THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 238/2020

In the matter between:
SA AIRLINK (PTY) LTD

APPELLANT

and

SOUTH AFRICAN AIRWAYS
(SOC) LIMITED
(in Business Rescue)

FIRST RESPONDENT

LESLIE MATUSON N.O.

SECOND RESPONDENT
SIVIWE DONGWANA N.O.

THIRD RESPONDENT

Neutral citation: SA Airlink v SAA (SOC) Limited and Others (238/2020)
[2020] ZASCA 156 (30 November 2020)
Coram:
MAYA P, DAMBUZA, VAN DER MERWE,
MAKGOKA, and SCHIPPERS JJA
Heard:

4 September 2020
Delivered: This judgment was handed down electronically by circulation to
the parties’ legal representatives by email publication on the Supreme Court

of Appeal website and release to SAFLII. The date and time for hand-down is
deemed to be 10H00 on 30 November 2020.

Summary: Company Law – business rescue – revenue received by first
respondent shortly prior to being placed under business rescue – appellant
precluded from instituting legal proceedings against first respondent (in
business rescue) for recovery of such revenue without the consent of the
business rescue practitioners or leave of the court – revenue a debt owed by
first respondent to the appellant and not property of appellant – appeal
dismissed with costs.

ORDER

On appeal from: Gauteng High Court, Johannesburg (Kathree-Setiloane J
sitting as court of first instance):
The appeal is dismissed with costs, including the employment of two counsel.

JUDGMENT

Dambuza JA (Maya P, Van der Merwe, Makgoka, Schippers JJA
concurring)

Introduction
[1] The issue in this appeal is whether certain moneys paid to the
first respondent, South African Airways (SOC) Limited (SAA), prior to it
being placed under business rescue, should be released to the appellant,
South African Airlink (Pty) Limited (Airlink). Airlink appeals against an
order of the Gauteng High Court, Johannesburg, (Kathree-Setiloane J)
(high court), in terms of which its application for an order that the moneys in
question be paid to it was dismissed. The appeal is with the leave of the
high court.

Background
[2] For almost 20 years prior to 5 December 2019, Airlink and SAA
conducted their businesses as air transportation providers in alliance with each
other. Their relationship was founded on an Alliance Agreement which
formed the framework within which several other agreements, the

operational agreements, comprising two licence agreements1 and a
Commercial Agreement, regulated their operations.

[3] Of specific relevance to this appeal were the parties’ obligations under
the Commercial Agreement. This agreement regulated matters such as the
agreed spheres of operation, routes and flight scheduling, use by Airlink of
SAA’s computer software, marketing, communications, public relations and
sales obligations.

[4] Under the Licensing and Commercial Agreements Airlink was granted
a licence to use SAA’s ‘SA8 designator’2 and related intellectual property at
a basic fee and a continuing royalty of one percent of Airlink’s flown
revenue.3 In terms of the Commercial Agreement, Airlink’s passengers could
book and pay for their flights through SAA’s ticket booking and revenue
collection platforms. SAA would then remit to Airlink, periodically, the
moneys received for the Airlink ticket sales, less commissions and fees due to
SAA, as well as levies, charges and taxes collected by SAA, for which Airlink
was liable to the Civil Aviation Authorities.

[5] During each month passengers could book and pay for Airlink tickets
through SAA operated systems.4 SAA would only pay over to Airlink the

1 The Licence Agreement and the Licence Agreement Africa.
2 Defined in the licencing agreement as the ‘SA designator “SA”’.
3 Clause 1 of the Commercial Agreement.
4 Clause 6 in Appendix 3 to the Commercial Agreement provided as follows:
‘6
TICKETING
6.1
SAA will provide customers who wish to travel on Airlink scheduled flights, ticket services at all
airport and off-airport SAA worldwide ticketing locations. SAA will issue such tickets on SAA stock.
Similarly Airlink will provide customers wishing to travel on SAA scheduled flights, ticket services at all
airports where Airlink is not handled by SAA, all subject to the following conditions:
6.1.1
Airlink will update SAAFARI on a daily basis on all manually issued tickets, to provide a proper
electronic sales report to enable SAA to account for such transactions in its general ledger. Totals of sales,

revenue received for these ticket sales on the 7th working day of the following
month. Thereafter, on the 15th working day of the month, SAA would pay to
Airlink the balance between the revenue paid on the 7th day and other moneys
which would have been processed for the given month of operation.5 To
ameliorate the cash flow constraints that would be occasioned by Airlink
whilst waiting for SAA to account and pay over moneys received by it for
tickets sold in a specific month, SAA would make a prepayment to Airlink of
an amount computed on an advance sales formula.6

