Vantage Goldfields SA (Pty) Ltd and another v Arqomanzi (Pty) Ltd and others

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Ponnan JA, Mocumie JA, Mbatha JA, Matojane JA and Mali AJA
• Judgment Date: 27 June 2023
• Citation: 2023 JDR 2275 (SCA)
• Hearing Date: 10 May 2023
• Docket Number: 733/2022
• Court: Supreme Court of Appeal

Ponnan JA and Matojane JA (Mocumie and Mbatha JJA and Mali AJA concurring):

[1]

The application, the subject of this appeal, was preceded by two earlier high court applications, the second of which was recently disposed of by this Court on appeal. We commend that judgment to the reader, which is reported sub nom Vantage Goldfields SA (Pty) Ltd and Others v Arqomanzi (Pty) Ltd. [1] Any attempt at a detailed recitation of the facts or the history preceding this appeal would render this judgment indigestible. In what follows, we will confine ourselves to those facts that are relevant for a proper appreciation of the issues that arise for determination in this appeal.

[2]

The second appellant, Vantage Goldfields Ltd (Vantage), is the ultimate holding company of the Vantage group of companies (collectively referred to herein as the Vantage Companies). It holds 100 of the issued shares in the first appellant, Vantage Goldfields SA (Pty) Ltd (VGSA). VGSA, in turn, owns 74 percent of the issued shares in the second respondent, Vantage Goldfields (Pty) Ltd (VGL), and 42 percent of the issued shares in the fourth respondent, Makonjwaan Imperial Mining Company (Pty) Ltd (MIMCO). VGL owns the remaining 58 percent of the issued shares in MIMCO and 100 percent of the issued shares in the third respondent, Barbrook Mines (Pty) Ltd. An

2023 JDR 2275 p4

Ponnan JA and Matojane JA (Mocumie and Mbatha JJA and Mali AJA concurring)

Australian company, Macquarie Metals (Pty) Limited (Macquarie), recently acquired a 98 percent stake in Vantage.

[3]

This appeal relates to an ongoing dispute between the first respondent, Arqomanzi Proprietary Limited (Arqomanzi) and the appellants in respect of business rescue proceedings of the Vantage Companies.The Vantage Companies faced financial distress after the collapse on 5 February 2016 of the crown pillar at MIMCO’s Lily Mine, a gold mine located near Barberton in Mpumalanga, which claimed the lives of three workers and rendered the mine inaccessible. Consequently, MIMCO was placed in business rescue on 4 April 2016. In August 2016, VGL requested an increase of R10 million in its existing banking facilities from the seventh respondent, the Standard Bank of South Africa Limited (Standard Bank), which was granted on condition that certain additional security be provided in the form of a cession to Standard Bank of the VGSA-VGL claim and the VGL-Barbrook claim. The condition was accepted, and on 6 September 2016, the claims were ceded in securitatem debiti to Standard Bank. Both cessions entitled Standard Bank, upon any breach, which was not remedied, to sell or otherwise realise the security.

[4]

MIMCO’s financial turmoil contributed to VGL and Barbrook facing similar difficulties, leading to the placement in business rescue of both on 12 December 2016. The creditors of VGL and Barbrook adopted business rescue plans on 16 February 2017 and 6 August 2018, respectively. The adopted plans were interdependent. Their success was dependent on finance that was principally to be sourced from the Industrial Development Corporation, which was, however, conditional upon a certain Flaming Silver Trading 373 (Pty) Ltd, acquiring VGSA’s shares in VGL and MIMCO and providing a minimum of at least R60 million in equity funding.

[5]

When it became apparent that the necessary funding for the adopted plans would not become available, Arqomanzi engaged in discussions with Standard Bank with a view to acquiring the VGSA-VGL claim. Standard Bank was willing to cede this claim to Arqomanzi at an agreed price, but only if VGSA failed to remedy its breach after having been given notice to do so. On 23 July 2019, Standard Bank delivered a written demand to VGSA to remedy its breach. In this demand, Standard Bank informed VGSA that should it fail to timeously remedy its breach, then it intended to

2023 JDR 2275 p5

Ponnan JA and Matojane JA (Mocumie and Mbatha JJA and Mali AJA concurring)

dispose of the claim for R8 911 771.35. VGSA failed to remedy the breach and Standard Bank realised its security by selling the claim to Arqomanzi on 1 August 2019 (the sale agreement).

