respondents disputed the rescue practitioners’ entitlement to suspend those
payment obligations. They contended that the SI Agreement is not an ‘agreement’ within
the meaning of s 136(2)(a) and that THL's obligations under the SI Agreement are
statutorily imposed and are therefore incapable of suspension under that section.

[11] The appellants consequently applied to the high court for an order declaring that
s 136(2)(a), read with the definition of ‘agreement’ in s 1, empowers the rescue
practitioners to suspend any of THL’s payment obligations, which arise under the SI
Agreement. Alternatively, they sought an order confirming the rescue practitioners’ power
to suspend any local market redistribution charges, and the interest thereon, that become
due in terms of the SI Agreement and would otherwise become due during the business
rescue proceedings.

[12] In the further alternative, the appellants asserted that s 136(2)(a) is under-inclusive
and irrational, thereby contravening the rule of law as established in s 1 of the
Constitution, which sets out foundational values, including the supremacy of the

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Constitution and the rule of law. The appellants argue that by failing to treat all creditors
equally, the section undermines the principle of equality before the law and fails to provide
a rational basis for differentiating between creditors. Section 9(1) of the Constitution
enshrines the right to equality, stating that ‘[e]veryone is equal before the law and has the
right to equal protection and benefit of the law ’. The appellants assert that s 136(2)( a)
creates an arbitrary distinction among creditors, thereby violating the provisions of s 9(1)
of the Constitution.

[13] The high court handed down its judgment on 4 December 2023, dismissing the
application with costs . The high court found that: (a) properly interpreted, s 136 (2)
excludes statutory obligations; (b) the SI Agreement constitutes subordinate legislation;
(c) SASA is a statutory regulatory body ; and (d) s 136(2) does not contravene s 9(1) of
the Constitution. Subsequently, on 6 May 2024, the high court refused the appellants’
application for leave to appeal. They afterwards successfully petitioned for leave to appeal
to this Court.

[14] On appeal to this Court, the appellants asserted that the high court misinterpreted
s 136(2)(a), which, when correctly construed, authorises business rescue practitioners to
suspend any inter partes obligation that would otherwise hinder the possibility of rescuing
the company. They maintain that the SI Agreement establishes definite rights and
obligations among participants in the sugar industry, thereby fitting the criteria for an
agreement subject to suspension under the relevant provision. According to them, the
respondents’ interpretation would produce the anomalous outcome of treating SASA as
a preferred creditor without any statutory justification for such status.

[15] Furthermore, the appellants argue that the respondents ’ interpretation would
render the section under -inclusive, irrational, and unconstitutional. On the interpretation

render the section under -inclusive, irrational, and unconstitutional. On the interpretation
proposed by the respondents, the section would arbitrarily distinguish between debts
owed to private individuals and those owed to regulatory bodies, even when these debts
arise from similar obligations. Such an approach could also compromise the intent and
effectiveness of the business rescue provisions within the Companies Act.

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[16] In assessing the impact of s 136(2)( a) on the rights and obligations arising from
the SI Agreement, several key legal questions arise. These questions are central to
determining whether the payment obligations under the SI Agreement may be suspended
during business rescue proceedings and thus have significant implications for the rights
and responsibilities of industry participants. They are the following:
a) What is the legal nature of an 'agreement' as defined in the Companies Act and
does it include obligations imposed by law?
b) Having established the meaning of 'agreement', does the SI Agreement fall within
the scope of an agreement contemplated by section 136(2)( a), and is it therefore
susceptible to suspension by a business rescue practitioner?
c) Is SASA established as a statutory regulatory body, or is it an association formed
by private agreement among participants in the sugar industry?
d) If the Court determines that the term 'agreement' in section 136(2)( a) excludes
liabilities arising from the SI Agreement, does this interpretation contravene section
9 of the Constitution, which guarantees equality before the law?

[17] The submissions advanced by the parties must be evaluated in light of the
pertinent facts, the organisational framework of the South African sugar industry, the
historical context related to the Sugar Act's enactment and the statutory scheme of
business rescue proceedings in the Companies Act. The high court's judgment, reported
as Tongaat Hulett Limited (In Business Rescue) and Others v South African Sugar
Association and Others,1 provides a comprehensive summary of these matters. As none
of the parties have challenged that summary, it is unnecessary to repeat that level of detail
here. I will therefore set out only those facts required to clarify the findings and final order.

Factual background
[18] The South African sugar industry is a cornerstone of the national economy,

[18] The South African sugar industry is a cornerstone of the national economy,
generating about R24 billion in annual revenue. It provides direct employment to roughly

1 Tongaat Hulett Limited (In Business Rescue) and Others v South African Sugar Association and Others
[2023] ZAKZDHC 93; [2024] 1 All SA 509 (KZD).

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65,000 people, with another 270,000 holding jobs indirectly – many of whom live in rural
communities where alternative employment opportunities are scarce. The sustainability
and productivity of this sector are thus crucial for both economic stability and social well-
being. The industry is organised into growers, represented by either SACGA or SAFDA,
and millers, represented by SASMA. These groups collaborate under the supervision of
SASA to manage industry-wide interests.

[19] Under the SI Agreement, participants like THL and other millers are required to pay
two main types of charges: (a) industry levies – fees that fund activities benefiting the
entire sector, and (b) local market redistribution payments. Redistribution payments are
made by millers who produce more sugar than their allocated quota; these payments are
collected by SASA and redistributed amon g millers to balance market allocations and
ensure fairness. SASA’s authority to impose these levies and payments is g rounded in
the Sugar Act and the SI Agreement, which also empower SASA to set pricing formulas
aimed at supporting shared industry objectives.

[20] The SI Agreement also governs how revenue from the domestic market is divided.
After deducting industry levies, the remaining ‘net divisible proceeds ’ are split between
growers (who receive 64%) and millers (who receive 36%). Growers are paid based on
the RV price – a price determined by the recoverable sugar content in their cane, ensuring
they are compensated fairly for the quality of their crop. Millers are assigned quotas that
dictate how much raw sugar they can contribute to the domestic market. If a m iller
produces more than their allocated quota, they must make redistribution payments to
SASA, as described above. Any surplus sugar that cannot be sold domestically is
exported, and profits from these exports are distributed according to each miller’s qu ota
allocation.

allocation.

[21] THL is South Africa’s oldest sugar milling company, responsible for over a quarter
of domestic sugar production and 40% of the country’s refined sugar supply. In 2021,
THL’s activities contributed approximately R11 billion to the national GDP. However, the
company is experiencing severe financial distress.

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[22] As an overproducer, THL’s output exceeds its domestic quota, obliging it to make
significant redistribution payments to SASA. All THL’s sugar is currently sold domestically,
which has led to underperformance in exports – a factor that further complicates the
company’s financial situation. This situation has sparked a dispute between THL and
SASA regarding the underlying causes of THL’s overproduction. THL maintains that its
overproduction is not voluntary but rather a cons equence of other millers reduc ing their
refining capacity, which, according to THL, forced it to process additional cane to prevent
waste and support growers. This argument highlights the interconnectedness of
operations in the sector and the ripple effects of capacity changes by one p layer. By
contrast, SASA attributes THL’s overproduction to its own business decisions, arguing
that strategic choices about production and sales should have accounted for industry
quotas and market conditions.

[23] With mounting debts totaling about R10.4 billion owed to roughly 1,000 creditors
and all its assets pledged as security, THL’s prospects for recovery have become
increasingly uncertain. The company’s board chose voluntary business rescue as
preferable to liquidation. This decision is acknowledged by all respondents as necessary
to preserve value for stakeholders and potentially safeguard jobs, especially in vulnerable
rural communities.

