---

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG LOCAL DIVISION, PRETORIA)

 

(1)        REPORTABLE: YES/NO

(2)        OF INTEREST TO OTHERS JUDGES: YES/NO

(3)        REVISED

21879/2020

 

 

 

In the matter between:

 

ENGAGED BUSINESS TURNAROUND (PTY) LTD                                 Applicant

and

ZELPY 1363 (PTY) LTD                                                                                  First Respondent

JACOBUS HENDRIKUS JANSE VAN RENSBURG NO                          Second Respondent

[ In his capacity as first respondent’s business rescue practitioner ]

CHAVONNES BADENHORST ST’CLAIR COOPER NO                            Third Respondent

SHAWN GLENVILLE ROBERTS NO                                                        Fourth Respondent

[ In their capacities as the first respondent’s joint liquidators ]

THE COMPANIES AND INTELLECTUAL

PROPERTY COMMISSION                                                                                 Fifth Respondent

FIRST RESPONDENT’S AFFECTED PERSONS                                         Sixth Respondent

THE MINISTER OF MINERAL

AND ENERGY RESOURCES                                                                     Seventh Respondent

THE REGIONAL MANAGER OF MINERAL RESOURCES

NORTH WEST REGION, KLERKSDORP                                                     Eighth Respondent

 

JUDGMENT

 

BAQWA J:

INTRODUCTION

1.         This is an application in which the applicant who is a creditor of the second respondent seeks to rescind the final liquidation order granted by this Court on 23 May 2017.

2.         The application is brought in terms of Section 354 (1) of the Companies Act, 61 of 1973.

3.         Zelpy Goldmine (Pty) Ltd (“Zelpy Gold”) who has launched an application for leave to intervene, is opposing the application.

 

ISSUES TO BE DETERMINED

4.         There are two issues to be determined, namely, the application to intervene and the application to rescind the final liquidation order.

BACKGROUND

5.         The first respondent found itself in financial difficulties early in 2016 as a result of which it passed a resolution to commence business rescue proceedings.

6.         As business rescue proceedings commenced, the first respondent lodged an application for a mining right with the Minister of Mineral Resources who is the seventh respondent in this application.

7.         In the middle of 2016 Ralph Lutchman who was the business rescue practitioner came to the conclusion that there were no reasonable prospects of rescuing the first respondent and brought an application to this Court to place the first respondent into liquidation.

8.         A final order placing the first respondent into liquidation was granted on 23 May 2017.

9.         Subsequent to that order and on 20 September 2017 the mining right was granted to the first respondent.

10.      Evidently a mining right was a valuable asset in the estate of the first respondent and upon this realisation, the applicant applied to the High Court, North West Division for the suspension of the liquidation proceedings and to place the first respondent under business rescue.

11.      The second respondent was appointed as the first respondent’s business rescue practitioner and on 23 March 2020, a business rescue plan in terms of which first respondent’s shares were to be sold to a company known as ‘B owned’ was adopted by 100% of the creditors and the majority shareholders of the first respondent. The intention was to raise capital to commence mining operations.

12.      Subsequent to these developments the applicant launched the main application during May 2020 which was opposed by Zelpy Gold during September 2020.

INTERVENTION APPLICATION

13.      Zelpy Gold lodged an application to intervene in terms of Rule 12 of the Uniform Rules of Court on the basis that it had been granted the same mining right as the first respondent.

14.      As proof of the granting of the right Zelpy Gold annexed a document marked “TM4” which reads as follows:

“…I hereby confirm that your application for mining right to mine gold ore in terms of Section 22 of the MPRD Act…has been accepted. Acceptance of your application does not grant you the right to commence with mining operations. Your application will be evaluated/processed and recommendation on the granting/refusal of the right will be forwarded to the Minister or her delegate.

[signed]

Regional Manager

North West Region”

15.      Section 22 (1) to Subsection (5) of the Mineral and Petroleum Resources Development Act 28 of 2002 (“the MPRDA”) provides for the process of applying for mining rights and states that:

“22. (1) Any person who wishes to apply to the Minister for a mining right must lodge the application— (a) at the office of the Regional Manager in whose region the land is situated….

(4) If the Regional Manager accepts the application, the Regional Manager must, within 14 days from the date of acceptance, notify the applicant in writing—

(a) to conduct an environmental impact assessment and submit an environmental management programme for approval in terms of section 39, and

(b) to notify and consult with interested and affected parties within 180 days from the date of the notice.