[6] On 5 December 2019, SAA was placed under business rescue in terms
of s 131(4)(a) of the Companies Act 71 of 2008 (the Act). The second and
third respondents, Mr Matuson and Mr Dongwana, were appointed on
5 November
2019
and
November
2019,
respectively,
as
joint business rescue practitioners for SAA as provided in s 129(3)(b) of the
Act.

cash, credit and debtor’s transactions will be faxed to the SAA Head Office on a daily basis, in a format
agreed from time to time.
. . . .’
5 This was regulated in clause 8 of the Commercial Agreement as follows:
‘8
REVENUE ACCOUNTING
8.1
SAA will provide Revenue Accounting and Ticket Audit functions for Airlink’s sales transactions.
In order to allow Airlink to reconcile its revenues, SAA will provide monthly electronic transfers to Airlink
on all Airlinks’ Revenue Accounting and Ticketing data, including, but not limited to, ticket data, sales data,
prorates data, BSP data, etc.
. . .
8.13
Payments by SAA to Airlink with respect to all Airlink tickets lifted and processed by SAA shall
be made on the basis that a prepayment shall be established and made by SAA to Airlink based on the
following principles:
8.13.1
. . .
8.13.2
Payment in respect of Airlink tickets flown will be paid on the 7th working day of the relevant month.
8.13.3
Payment in respect of the balance between the above and revenue that has been processed for the
given month of operation will be paid over on the 15th (fifteenth) working day of the following month by
direct bank deposit.
8.13.4
Earned revenues shall include Airlink’s lifted coupons, MCO’s and excess baggage. SAA has the
right to offset from amounts paid to Airlink any amounts due to SAA.
. . . .’
6 Clause 8.13.1 of the Commercial Agreement stipulated that: ‘SAA will provide Airlink with a loan equal
to advance sales as per the formula laid out in Appendix 11. It is agreed that the amount advanced to Airlink
will be revised at monthly intervals, with the first period starting on 01 September 1999’.

[7] It was not in dispute that prior to being placed under business rescue
SAA had received moneys for Airlink tickets sales conducted during
November 2019 up to 5 December 2019.7 On 6 December 2019, a day after
being placed under business rescue, SAA transmitted to Airlink a statement
of account in respect of a ‘prelim[inary] payment’ that was due to Airlink on
10 December 2019, that being the seventh working day in respect of the
revenue received during November 2019.

[8] It appears that prior to 5 December 2019 SAA’s impending
business rescue or its perilous financial state had been discussed between the
parties. In a letter dated 10 December 2019, headed ‘Proposal regarding
restructure
of
alliance
relationship’,
Airlink,
through
its
Chief Executive Officer and Managing Director, Mr Rodger Foster, referred
to
a
proposal
that
Airlink
had
made
to
SAA’s
Board Implementation Committee on 8 November (2019), to which SAA had
not responded. Having expressed concern about the risk to it as a result of
SAA being placed under business rescue, Airlink gave SAA six months’
notice of cancellation of the Alliance Agreements. The effective date of
cancellation would be 10 June 2020.

[9] In the letter Airlink proposed that:
‘. . . the franchise system be restructured as a code share agreement whereby Airlink -
operated flights can still be booked through the SAA – operated SA8 system as allocated
to Airlink but will also be available on the Airlink operated 4Z system.’

7 The amounts owing were in dispute. However that is not relevant to the issues before us.

At the same time Airlink reserved its right to claim moneys due by SAA to it
under the Alliance Agreement.