[24] The business rescue practitioners took control of THL with only two months left in
the sugar season. They continued operations but, invoking s 136(2)( a), suspended
certain payments, including those due to SASA, while seeking new financing to ensure
ongoing processing. The suspension of these payments created immediate uncertainty
for growers and millers, as it threatened the flow of funds that underpin both industry
stability and employment in affected communities.

[25] From September 2022, THL stopped making payments required under the SI

[25] From September 2022, THL stopped making payments required under the SI
Agreement, triggering a dispute about whether such payments could legally be withheld
during business rescue. SASA expressed concern that non-payment by THL could have
far-reaching impacts on the broader industry, including the financial health of other millers

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and growers. It responded by establishing a dedicated task team to monitor the situation
and propose solutions.

[26] By January 2023, THL indicated it was unable to meet impending obligations for
redistributions, interest, and levies. SASA insisted that these commitments remained
enforceable and, in response to THL’s non-payment, withheld export proceeds that would
otherwise have been due to THL. SASA then demanded payment of more than R176
million in industry levies. THL, however, confirmed it was suspending these payments in
reliance on s 136(2). This impasse increased financial pressure on both THL and the
wider i ndustry, raising concerns about ongoing support for rural employment and the
stability of sector-wide revenue sharing.

[27] As of 31 March 2023, the exact amounts owed by THL remained contested. They
are, however, considered immaterial to the immediate dispute. The business rescue
practitioners announced that payments for new obligations would resume from April 2023,
while historical debts would be addressed through the business rescue plan – a strategy
aimed at balancing the interests of current operations with the need to resolve past
arrears. THL began repaying current charges and levies from April 2023, but most debts
predating this period remained outstanding, continuing to pose risks for suppliers,
employees, and industry partners.

[28] On 31 March 2023, SASA imposed a special levy – an additional charge on
industry participants designed to cover specific shortfalls – requiring other millers to
contribute extra funds. This levy had the potential to reduce the profits of other millers,
illustrating how the financial distress of a major player can have negative knock-on effects
for the entire sector.

[29] On 31 May 2023, the business rescue practitioners published a business rescue
plan that did not make provision for payment of any outstanding industry levies or
redistribution payments under the SI Agreement. Instead, these obligations were

redistribution payments under the SI Agreement. Instead, these obligations were
classified as unsecured debt, placing SASA in the position of an unsecured creditor and

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suspending the debt pending confirmation by the high court. This omission and the
apparent suspension of THL’s obligations for the duration of business rescue prompted
other industry participants – including RCL Foods, SASMA, and Illovo Sugar – to file an
urgent application in the high court to prevent the adoption of the plan.
[30] Following service of th e application, the business rescue practitioners obtained
creditor consent to postpone the meeting convened to consider the plan. On 14 June
2023, creditors holding 85 percent of total claims against THL voted unanimously to allow
the rescue practitioners to amend the plan in light o f new developments. It appears that
the plan remains subject to further changes.

[31] Given these developments and the contentious treatment of SASA's claims under
the proposed business rescue plan, the dispute ultimately turned on the legal implications
of THL's suspended obligations during business rescue. This brings the focus squarely
to the interpretation of s 136(2), which governs the suspension and potential cancellation
of contractual obligations in the context of business rescue proceedings.

Interpretation of s 136(2) of the Companies Act
[32] I now address the core issue in this appeal, which concerns the correct
interpretation of section 136(2). That section provides:

‘(2) Subject to subsection (2A), and despite any provision of any agreement to the contrary, during
business rescue proceedings, the practitioner may –
(a) entirely, partially or conditionally suspend, for the duration of the business rescue
proceedings, any obligation of the company that—
(i) arises under an agreement to which the company was a party at the commencement of
the business rescue proceedings; and
(ii) would otherwise become due during those proceedings; or
(b) apply urgently to a court to entirely, partially or conditionally cancel, on any terms that are
just and reasonable in the circumstances, any agreement to which the company contemplated in

just and reasonable in the circumstances, any agreement to which the company contemplated in
paragraph (a)’.

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[33] In terms of the definition of ‘agreement’ in s 1 of the Companies Act, it ‘includes a
contract, or an arrangement or understanding between or among two or more parties that
purports to create rights and obligations between or among those parties.’

[34] These provisions should be construed in accordance with the recogni sed
principles of interpretation. The proper approach to legislative interpretation in our law
requires courts to ascertain and give effect to the intention of the legislature, as expressed
in the wording of the statute, while also considering the context, purpose, and underlying
values of the Constitution. In this regard, the purposive approach is favoured, ensuring
that statutory provisions are read holistically and in a manner that promot es the spirit,
purport, and objects of the Bill of Rights.2

[35] The Constitutional Court, in Investigating Directorate: Serious Economic Offences
and Others v Hyundai Motor Distributors (Pty) Ltd and Others (Hyundai Motor
Distributors),3 affirmed that interpretation must be consistent with constitutional values
and that ambiguity must be resolved in a way that best promotes those values.4 Similarly,
this Court in Natal Joint Municipal Pension Fund v Endumeni Municipality 5 emphasised
that statutory interpretation is a unitary exercise, requiring consideration of language,
context, and purpose together. 6 These authorities underscore the importance of a
contextual, purposive, and constitutionally aligned approach to legislative interpretation.

[36] It is a fundamental tenet of our law of statutory interpretation that legislation must,
wherever possible, be read in a manner that is consistent with the Constitution. This
principle, often referred to as the doctrine of constitutional compliance, has bec ome a
cornerstone of modern interpretive methodology in South Africa. It requires courts to

2 Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869
(CC) para 28.

(CC) para 28.
3 Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd
and Others; In re: Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others [2000] ZACC 12;
2000 (10) BCLR 1079 (CC); 2001 (1) SA 545 (CC); 2000 (2) SACR 349 (CC) (Hyundai Motor Distributors).
4 Ibid para 22.
5 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA).
6 Ibid para 19.

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favour an interpretation of statutory provisions that upholds, rather than undermines,
constitutional rights and values.

[37] Section 39(2) of the Constitution specifically directs that when interpreting any
legislation, every court, tribunal, or forum must promote the spirit, purport, and objects of
the Bill of Rights. This interpretive injunction means that if a statutory provision is
reasonably capable of more than one meaning, the meaning that is consistent with the
Constitution should be preferred. Therefore, courts are not permitted to adopt an
interpretation that would render the provision unconstitutional if a constit utionally
compliant construction is reasonably possible.

[38] This approach was articulated by the Constitutional Court in Hyundai Motor
Distributors, as follows:
‘Accordingly, judicial officers must prefer interpretations of legislation that fall within constitutional
bounds over those that do not, provided that such interpretative approach can be reasonably
ascribed to the section.’

[39] The Constitutional Court further emphasised that ambiguity is not a prerequisite
for the application of this principle – wherever a statute is reasonably capable of a
meaning that avoids constitutional invalidity, that meaning ought to be adopted. This
ensures that legislati ve intent is realised as far as possible without encroaching upon
constitutional rights.

Context and purpose
[40] Given the legal principles outlined above, s 136(2) must also be interpreted within
the broader framework of Chapter 6 of the Companies Act, which regulates business
rescue proceedings. That chapter sets out the statutory framework for business rescue
proceedings in South Africa. Its provisions empower business rescue practitioners
temporarily to suspend or apply for the cancellation of certain company obligations arising
from agreements concluded before the commencement of business rescue proceedings.