[6]

However, the fifth and sixth respondents, the Business Rescue Practitioners (the BRPs) refused to acknowledge Arqomanzi as the owner of the VGSA-VGL claim. Consequently, on 8 October 2019, Arqomanzi issued an application (the first application) out of the Mpumalanga Division of the High Court, Mbombela (the high court). The application, which was opposed by VGSA, succeeded for the most part before Roelofse AJ. In his judgment of 11 November 2019, the learned judge made the following key findings: (i) Standard Bank lawfully and validly ceded the VGSA-VGL claim to Arqomanzi; (ii) Arqomanzi was an independent creditor of VGL; and, (iii) as the funding contemplated in the adopted plans had not been realised, those plans could no longer be implemented. Even though VGSA was granted leave by Roelofse AJ to appeal his judgment, the appeal lapsed when VGSA failed to timeously prosecute it. Thereafter, in compliance with Roelofse AJ’s order, the BRPs published amended business rescue plans for MIMCO and Barbrook on 22 and 25 June 2020, respectively.

[7]

During July 2020, Arqomanzi negotiated with Standard Bank to acquire the VGL-Barbrook claim. Once again, Standard Bank was willing to cede this claim to Arqomanzi at an agreed price, if VGL did not remedy its breach after having been given notice by Standard Bank to do so. On 17 July 2020, Standard Bank delivered a written demand to VGL to remedy its breach by making payment of the outstanding amount within 10 days. VGL was informed that should it fail to timeously remedy the breach, then Standard Bank intended to dispose of the claim for R1. When VGL failed, Standard Bank realised its security by selling the VGL-Barbrook claim to Arqomanzi on 23 July 2020 (this agreement came to be described in the papers as the ‘addendum’).

[8]

On 20 January 2021, the BRPs intimated that the proposed amended business rescue plans for all of the Vantage Companies would be circulated shortly, after which a meeting would be convened to discuss and vote on the plans. A few days later, however, they informed Arqomanzi that they would no longer be publishing the

2023 JDR 2275 p6

Ponnan JA and Matojane JA (Mocumie and Mbatha JJA and Mali AJA concurring)

proposed amended business rescue plans. They advised that they would instead act in accordance with the appellants’ invitation to disregard the order of Roelofse AJ and unilaterally amend the adopted plans, which, in effect, involved replacing the original funders with new ones.

[9]

Consequently, on 16 February 2021, Arqomanzi launched urgent proceedings in the high court to stop the implementation of the amended plans (the second application). Greyling-Coetzer AJ issued a rule nisi interdicting the BRPs from implementing the amended plans. The rule was confirmed by Legodi JP on the return day, who found that the BRPs could not unilaterally amend the adopted plans. On appeal, this Court made the following key findings: (i) the adopted plans could not be implemented because of a lack of funding; (ii) a clause in a business rescue plan that provides for the unilateral amendment of the plan by the BRPs is contrary to the scheme of the Companies Act 71 of 2008 (the Companies Act) – at best, such a clause would only allow for amendments of an administrative nature that do not affect its substance; (iii) the replacement of the funders and the funding model was not merely an administrative amendment, it was central to the plans; and, (iv) the BRPs were not entitled to amend the adopted plans in the manner that they did. [2]

[10]

Despite Arqomanzi having paid to Standard Bank the purchase price for both the VGSA-VGL and VGL-Barbrook claims in the aggregate amount of R15 482 677 on 15 January 2021, the appellants and the BRPs denied in the second application that Arqomanzi had lawfully acquired the VGL-Barbrook claim. They also contended that the loan account claims were fully subordinated under two subordination agreements dated 7 April 2015 and 23 February 2013. They further asserted that the Vantage proposal (the Vantage proposal) was superior to Arqomanzi’s proposed amended business rescue plans because the former would not require the consent of the eight respondent, the Minister of Mineral Resources and Energy (the Minister), under s 11 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA), whereas Arqomanzi’s amendment would. As the issues raised would impact on Arqomanzi’s voting interest, when the new business rescue plans were to

2023 JDR 2275 p7

Ponnan JA and Matojane JA (Mocumie and Mbatha JJA and Mali AJA concurring)

be voted on, Arqomanzi launched a third application (the application the subject of this appeal).

[11]

Legodi JP found in Arqomanzi’s favour in the third application. In his judgment of 26 October 2021, the learned judge held: (i) the Vantage proposal cannot be implemented without s 11 consent and the BRPs and appellants were interdicted from representing otherwise; (ii) Standard Bank lawfully and validly ceded the VGL-Barbrook claim to Arqomanzi and the latter is an independent creditor of Barbrook; (iii) the subordination agreement of 7 April 2015 in respect of the VGSA-VGL claim, subordinated only R14 million of the claim in favour of VGL’s creditors; and, (iv) the subordination agreement of 27 February 2013 in respect of the VGL-Barbrook claim, subordinated only R17 million of the claim in favour of Barbrook’s creditors. The appeal against these orders is with the leave of the high court.

[12]

The following issues arise in the appeal: First, whether the affected persons (as defined in s 128(1)(a) of the Companies Act 71 of 2008) [3] should be joined as parties to the appeal. Second, whether Arqomanzi had validly and lawfully acquired the loan...