[10] On 11 December 2019, Airlink gave SAA seven days within which to
pay the moneys accounted for in the statement of account dated
6 December 2019, failing which it would terminate the Alliance Agreements
without further notice. However, on the same day Airlink revoked the
summary termination. An ‘Ad Hoc Agreement’ was reached that the Alliance
Agreements would remain in force ‘until terminated in accordance with their
own terms and [would] be complied with by the parties subject to the
provisions of the Ad Hoc Agreement and the provisions of Chapter 6 of the
Companies Act’. The main feature of the Ad Hoc Agreement was that SAA
would immediately make payment to Airlink in respect of flown revenue
received for the period 6 to 11 December 2019 and would, thereafter, make
daily payments in respect of flown revenue received on each day from 12
December 2019. On 13 December 2019, SAA generated a statement in respect
of moneys due to Airlink in respect of unflown revenue8 for May 2018.

[11] Throughout the negotiations and the ultimate re-arrangement of their
business relationship subsequent to the business rescue, SAA and Airlink
disagreed on whether Airlink was entitled to payment of the November-early
December 2019 ticket sales revenue (that is, the revenue received by SAA for

8 These are moneys held by SAA in respect of air tickets whose owners had failed to present themselves for
their respective flights. In this regard SAA’s policy was different from Airlink’s in that with SAA the
customer could still re-use his or her ticket for some time after the originally booked flight, depending on the
rules applicable to the ticket. If the customer failed to use the ticket within the stipulated period the money
attached to the ticket would be released to revenue. In practice SAA would raise a liability once a customer
failed to present him or herself but would only release the funds to Airlink after 18 months. This was so even
though Airlink’s rules provided that a customer had no right to re-use the ticket and the money became
forfeited immediately when a customer failed to present herself.

Airlink ticket sales during the accounting period immediately preceding the
commencement of business rescue). In a letter to SAA dated
17 December 2019, Airlink rejected the position adopted by the second
respondent, who was the only business rescue practitioner appointed for SAA
at the time, that the revenue constituted a pre-commencement debt owed by
SAA and could, therefore, not be paid to Airlink. Airlink maintained that this
revenue was not a ‘debt owed’ by SAA as envisaged in s 154(2) of the Act.
Consequently, Airlink considered itself entitled to immediate payment of the
moneys.

[12] On 18 December 2019, SAA provided Airlink with a reconciliation
statement in relation to the November-early December flown ticket sales
revenue, showing that R430 000 838.80 had been payable to Airlink for the
pre-commencement period. Airlink disputed the correctness of this amount.
On 17 January 2020, Airlink launched an urgent application against SAA in
the high court seeking to recover the November-early December revenue, the
amount set forth in the 18 December 2019 statement of account and the
unflown revenue.

The high court proceedings
[13] As forewarned in the correspondence that preceded the high court
application, the relief sought by Airlink was premised on SAA having held
the claimed revenue as an agent of Airlink. The argument was that in relation
to ticket sales and revenue collection, the business relationship between SAA
and Airlink was that of agency, because SAA had an obligation to pay the
funds to Airlink after deduction of commission, royalties and service charges.

[14] The high court rejected Airlink’s agency argument. It found no
evidence to support the contention that the funds belonged to Airlink and were
held by SAA on behalf of Airlink. That court also found that in terms of
Clause 12.2 of the Commercial Agreement, agency was expressly excluded
from the business relationship between SAA and Airlink, except where the
Alliance Agreement specifically provided for it. The court concluded that the
relationship between the parties was rather that of debtor and creditor. It
further held that Airlink had not made out any case for the lifting of the
moratorium imposed under s 133(1) of the Act on legal proceedings against
companies placed under business rescue.

Issues on appeal
[15] Airlink’s appeal was grounded on the same three issues that it had
raised with SAA in its pre-litigation correspondence. First, that SAA held the
revenue received for Airlink ticket sales as the latter’s agent and therefore it
was Airlink’s own money. Secondly, that even if the revenue was a debt owed
by SAA, such debt arose only after commencement of the business rescue and
thus could not be compromised in terms of s 154(2) of the Act. Thirdly, that
because (subsequent to commencement of business rescue) SAA had elected
to abide by the Alliance Agreement, it was not open to it to raise the s 133
moratorium as a defence to a claim for performance of its contractual
obligations.