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[41] The primary purpose of business rescue proceedings, as set out in s 128(1)(b), is
to facilitate the rehabilitation of a financially distressed company by providing for the
temporary supervision of the company , a temporary moratorium on legal proceedings
against it, and the development and implementation of a business rescue plan to
maximise the likelihood of the company continuing on a solvent basis. Where this is not
possible, the aim is to achieve a better return for the company's creditors and
shareholders than would result from immediate liquidation.

[42] In Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein
(Kyalami) (Pty) Ltd and Others,7 this Court clarified that business rescue is not intended
to delay inevitable liquidation, but rather to provide an opportunity for viable restructuring
or, at the very least, to secure a more advantageous outcome for stakeholders. 8 This
reflects a policy preference for rescue and rehabilitation over liquidation, aligning with
broader constitutional values of fairness and the protection of economic activity. The
overall aim of business rescue is to facilitate the rehabilitation of fi nancially distressed
companies, protect the interests of stakeholders, and ensure that decisions made during
business rescue proceedings are just, reasonable, and aligned with legislative intent.

[43] Business rescue places a company under the temporary control of registered
practitioners, who assume full management authority as outlined in s 140. If rescue
appears feasible, these rescue practitioners must draft a plan for creditors and other
voting stakeholders detailing debt repayment strategies and steps to meet the goals of
s 128(1)(b). In addition, s 136(2)(a), establishes a general pause on legal actions against
the company or its assets, with exceptions.

[44] In addition to s 136(2)( a), the other relevant provisions are: s 133 , which
establishes a general pause on legal actions against the company or its assets, with

establishes a general pause on legal actions against the company or its assets, with
exceptions; s 134(1)(c) which prohibits persons from exercising rights over property in the

7 Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd and Others
[2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All SA 303 (SCA).
8 Ibid para 22.

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lawful possession of the company, without the written consent of the business rescue
practitioner; and s 135(1) which ensures that monies due to employees during the
business rescue process are prioriti sed and repaid at the end of the business rescue
process.

The high court’s findings
[45] The high court determined that, according to conventional rules of grammar and
syntax, the terms ‘arrangement’ or ‘understanding’ must be interpreted as requiring an
agreement between two or more parties, which is intended to establish rights and
obligations among those parties. The fundamental characteristics of all these instruments
is mutual assent and an intention to establish rights and obligations inter partes. This
definition is applied exclusively on a horizontal basis, such that rights and obligations
conferred vertically by the state through legislation are excluded from its scope

The parties’ submissions
[46] The appellants argue that s 136(2) empowers business rescue practitioners to
suspend any obligation arising between parties under agreements, including the SI
Agreement, when a company enters business rescue. This is so regardless of the source
of the obligation, provided it arises from an agreement. They maintain that the Act defines
‘agreement’ broadly, encompassing contracts, arrangements, and understandings – even
those without all the usual elements of a contract – so the power to suspend is wide -
ranging.

[47] They criticise the high court for interpreting ‘agreement’ too narrowly and assert
that their interpretation better supports the business rescue objectives of the Companies
Act. They clarify that they only seek to suspend THL’s specific payment obligations under
the SI Agreement – not the entire agreement – including industry levies and redistribution
payments, which they say are debts between millers, not regulatory charges.

[48] The appellants argue further that these obligations do not have preferential status

[48] The appellants argue further that these obligations do not have preferential status
in business rescue and SASA should not be prioritised over other creditors, in line with

16

the Company Act's ranking of claims. Finally, they rely on the sugar industry's regulatory
history, asserting that SASA is an industry association, not a regulator, and that the SI
Agreement is a contractual arrangement formalised by legislation, and does not constitute
regulatory law.

[49] The respondents support the high court’s view that, although the Companies Act
offers a broad definition of an agreement, every element within that definition depends on
consensus or mutual assent . They argue that the section’s wording clearly requires
consensus for an arrangement to qualify as an 'agreement' under the Companies Act. It
is trite that mutual assent is a foundational requirement for the existence of a valid
agreement under South African law. No alternative interpretation is supported by the text.
If the legislature intended to allow agreements without consensus, it would have stated
this explicitly. Therefore, suggesting that consensus is not required simply because the
section does not use the word ‘consensus’ ignores the ordinary meaning of ‘agreement’.

Discussion and analysis
[50] It is established law that an agreement is generally understood to require at least
some minimum manifestation of mutual assent between two or more parties.9 The Shorter
Oxford Dictionary variously defines the term ‘agreement’ to mean ‘a coming into accord;
a mutual understanding; a covenant, or treaty’ and ‘a contract, duly executed and binding’.
The definition in the Companies Act includes ‘any contract, arrangement, or
understanding between two or more parties that purports to create rights and obligations
between or among those parties,’ which inherently presupposes some form of consensus.
Thus, on every conceivable textual interpretation , the term presupposes some measure
of mutual assent.

9 Conradie v Rossouw 1919 AD 279 at 320 to 321, where the following was stated:
‘This disposes of the exception. According to our law if two or more persons, of sound mind and capable

of contracting, enter into a lawful agreement, a valid contract arises between them enforceable by action.
The agreement may be for the benefit of the one of them or of both (Grotius 3.6.2). The promise must have
been made with the intention that it should be accepted (Grotius 3.1.48); according to Voet the agreement
must have been entered into serio ac deliberate animo [with serious and deliberate intend]. And this is what
is meant by saying that the only element that our law requires for a valid contract is consensus, naturally
within proper limits - it should be in or de re licita ae honesta [in a matter that is lawful and honest].’

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[51] I disagree with the appellants’ assertion that the inclusion of the terms ‘any’ and
‘including’ indicates an intent to extend the definition of agreement beyond instruments of
a contractual nature arising from mutual consent. It is established law that the word
‘includes’ in statutory definitions can mean either ‘including but not limited to’ or the
equivalent of ‘means’, depending on the context. 10 On the appellants’ interpretation,
‘agreement’ would encompass the SI Agreement as well as liabilities created therein. This
interpretation fails to recogni se that the Companies Act defines ‘agreement’ as
instruments entered into between two or more parties, which serve to establish rights and
obligations between those parties, or purports to do so.

[52] The assertion that the definition of an agreement under the Companies Act should
encompass instruments where there is no mutual assent is manifestly fallacious.
Typically, an agreement refers to an arrangement between two or more parties
established throug h mutual assent. While the statutory definition may include other
instruments that also reflect characteristics of consensus, such as an ‘arrangement’ or
‘understanding’, it does not necessarily follow that the inclusion of these concepts implies
that instruments lacking mutual assent were intended to be covered by the definition.
Therefore, despite the breadth of the statutory language, the core requirement of
consensus remains. Other than the fact that it is called an ‘agreement’, the SI Agreement
– a sta tutory instrument imposed by the Minister under s 2 of the Sugar Act after
consultation with SASA – lacks the fundamental characteristics of a covenant established
through mutual assent.

[53] The language of the section – although broad – nevertheless assumes that parties
are consciously entering into a relationship intended to create binding rights and
obligations. For example, a shareholders’ agreement that sets out voting rights or

obligations. For example, a shareholders’ agreement that sets out voting rights or
procedures for appointing directors exemplifies an ‘arrangement’ or ‘understanding’ under
s 136, as it results from the consensus of private parties and their mutual assent. In
contrast, obligations imposed directly by government regulation, such as statutory
requirements for tax payments, are not the product of mutual agreement but are ‘vertical’

10 Estate Brownstein v Commissioner for Inland Revenue 1957 (3) SA 512 (A).

18

in nature – meaning they are imposed by the state upon individuals or entities. Thus, a
person or entity may be a party to a contract, but not to legislation itself.