(5) The Minister may by notice in the Gazette invite applications for mining rights in respect of any land, and may specify in such notice the period within which any application may be lodged and the terms and conditions subject to which such rights may be granted.”

16.      Section 22 does not provide for the granting of a mining right but merely for an acceptance of an application. This is the acceptance referred to in annexure “TM4” referred to above. “TM4” does not provide proof of a mining right. Mining rights are granted by the seventh respondent, namely, the Minister of Minerals and Energy Resources in terms of Section 23 of the MPRDA. In the circumstances, Zelpy Gold Mine has not yet been granted any mining rights but their application for mining rights has been accepted.

17.      What appears to be a challenge to the intervening applicant is that Zelpy Gold’s application pertains to property described as: “400 IP (excluding portion 81), situated in the magisterial district of Rustenburg”.

18.      The first respondent’s mining right appears on annexure “FA3” which refers to a mining right over the farm: “400 IP (excluding 81) situated in the magisterial district of Klerksdrop”. Clearly, thus is not the same district applied for by Zelpy Gold.

19.      During the hearing of the application for intervention Cilliers S.C submitted that this was an error on the part of the Department of Minerals and Energy (DMR). This submission does not however assist Zelpy Gold in that this Court cannot amend a document issued by the DMR.

20.      Mr Vorster S.C in opposing the application for intervention points out that Zelpy Gold cannot disavow the contents of “TM4” in the light a statement under oath by Ontiretse Mathews Senosi in support of the application for intervention in which he said:

“3.1      I am advised that the main application before the above Honourable Court in terms of Section 354 (1) of the Companies Act 81 of 1913 (“the Companies Act”) is premised on the alleged fact that the first respondent, Zelpy 1363 (Pty) Ltd is the holder of a mining right over the farm…400 IP (excluding portion 81) situated in the magisterial district of Rustenburg as evinced by annexure “FA3” in the main application.

3.2       The same right, without getting into the merits of the first respondent’s claim and the averments by the applicants was awarded to the intervening party.”

21.      A cursory reading or comparison of “TM4” and “FA3” shows that we are not dealing with the same property and that we cannot therefore be dealing with the same mining right.

22.      In the circumstances, it is evident that Zelpy Gold applied for a mining right in respect of a different magisterial district than the first respondent and consequently, there can be no effect on the rights of Zelpy Gold. In the result Zelpy Gold has no direct and substantial interest in the main application.

MAIN APPLICATION

23.      Section 354 (1) of the Companies Act 61 of 1973 provides that:

“(1)      The Court may at any time after the commencement of a winding side winding-up -up, on the application of any liquidator, creditor or member, and on proof to the satisfaction of the Court that all proceedings in relation to the winding-up ought to be stayed or set aside, make an order staying or setting aside the proceedings or for the continuance of any voluntary winding-up on such terms and conditions as the Court may deem fit.

(2)       The Court may, as to all matters relating to a winding-up, have regard to the wishes of the creditors or members as proved to it by any sufficient evidence.”

24.      In Klass v Contract Interiors CC (In liquidation) and Others 2010 (5) SA 40 (W) at para 65 to 65.4 the discretionary powers which the Court possesses under Section 354 were set out as follows:

“…the Courts discretion is practically unlimited, although it must take into account surrounding circumstances and the wishes of the parties in interest, such as the liquidator, creditors and members;

…the Courts should ordinarily not set aside a winding-up where creditors or the liquidators remain unpaid or inadequate provision has been made for the payment of their claims;

…where the claims of the liquidators and all creditors have been satisfied the Court should have regard to the wishes of the members…;

…in deciding whether or not to grant a setting aside order, the Court should, where appropriate, have regard to issues of ‘commercial morality’, the public interest and whether the continuation of the winding up ‘the instrument of injustice’.”

25.      In the present case the evidence tendered shows that the business rescue plan was approved by 100% of the creditors together with a majority of the shareholders of the first respondent.

26.      The evidence further demonstrates that business rescue plan provides for the sale of shares in the first respondent to B Owned (Pty) Ltd which has the capacity to fund future mining activities which, in turn, has the potential to create 152 employment opportunities. The plan also provides for the payment of a 100% dividend to the employees of the first respondent who constitute a creditor to the value of R809 000.00 and the payment of a dividend in the amount of 30c/R1 to the remaining creditors on full and final settlement of the claims against the first respondent.