[54] This interpretation is further supported by the provisions of s 133(1)(f).11 By its
express terms, this provision establishes a moratorium on legal proceedings against a
company in business rescue, shielding it from litigation and enforcement actions that
could disrupt the rescue process. This moratorium is designed to give the company
breathing space, allowing the bu siness rescue practitioner to develop and implement a
plan for recovery without the immediate threat of creditors’ claims. However, section
133(1)(f) creates a specific exception to this general rule: “nothing in this section
precludes a regulatory authority from instituting enforcement proceedings in the execution
of its duties, after giving written notification to the business rescue practitioner.” For the
reasons which I explain below, SASA qualifies as a regulatory authority.

[55] The clear language of the exemption ensures that regulatory authorities –
entrusted with oversight and enforcement in the public interest – are not impeded from
carrying out their statutory responsibilities, such as maintaining market integrity, public
safety, or compliance with regulatory frameworks. The relationship between s 133 and s
136 thus becomes pivotal in the statutory interpretation of the latter provision . Section
136(2)(a), which empowers business rescue practitioners to suspend obligations under
agreements, cannot logically extend to overriding the exemption provided by s 133(1)(f).
Allowing such an override would undermine the le gislative intent to preserve regulatory
oversight during business rescue. The anomaly arises because s 133(1)( f) deliberately
excludes regulatory enforcement from the moratorium, recognizing the necessity of
continued statutory compliance and protection of the public interest, whereas s 136(2)(a)

continued statutory compliance and protection of the public interest, whereas s 136(2)(a)

11 That section provides, in relevant part:
‘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 –
. . .
(f) proceedings by a regulatory authority in the execution of its duties after written notification to the business
rescue practitioner.’

19

is meant to facilitate the restructuring of contractual obligations – not statutory duties. If
business rescue practitioners could use s 136(2)(a) to suspend obligations that regulatory
authorities are empowered to enforce under s 133(1)(f), it would create a practical conflict:
regulatory compliance could be frustrated, and the statutory purpose of the regulatory
exemption would be nullified. This would erode the balance between enabling corporate
recovery and maintaining essential public oversight, a result clearly not contemplated by
the legislature. Therefore, the interpretation advanced by the appellants, which suggests
s 136(2)(a) could be used to circumvent the regulatory exemption in s 133(1)( f), is not
only textually unsupported but also inconsistent with the broader statutory scheme and
its underlying objectives.

[56] In summary, I find that the definition of an agreement under the Companies Act
contemplates a covenant concluded by parties through mutual assent, creating rights and
obligations inter partes. Statutory instruments imposed by government do not meet this
definition because they lack consensus. Liabilities imposed by statute, or subordinate
legislation, therefore fall outside the scope of s 136(2).

Are liabilities arising from the SI Agreement subject to suspension under
s 136(2)(a)?
The Sugar Act
[57] The regulation of the South African sugar industry operates within a
comprehensive statutory framework designed to safeguard the interests of growers,
millers, and refiners. Central to this regulatory landscape is the SI Agreement, which
governs market acc ess, pricing mechanisms, and the allocation of industry revenues.
Therefore, d etermining whether the agreement qualifies as a statutory instrument
requires an examination of public interest factors, the sector's historical evolution, and the
key provisions contained in both the SI Agreement and the Sugar Act.

[58] There are compelling public interest and industry considerations for the regulation

[58] There are compelling public interest and industry considerations for the regulation
of the sugar industry through legislation. First, growers of sugar cane face a highly
concentrated market: they have only one channel through which to sell their cane in

20

volume, and this market is divided among just six millers. Second, in addition to these
risks, the global sugar market is characterised by significant distortions. Accordingly, the
price regulation mechanism outlined in the SI Agreement is essential for supporting the
continued viability of local producers. Third, without statutory regulation, individual
growers, especially small -scale farmers , would be at a significant disadvantage in
negotiations with millers due to their limited market and financial powe r. This imbalance
could enable millers to impose unjustifiably low prices on growers. Statutory regulation
through the SI Agreement addresses this challenge by providing for a fair sharing of
earnings and enabling more balanced supply agreements. The provisions of the Sugar
Act should be interpreted with consideration of these essential factors.

[59] Before outlining the provisions of the Sugar Act, it is important first to review those
of its predecessor, the Sugar Act 28 of 1936 (the 1936 Act), to establish historical context.
The enactment of the 1936 Act represented a significant development in sug ar industry
regulation, promoting coordinated efforts among growers, millers, and refiners during a
period when industry stability was essential for economic advancement.

[60] The provisions of the 1936 Act gave legislative recognition to the cooperative and
contractual arrangements between millers and growers. Unlike the current Sugar Act, the
1936 Act primarily vested in the Minister the power to publish an agreement concluded
by the industry role players. Section 1 of the 1936 Act authorised the Minister to publish
in the Gazette an agreement entered into between representatives of growers, millers
and refiners if such an agreement had been approved by at least 90% of the growers who
together had produced not less than 90% of the cane grown in South Africa during that
time, and if it was in the public interest.

time, and if it was in the public interest.

[61] It was only if no agreement under s 1 of the 1936 Act had either been concluded
or published that the Minister was authorised under s 2 of the Act to determine the terms
of an agreement between growers, millers and refiners, if it was in the interests of t he
sugar industry. On publication, the agreement became binding on every grower, miller
and refiner that received a quota in respect of the manufacture of sugar, ‘as if it had been

21

an agreement or amending agreement, as the case may be, signed by such grower, miller
or refiner’.

[62] In terms of s 6 of the 1936 Act , the Minister could, by notice in the Gazette,
prescribe specific prices, quantities, and grades of sugar. In terms of s 8 of th at Act,
publication in the Gazette of any agreement or amending agreement served as prima
facie proof of the terms of the agreement, and of the compliance with prerequisites to its
conclusion. Publication thus served an evidentiary purpose, providing certainty as to the
terms of the agreement.

[63] The cooperative framework established by the 1936 Act laid the foundation for later
regulatory measures, including those found in subsequent versions of the Sugar Act. This
legislative approach influenced the ongoing governance of the industry, ensuring th at
future statutory frameworks continued to facilitate cooperation and certainty among
industry participants.

[64] The Sugar Act marked a significant transformation in the regulation of the industry.
It sets out the legal framework for the regulation and governance of the South African
sugar industry, consolidating earlier legislation and providing for matters incidental to the
industry’s operation.

[65] The Sugar Act defines key terms, including ‘Agreement’ (referring to the SI
Agreement under s 4), ‘Association’ ( SASA established under s 2), and, importantly,
stipulates that ‘this Act’ includes the SI Agreement itself, notices issued under s 6 of the
Sugar Act, and regulations made under s 10 of the Act. The S I Agreement is therefore
accorded the same status as the regulations.

[66] In terms of s 2 of the Sugar Act, SASA is established as a juristic person. Its
constitution’s terms are to be published by the Minister in the Gazette, and any
amendments must also be published. The Registrar of Companies registers the
Association as a statutory body.

22

[67] Section 4 of the Sugar Act provides that the Minister, after consulting SASA,
determines the terms of the SI Agreement.12 The SI Agreement is binding on all industry
participants (growers, millers, refiners) and is published in the Gazette. The SI
Agreement’s scope includes designation of agricultural products subject to its terms;
regulation and control (or prohibition) of production, marketing, and exportation;
confiscation or destruction of products in contravention; and formulas for determining
prices paid by millers to growers.

[68] Importantly, s 4(2)(g) of the Sugar Act provides that the SI Agreement must include
the right of the Association to impose levies upon growers, millers and refiners for the
purpose of giving effect to the terms of the SI Agreement and for the purpose of enabling
SASA to fulfil its obligations in accordance with its constitution.13

[69] SASA may prescribe maximum industry prices for sugar products through notice
in the Gazette, and these prices may vary by grade, type, or location. All growers, millers,
and refiners are to be treated equally under the SI Agreement, unless expressly provided
otherwise for specific classes or categories. SASA can impose surcharges on purchases
or acquisitions of sugar or molasses, specifying the methods of collection, payment, and

12 Section 4 provides:
‘Sugar Industry Agreement –
(1)(a) The Minister shall after consultation with the Association determine the terms of an agreement to be
known as the Sugar Industry Agreement, which shall provide for, and deal with, such matters relating to the
sugar industry as are, in the opinion of the Minister, in the interests of that industry b ut not detrimental to
the public interest.
(b)(i) The Minister may at the instance of, or after consultation with, the Association, amend the Agreement
if the Minister is satisfied that such amendment is in the interests of the sugar industry and not detrimental
to the public interest.

to the public interest.
(ii) Unless the Association requests otherwise, a n amendment may be made with re trospective effect to a
date not earlier than the date of commencement of the year during which the amendment is published
under paragraph (c).
(c) The Minister shall publish the Agreement and any amendment thereof by notice in the Gazette,
whereupon the Agreement or such amendment shall become binding upon every grower, miller and refiner.’
13 Section 4(2) provides:
‘Without derogating from the generality of subsection (1)(a), the matters with reference to which the Minister
may provide for, and deal with, in the Agreement, shall include –
(g) the imposition of levies upon growers, millers and refiners for the purpose of giving effect to the terms
of the Agreement and for the purpose of enabling the Association to fulfil any obligation incurred by it in
accordance with its constitution.’

23

use of surcharges. Notices regarding prices or surcharges may be revoked or amended
as needed. It is also noteworthy that, within this context, SASA is authorised under s
4(2)(d) of the Sugar Act to establish a formula for determining the price that millers must
pay to growers for sugar cane or any other agricultural product.

[70] As stated, the SI Agreement also regulates the local market redistribution
proceeds, which constitute amounts collected by SASA for pooling and sharing amongst
millers. This revenue -sharing framework is structured to facilitate a fair allocation of
domestic market earnings among growers, millers, and refiners, thereby shielding these
stakeholders from the uncertainties and risks associated with the export market.

The high court’s findings
[71] The high court found that the SI Agreement constitutes subordinate legislation and
that, a fortiori, SASA is a regulatory body established by statute. This finding was based,
amongst others, on the following considerations: (a) the fact that the Minister is entitled
in terms of s 4(1)(a) of the Sugar Act to determine the terms of the SI Agreement on her
own after consultation with SASA; (b) the Minister’s powers to prescribe penalties for non-
compliance with provisions of the SI Agreement in terms of s 4(3) of the Sugar Act; (c)
judicial authority for the proposition that the SI Agreement is legislative in nature; and (d)
the definition of ‘this Act’ in the Sugar Act which includes the SI Agreement, according it
the same status as regulations promulgated under the Sugar Act.

The parties’ submissions
[72] The appellants submit that two textual elements of the Sugar Act suggest that the
SI Agreement constitutes a sui generis agreement. They contend that s 4(1)( a) of the
Sugar Act refers to the SI Agreement explicitly as an ‘agreement’. Had the legislative
intent been to establish something other than an agreement, the provision would have

intent been to establish something other than an agreement, the provision would have
authorised the Minister, for instance, to promulgate regulations identified as the SI
Agreement.

24

[73] Second, the appellants submit that a comparison between s 4, on the one hand,
and ss 6 and 10 of the Sugar Act, on the other, supports their argument, as the latter
sections clearly confer authority for the creation of subordinate legislation. Specifically ,
s 6 of the Sugar Act authorises SASA, through publication in the Gazette, to set the
maximum industry price for sugar industry products, while s 10 enables the Minister to
formulate regulations addressing various matters. According to the respondents t his
distinction is significant because it demonstrates that s 4 does not grant similar powers,
thereby limiting the scope for subordinate legislation under its provisions. They argue that
unlike ss 6 and 10, which explicitly provide mechanisms for regulatory action, s 4 lacks
such language, indicating a narrower legislative intent and reinforcing the point that the
SI Agreement is sui generis rather than a legislative instrument.

[74] The respondents argue that the Sugar Act was intentionally designed as a statutory
regulatory framework to govern the sugar industry. Under s 4 of the Sugar Act, the Minister
holds the authority to determine and amend the terms of the SI Agreement after consulting
with SASA, and these terms are imposed as a matter of law upon all industry participants
upon publication in the Gazette. Compliance with the SI Agreement is thus mandatory for
growers, millers, and refiners, with penalties for non -compliance, hig hlighting the
legislative — not contractual — nature of the SI Agreement.

[75] The respondents further contend that the SI Agreement operates like a statutory
regime, with the Minister empowered to prescribe offences and penalties for breaches,
thereby ensuring sectoral regulation in line with public and developmental interests. The
SI Agreement is intended to create a fair and competitive environment by addressing
unique challenges in the sugar industry, such as global market distortions, power

unique challenges in the sugar industry, such as global market distortions, power
imbalances, and regional economic dependency. The regulatory measures within the SI
Agreement — such as quality standards and pricing benchmarks – are designed to
support the sector and broader societal objectives.

[76] The respondents support the high court’s determination that, while the Companies
Act provides a broad definition of an agreement, the rights and obligations established

25

under the SI Agreement are not private law rights and obligations derived from mutual
agreement. Instead, these rights and obligations carry the force of law and cannot be
suspended by a rescue practitioner.

Discussion and analysis
[77] The legislative scheme, as articulated in the Sugar Act, specifically delineates the
extent to which statutory provisions govern the rights and obligations of industry
participants and establishes the regulatory authority of SASA. The question then arises
whether the SI Agreement constitutes subordinate legislation or, as contended by the
appellants, is merely an agreement between the sugar industry role players. The answer
to this question determines if business rescue practitioners have the power to suspend
obligations arising from the SI Agreement under s136(2)(a).

[78] As stated earlier, s 1 of the Sugar unambiguously confers upon the SI Agreement
the same status as regulations promulgated thereunder. This, in my view, is a compelling
indicator that the obligations under the SI Agreement are statutory in nature.

[79] Moreover, in accordance with s 4(1)(a) of the Sugar Act, the Minister determines
the terms of the SI Agreement following consultation with SASA. Unlike the 1936 Act,
which required the Minister to publish an agreement negotiated by industry stakeholders,
the current Sugar Act expressly grants the Minister the authority to set the terms of the SI
Agreement, after consulting with SASA. It is well-established in our jurisprudence that the
phrase ‘after consultation with’ does not require consensus. In Premier, Western Cape v
President of the Republic of South Africa (Premier, Western Cape),14 the Constitutional
Court affirmed that a Minister may exercise his or her powers following the requisite
consultation.15 Consequently, while the Minister is obligated to seek input from SASA,
there is no requirement to adopt its recommendations if the Minister considers them
contrary to the best interests of the sugar industry.

contrary to the best interests of the sugar industry.