27.      Over and above the aforesaid arrangements R3 million would be paid by B Owned to the second respondent in his capacity as the business rescue practitioner to cover his fees and the fees of the third and fourth respondents in their capacities as joint liquidators. In addition, an amount of R5 million would be held on trust by Theron, Jordaan and Smit Inc Attorneys for the benefit of the Attorneys for the benefit of the second respondent as business rescue practitioner and a further amount of R5 million by way of an overdraft facility would be made available to fund any mining operations of the first respondent.

28.      The evidence summarised above seems to encompass all the surrounding circumstances and the wishes of parties who have an interest in this matter and I accept that it justifies an exercise of this Court’s discretion in favour of the applicant but before doing so there is one more factor to consider.

29.      It is common cause that the first respondent was placed in final liquidation on 23 May 2017 and that on 20 September 2017 a mining right was granted to the first respondent.

30.      Section 56 (d) of the MPRDA provides that:

“56.      Any right, permit, permission or licence granted or issued in terms of this Act shall lapse, whenever: -

(d)       … the holder is liquidated or sequestrated…”

31.      What has to be considered therefore is whether the provisions of the quoted section apply to the first respondent.

32.      Counsel for the applicant Mr Vorster S.C submits that at the time of liquidation, the first respondent was not the holder of a mining right and that the relevant provision could not have applied to the first respondent.

33.      He further submits that if it is argued that the seventh respondent in granting the said mining right, acted unlawfully for one reason or another, such act was an administrative act which cannot be said to be invalid unless and until it is so declared by a court of law. Mr Vorster finds support for this submission in the well-known decision of Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 SCA at para 26 where the Court said:

“[26]       For those reasons it is clear, in our view, that the Administrator’s permission was unlawful and invalid at the outset. Whether he thereafter also exceeded his powers in granting extensions for the lodgement of the general plan thus takes the matter no further. But the question that arises is what consequences follow from the conclusion that the Administrator acted unlawfully. Is the permission that was granted by the Administrator simply to be disregarded as if it had never existed? In other words, was the Cape Metropolitan Council entitled to disregard the Administrator’s approval and all its consequences merely because it believed that they were invalid provided that its belief was correct? In our view it was not. Until the Administrator’s approval (and thus also the consequences of the approval) is set aside by a court in proceedings for judicial review it exists in fact and it has legal consequences that cannot simply be overlooked. The proper functioning of a modern state would be considerably compromised if all administrative acts could be given effect to or ignored depending upon the view the subject takes of the validity of the act in question. No doubt it is for this reason that our law has always recognized that even an unlawful administrative act is capable of producing legally valid consequences for so long as the unlawful act is not set aside.”

34.      I accept that the mining right as granted by the seventh respondent remains valid until set aside.

THE ORDER

35.      In light of all the above, I make the following order:

RE: INTERVENTION APPLICATION

35.1   The application for intervention by Zelpy Gold Mine (Pty) Ltd is dismissed with costs which costs shall include the employment of two Counsel;

RE: MAIN APPLICATION

35.2   The order issued on 23 May 2017 under case number 64898 / 2016 for the first respondent’s final liquidation is rescinded in terms of section 354(1) of the Companies Act, 61 of 1973.

35.3   The applicant shall be liable for payment of any possible fees or charges payable to the third and fourth respondents in their capacities as the first respondent’s joint liquidators. 

35.4   The first respondent shall pay the costs of this application.

 

                                                                                           

JUDGE SELBY BAQWA

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, JOHANNESBURG

 

MATTER HEARD ON                                    :           3 NOVEMBER 2020

JUDGMENT RESERVED ON                       :           3 NOVEMBER 2020

JUDGMENT DELIVERED ON                      :           11 NOVEMBER 2020

 

APPEARANCES:  

COUNSEL FOR THE APPLICANT                          :           ADV TJ JOOSTE

ATTORNEYS FOR THE APPLICANT                      :           ATTORNEYS

 

COUNSEL FOR THE RESPONDENTS                   :           N/A

ATTORNEYS FOR THE RESPONDENTS               :           N/A

 

COUNSEL FOR THE INTERVENTION APPLICATION:        

ATTORNEYS FOR THE INTERVENTION APPLICATION:    KHOLISILE LUMKA INC.

---