14 Premier, Western Cape v President of the Republic of South Africa [1999] ZACC 2; 1999 (3) SA 657
(CC); 1999 (4) BCLR 383 (Premier, Western Cape).
15 Ibid para 85.

26

[80] Section 4(1)(c) of the Sugar Act stipulates that, once published by the Minister in
the Gazette, the SI Agreement or any amendments thereto become binding on all
growers, millers, and refiners. Thus, t he enforceability of the SI Agreement within the
industry is not contingent upon the consent or agreement of any individual stakeholder.

[81] Considering this statutory context and applying the test articulated by this Court in
Retail Motor Industry Organi sation and Another v Minister of Water and Environmental
Affairs and Another,16 it is, in my view, clear that the SI Agreement constitutes subordinate
legislation. First, the SI Agreement has a general application, extending to the entirety of
the sugar industry. Second, it pertains to the implementation of a particular policy,
specifically, the regulation of the sugar industry to serve the interests of both industry
stakeholders and the broader national economy. Third, its provisions are prospective in
nature, establishing consequences for all industry stakeholders following their publication
in the Gazette. Fourth, the SI Agreement is designed to remain in effect indefinitely,
subject only to amendments promulgated by the Minister. Finally, it require s formal
publication in the Gazette before acquiring the force of law , and provides for additional
administrative measures, such as the prescription of penalties in terms of s 4(3) to ensure
its effectiveness. These distinctive features of subordinate legislative instruments set the
SI Agreement apart from other forms of administrative action.

[82] This conclusion also significantly impacts the enforceability of s 136(2) (b)
regarding liabilities associated with the SI Agreement. That section permits a practitioner,
with court approval, to ‘entirely, partially, or conditionally cancel any obligation’ as referred
to in subsection 2(a). However, as stated, the language and intent of this provision are

to in subsection 2(a). However, as stated, the language and intent of this provision are
confined to obligations arising under agreements to which the company is a party; it does
not, and cannot, authori se the cancellation or suspension of statutory obligations or
legislative instruments. The principle of legality dictates that subordinate legislation, once
promulgated, derives its force from an Act of Parliament and cannot be unilaterally set
aside by a business rescue practitioner. This interpretation is consistent with foundational

16 Retail Motor Industry Organi sation and Another v Minister of Water and Environmental Affairs and
Another [2013] ZASCA 70; [2013] 3 All SA 435 (SCA); 2014 (3) SA 251 (SCA) para 28.

27

constitutional principles and was affirmed in Premier, Western Cape , where the
Constitutional Court emphasi sed the distinction between administrative and legislative
powers and the limits of delegated authority.17

[83] Section 133(1) (f) is also of significant importance in this context. As previously
discussed, the provision permits enforcement actions by regulatory authorities during
business rescue, thereby ensuring that regulatory compliance and enforcement are not
subordinated to business rescue proceedings. This upholds the precedence of public law
obligations over private arrangements.

[84] This statutory context naturally leads to the question of SASA’s status and role as
a regulatory authority within the sugar industry. Contrary to the appellants’ assertions,
SASA’s regulatory status is firmly anchored in legislative history, statutory text , and
authoritative case law. Section 1 defines a ‘regulatory authority ’ to include any entity
established by national or provincial legislation responsible for regulating an industry or
sector thereof. SASA is not a mere association acting for the in terests of its members;
rather, it is a statutory body incorporated by the Sugar Act, with its constitution
promulgated by Ministerial notice in the Gazette. The legislative framework explicitly vests
SASA with regulatory functions, including the administr ation and enforcement of the SI
Agreement, which itself constitutes subordinate legislation.

[85] This conclusion is further supported by several judgments in which courts have
affirmed the statutory character of the SI Agreement. In Sugar Industry Central Board and
Another v Hermannsburg Mission and Another 1983 (3) SA 669 (A)18 this Court endorsed
an earlier finding that the SI Agreements (under the 1936 Act) were subordinate
legislation:
‘In W H Hindson and Co Ltd v Natal Estates Mill Group Board and Others 1941 NPD 41 at 48-49
SELKE J said this:

17 Premier, Western Cape para 8.

SELKE J said this:

17 Premier, Western Cape para 8.
18 Sugar Industry Central Board and Another v Hermannsburg Mission and Another 1983 (3) SA 669 (A) at
690 C-G.

28

“The sugar industry in Natal is governed by and organised pursuant to a Union statute known as
the Sugar Act 28 of 1936, and an agreement called the Sugar Industry Agreement, which has
statutory force, and is binding upon substantially all sugar growers, millers and refiners engaged
in the industry.
The Agreement amounts virtually to a code providing for the organisation of the whole industry
upon something of a co-operative basis. So far as is now relevant it divides those engaged in the
industry into two main classes: (a) growers, and (b) millers; and it then proceeds by a series of
elaborate provisions to establish machinery for regulating and adjusting the respective rights and
obligations as between growers and millers, and as between the members of these two classes
inter se.”’19

[86] In Even Grand 51 CC v Tongaat Hullet Ltd, 20 the court considered whether the SI
Agreement could confer appellate jurisdiction. In answering this question, the court had
to consider the legal nature of the SI Agreement. The court found that the SI agreement
is clearly distinguishable from an agreement between the parties – e.g. an arbitration
agreement – which seeks to confer appellate jurisdiction on the High Court. The court
held that the agreement is therefore subordinate legislation, by the Minister, exercising
his powers in terms of the Sugar Act.

[87] The appellants criticised the high court’s reliance on this judgment, arguing that,
although finding that the SI Agreement constitute s subordinate legislation, the judgment
dealt with the issue of jurisdiction and does not address key issues such as payment
obligations under the SI Agreement or whether the SI Agreement created inter partes
obligations relevant to the Companies Act and business rescue provisions. They submit
that the judgment is manifestly wrong and, in any event, this Court is not bound by it.

[88] However, despite these criticisms, the reasoning in Even Grand remains pertinent

[88] However, despite these criticisms, the reasoning in Even Grand remains pertinent
and instructive. The court there clarified that the SI Agreement is not an ordinary contract
formed by consensus among parties, but rather a form of subordinate legislation enacted
by the Minister under statutory authority, with terms determined in the public interest after

19 Ibid at 690C-E.
20 Even Grand 51 CC v Tongaat Hullet Ltd Unreported Judgment, 2 November 2012, Case No: AR517/11.

29

stakeholder consultation. This distinction underscores that the SI Agreement’s obligations
are imposed by law, not mutual agreement, and thus are not subject to suspension or
cancellation as if they were merely contractual obligations between private parties.

[89] In Recycling and Economic Development Initiative of South Africa v Minister of
Environmental Affairs,21 this Court examined the legal status of the Waste Management
Plan promulgated under the National Environmental Management: Waste Act 59 of 2008.
The Court held that the Plan, once published in the Government Gazette by the Minister,
constituted subordinate legislation rather than a mere contractual arrangement. This
meant its provisions were binding on all industry participants, regardless of their individual
consent, and could not be unilaterally suspended or cancelled by private parties. The
Court emphasised that statutory obligations arising from such subordinate legislation
serve public interests and are subject to regulatory oversi ght, distinguishing them from
private contractual agreements.

[90] In summary, a holistic reading of the statutory framework, informed by legislative
history and jurisprudence, demonstrates that the SI Agreement’s obligations are statutory
in nature, immune from unilateral cancellation by business rescue practitioners, an d
subject to enforcement by SASA as a regulatory authority. The cumulative effect of these
provisions is to ensure that public law obligations and regulatory oversight remain
paramount, thereby safeguarding the integrity and orderly functioning of the suga r
industry.

[91] Once this conclusion is reached, the appellants’ contention that the payment
obligations in the SI Agreement arise from a consensual agreement between participants
in the sugar industry cannot be sustained. These obligations are not the result of
consensus among industry participants. Instead, they are imposed as a matter of law and

consensus among industry participants. Instead, they are imposed as a matter of law and
become binding upon promulgation by the Minister. As stated, n o mutual assent or

21 Recycling and Economic Development Initiative of South Africa v Minister of Environmental Affairs ;
Kusaga Taka Consulting (Pty) Ltd v Minister of Environmental Affairs [2019] ZASCA 1; [2019] 2 All SA 1
(SCA); 2019 (3) SA 251 (SCA).

30

agreement among the industry participants – or between the industry as a whole and the
Minister – is required for the SI Agreement and its obligations to acquire legal force.

[92] Two additional issues raised by the appellants remain for consideration. First, they
contend that even if this Court determines that the industry levies imposed by SASA are
not subject to suspension due to their statutory nature, the local market redistrib ution
proceeds, which are essentially payment obligations owed between millers, are
fundamentally different. According to the appellants, these obligations , at the very least,
constitute inter partes responsibilities arising from agreements or arrangements among
participants in the sugar industry. They can therefore be suspended by a rescue
practitioner during business rescue proceedings under s 136(a).

[93] In my view, this submission is untenable. The SI Agreement constitutes a statutory
instrument that assigns liabilities to all participants within the sugar industry. The
responsibility for redistribution payments is determined by SASA pursuant to its regulatory
authority and is analogous to the imposition of industry levies. Accordingly, neither
obligation may be suspended by a business rescue practitioner under s 136(2)(a).

[94] Secondly, the appellants argue that accepting the respondents ’ interpretation
would inappropriately grant SASA and industry participants a preference during business
rescue proceedings. Such a preference is not contemplated or provided for by the
Companies Act and is inconsistent with the order of claims in liquidation processes. In my
view, even if s 136(2)( a) affords such a preference, it aligns with the overarching
framework of business rescue under the Companies Act and accords with the objectives
of th e Sugar Act. The constitutional considerations pertaining to this argument are
addressed below.

Constitutional challenge
The high court’s findings

addressed below.

Constitutional challenge
The high court’s findings
[95] The high court disagreed with THL’s submission that the exclusion of statutory
obligations from the scope of s 136 arbitrarily differentiates between organs of state and

31

other persons or entities. It found that ‘it is the nature of the obligation imposed and not
the identity of the actor to whom the obligation is owed which is of importance for the
purposes of s 136(2) of the Companies Act.’ The section therefore does dis tinguish
between organs of state and other creditors.

[96] The high court also rejected THL’s argument that the inability to suspend statutory
obligations will create a preference for regulatory authorities in business rescue,
contradicting its concurrent ranking in liquidation. It found that this ‘is a consideration
which the practitioners ought to take into account when determining whether the business
is capable of rescue or whether a better return will result in liquidation.’ The High Court
found that the ranking therefore has no bearing on the constitutionality of s 136.

The parties’ submissions
[97] The appellants have advanced the following constitutional challenge in their
founding papers: first, they argue that s 136(2)( a) is under -inclusive and, as a result,
irrational or unconstitutional. Second, they contend that it is irrational and arbitrary to allow
creditors who are organs of state to demand immediate payment of debts solely on that
basis.

[98] To succeed with their constitutional challenge , the appellants must establish that
s 136(2) contravenes the provisions of s 9 of the Constitution, the absence of a legitimate
government purpose, or the absence of a rational relationship between the measure and
that purpose.22

[99] The appellants argue that the section arbitrarily distinguishes between debts owed
to private parties and those owed to regulatory bodies, even when the obligations are of
the same nature. Such differentiation is not grounded in any legitimate purpose or rational
basis, resulting in inconsistent application of legal rights and obligations, and undermining
the constitutional guarantee of equal treatment before the law.

the constitutional guarantee of equal treatment before the law.

22 New National Party v Government of the Republic of South Africa and Others [1999] ZACC 5; 1999 (3)
SA 191 (CC); 1999 (5) BCLR 489 para 48.

32

[100] To support this view, the appellants provide examples where statutory obligations,
though imposed by law, are essentially private in character. These include statutory duties
related to company management, municipal service fees, collective bargaining
agreements, and debts within sectional title schemes. In each case, the obligations arise
from legislative instruments but pertain to private or internal arrangements, not the
exercise of public power or the fulfilment of broader public interests. The appellants argue
that statutory origin alone does not justify elevating these obligations above those arising
from purely private contracts.

[101] Specifically in the context of the SI Agreement, the appellants emphasi se that
payment obligations – such as fees for services rendered by SASA or redistribution of
proceeds among industry participants – are contractual or quasi -contractual in nature.
They are not public taxes or penalties serving the public interest but are i nstead
obligations between defined parties within the industry. As such, the appellants contend,
there is no rational or legitimate justification for affording these types of debts preferential
protection over similar private obligations.

[102] The appellants maintain that not all obligations to regulatory bodies are public in
nature – many are private or contractual and should not be given preferential protection.
They assert that granting regulatory bodies priority in business rescue proceeding s, as
suggested by the respondents, creates unjustified and inconsistent treatment of creditors,
contradicting the intent of the business rescue framework and the established creditor
hierarchy. The appellants join issue with the high court’s analogy between the SI
Agreement obligations and statutory taxes, emphasi sing that the SI Agreement debts
benefit industry participants rather than serve public interests, and should not take
precedence over other creditor claims.

precedence over other creditor claims.

[103] The respondents assert that the Sugar Act establishes a statutory regulatory
framework for the sugar industry, with the Minister empowered to determine and amend
the terms of the SI Agreement. They contend that when the legislature promulgated the

33

Sugar Act, it deliberately chose a statutory framework to regulate the sugar industry,
rather than relying on the law of contract as the applicants contend.

Analysis and discussion
[104] Section 9 of the Constitution guarantees the rights to equal protection, non -
discrimination, and substantive equality. In terms of s 9(1), all individuals are equal before
the law and are entitled to equal protection and benefit of the law. This provision mandates
that persons in similar circumstances should receive similar treatment and be afforded
identical rights.23

[105] In Prinsloo v Van der Linde and Another,24 the Constitutional Court explained that
a statutory distinction is under -inclusive if it fails to include all persons who are similarly
situated, and that such differentiation will be arbitrary and unconstitutional if it is not
rationally connected to a legitimate governmental purpose.25 Similarly, in Harksen v Lane
NO and Others,26 the Constitutional Court set out the approach to equality challenges,
emphasising that a law that distinguishes between people in a way that is not rationally
connected to a legitimate purpose may be unconstitutional, particularly if it arbitrarily
excludes persons who are in fact similarly situated.

[106] It is important to note that this principle does not require uniform treatment for all
individuals in every circumstance, nor does every legal distinction constitute inequality.
Section 9(1) of the Constitution does not prohibit differentiation per se ; rather, if a
challenged provision distinguishes between categories of people, the state must act
rationally and differentiate only in a manner that serves a legitimate governmental
objective. Arbitrary regulation or the expression of unjustifiable prefer ences would
contravene the rule of law and the foundational principles of the constitutional state. 27

23 Van der Walt v Metcash Trading Limited [2002] ZACC 4; 2002 4 SA 317 (CC); 2002 (5) BCLR 454 para
24.

24.
24 Prinsloo v Van der Linde and Another [1997] ZACC 5; 1997 (6) BCLR 759; 1997 (3) SA 1012 (CC)
(Prinsloo).
25 Ibid para 24.
26 Harksen v Lane NO and Others [1997] ZACC 12; 1997 (11) BCLR 1489; 1998 (1) SA 300 (CC) (Harksen)
para 42.
27 Prinsloo paras 24-25.

34

Differentiation must, therefore, bear a rational connection to a legitimate governmental
purpose, failing which it would violate s 9(1) of the Constitution.

[107] When s 9(1) of the Constitution is invoked to challenge a statutory provision, two
main questions arise: first, does the impugned provision create distinctions between
categories of persons? Secondly, if differentiation exists, is there a rational link bet ween
the distinction made and the legitimate governmental aim it seeks to achieve? If such
differentiation is justified, it does not amount to a violation of s 9(1) of the Constitution. 28
In addressing the second enquiry, two further considerations are necessary: identifying
the legitimate purpose underlying the differentiation and assessing whether a rational
relationship exists between the distinction and its intended purpose.

[108] An obligation owed to an organ of state may be suspended under s 136(2) if it
arises from a contract or agreement. In contrast, obligations that stem from legislative
schemes and are owed to individuals other than organs of state do not qualify for
suspension under this provision. The crucial criterion in applying s 136(2) is thus the
nature of the obligation imposed, rather than the identity of the person upon whom it is
imposed. Importantly, s 136(2)(a) does not distinguish between organs of state and other
creditors.

[109] Given that there is no differentiation among persons or categories within the scope
of s 136(2)( a), no violation of s 9(1) of the Constitution occurs. As a result, it is
unnecessary to consider whether any such differentiation bears a rational connection to
a legitimate governmental objective.

[110] However, the appellants also contended before both the high court and this Court
that s 136 contravenes s 9(1) of the Constitution by arbitrarily differentiating between
debts owed to private individuals and those owed to regulatory bodies, even when the

debts owed to private individuals and those owed to regulatory bodies, even when the
debts arise from identical obligations. Their submission reste d on the Minister’s
acknowledgement that s 136(2) distinguishes between obligations owed under a

28 Harksen para 50.

35

regulatory regime to regulatory authorities and contractual debts owed to other creditors.
However, the Minister asserted that s 136(2) does not differentiate between organs of
state and private entities; rather, it distinguishes between regulatory obligations owed to
authorities and contractual debts owed to other creditors. Both organs of state and private
entities may pos sess debts arising either from contracts or from regulatory authorities
operating within a regulatory framework. Thus, the relevant dis tinction is based
exclusively on the source of the obligation – whether it derives from a regulatory regime
or a contractual arrangement.

[111] Furthermore, the Minister provided justification for excluding statutory obligations
from s 136(2)( a), demonstrating its rational connection to a legitimate governmental
purpose. In this regard, the Minister has shown compelling social and economic reasons
for protecting statutory obligations from the reach of rescue practitioners’ power under the
section. It is common ground that the exclusion seeks to protect, not only organs or state
industry role players, but also has broader public interest objectives. The legislature is
faced with the responsibility carefully to weigh tradeoffs in making policy choices. Its policy
decision to maintain the statutory obligations imposed by regulatory authorities in the
interests of their regulatory objectives over the rescue of companies in the more limited
interests of their creditors and shareholders, cannot be impugned on the grounds of
rationality.

[112] While the absence of rationality would render the impugned measure
unconstitutional, in assessing rationality, the court's focus should be confined to
determining whether the differentiation is arbitrary or lacks a rational link to a legitimate
government purpose, without evaluating potentially superior alternatives. Courts should
not scrutinise the policy choices of the legislature under the pretence of an irrationality

not scrutinise the policy choices of the legislature under the pretence of an irrationality
review. The inquiry is limited to determining whether the government can articulate a
logical and reasonable justific ation. The Constitutional Court in Weare and Another v
Ndebele NO and Others, explained that:
‘The question is not whether the government could have achieved its purpose in a manner the
court feels is better or more effective or more closely connected to that purpose. The question is

36

whether the means the government chose are rationally connected to the purpose , as opposed
to being arbitrary or capricious.’29

[113] Moreover, the exemption of statutory obligations from suspension under
s 136(2)(a) is directly connected to the purpose for which the power was conferred. It also
aligns with the goals of the business rescue framework in Chapter 6 of the Companies
Act. These goals include rescuing financially troubled companies or ensuring better
returns for creditors and shareholders. Section 136(2)(a) permits rescue practitioners to
suspend contractual obligations while excluding statutory obligations, which are imposed
by law with broader implica tions for industry regulation and the public interest. This
distinction ensures that, although distressed companies may receive relief from certain
private agreements, statutory requirements essential to the stability and fairness of – in
this case – the sugar sector, remain intact. Even if this sometimes limits the possibility of
fully rescuing a distressed company or maximising returns to creditors, the broader public
and regulatory interests take precedence. Thus, the section advances a balance between
private concerns and the overarching public interest in sustaining the industry.

[114] Ultimately, the legislative decision to exclude statutory obligations from suspension
during business rescue is a rational policy choice, supporting the orderly functioning of
industries and broader economic and societal interests. As I stated earlier, t he related
exemption for regulatory authorities in s 133(1) further ensures that statutory duties can
continue to be enforced during business rescue. Accordingly, the constitutional challenge
to s 136(2)(a) cannot be sustained.

[115] In the result, the following order is made:
1 The appeal is dismissed.

29 Weare and Another v Ndebele NO and Others [2008] ZACC 20; 2009 (1) SA 600 (CC); 2009 (4) BCLR

370 (CC) para 46; See also: Albutt v Center for the Study of Violence and Reconciliation, and Others [2010]
ZACC 4; 2010 3 SA 293 (CC); 2010 (2) SACR 101 (CC); 2010 (5) BCLR 391 (CC) para 51.

37

2 The appellants are to pay the costs of appeal of the first, second, third, fourth, seventh,
eighth and twelfth respondents. Such costs are to include the costs of two counsel where
so employed.




________________
J E SMITH
JUDGE OF APPEAL

38

Appearances:

For the Appellants: A Subel SC, I Goodman SC and M Mbikiwa
Instructed by Werksmans Attorneys, Johannesburg
MDP Attorneys, Bloemfontein

For the first & second respondents: PJ Wallis SC and LK Olsen
Instructed by: Garlicke & Bousfield, La Lucia
Honey Attorneys, Bloemfontein

For the third respondent: LN Harris SC and M Mtshali
Instructed by: The State Attorney, Durban
The State Attorney, Bloemfontein

For the fourth and twelfth
Respondents: AJ Troskie and S Powell
Instructed by: Garlicke & Bousfield, La Lucia
Neuhoff Attorneys, Bloemfontein

For the seventh Respondent: B Manca SC, D Robertson and C Kruyer
Instructed by: Webber Wentzel Attorneys, Johannesburg
McIntyre Van der Post, Bloemfontein

For the eighth Respondent: FAS Snyckers SC and AJ D’Oliveira
Instructed by: Cox Yeats Attorneys, Umhlanga
Symington De Kok Attorneys, Bloemfontein.