Discussion
[16] The starting point is the position articulated in s 133(1) of the Act which
imposes a moratorium on legal proceedings against companies during
business rescue. The section also sets out the limited circumstances in which

that moratorium may be lifted and legal proceedings, may be brought or
persisted with against a company which is under business rescue. The section
provides:
‘133 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-
(a) with the written permission of the practitioner;
(b) with the leave of court and in accordance with any terms the court considers suitable;
(c) as a set-off against any claim made by the company in any legal proceedings,
irrespective of whether those legal proceedings commenced before or after the business
rescue proceedings
(d)
criminal proceedings against the company or its directors or officers;
(e)
proceedings concerning any property or right over which the company exercises
the powers of a trustee; or
(f)
proceedings by a regulatory authority in the execution of its duties after written
notification to the business rescue practitioner.’

[17] In its application before the high court Airlink accepted that once SAA
was placed under business rescue on 5 December 2019, no legal proceedings
could be initiated against it. To this extent, in prayer 2 of its notice of motion
it sought the leave of court, as provided in s 133(1)(b), to enforce its claim
against SAA. However, it went on to assert the reasons why the moratorium
did not apply in respect of the claimed revenue. It therefore did not lay any
basis for leave to institute the proceedings.

[18] Clearly, the general moratorium on legal proceedings imposed in terms
of s 133(1) becomes applicable immediately on commencement of business
rescue and endures until business rescue ceases. The intention of the provision

is to cast the net as wide as possible in order to include any conceivable type
of action against the company which is under business rescue.9 The
moratorium is necessary for the effectiveness of the business rescue
procedure. As this court held in Cloete Murray and Another:10
‘It is generally accepted that a moratorium on legal proceedings against a company under
business rescue, is of cardinal importance since it provides the crucial breathing space or a
period of respite to enable the company to restructure its affairs. This allows the
practitioner, in conjunction with the creditors and other affected parties to formulate a
business rescue plan designed to achieve the purpose of the process. . . .’

[19] Legal proceedings may therefore be brought against a company under
business rescue only in the circumstances set out in s 133(1)(a)-(f) of the Act.
The moratorium is applicable in respect of all legal proceedings against a
company in business rescue. A distinction between pre- and post-
commencement causes is irrelevant to the moratorium.11

[20] The factors relevant in determining whether it is appropriate to lift the
moratorium are case specific. However, as Boruchowitz J held in Arendse and
Others v Van der Merwe and Another NNO, regard will always be had to the
following:
‘(a) The effect that the grant or refusal of leave would have on the applicants’ rights as
opposed to other affected persons and relevant stakeholders; (b) the impact that the
proposed legal proceedings would have on the wellbeing of the company and its ability to
regain its financial health; and (c) whether the grant of leave would be inimical to the object

9 PM Meskin and JA Kunst Insolvency Law (1994) para 18.6.
10 Murray NO and Another v FirstRand Bank Ltd t/a Wesbank [2015] ZASCA 39; 2015 (3) SA 438 (SCA)
para 14.
11 To this extent, this court in Shamla Chetty t/a Nationwide Electrical v Hart NO and Another [2015] ZASCA
112; 2015 (6) SA 424 (SCA) para 35 has held that the term ‘legal proceedings’ applies even to proceedings
before arbitral tribunals and that such proceedings may only be brought with the consent of a business rescue
practitioner or with the leave of court.

and purpose of business rescue proceedings as set out in sections 7(k) and 128(b) of the
Act’.12

[21] Airlink’s stance in the court a quo and in this Court was that s 133(1) is
inapplicable in this case. Its application therefore fell to be dismissed on this
ground alone. Nevertheless, I shall proceed to consider briefly the grounds on
which Airlink relied in its attempt to evade the moratorium.

The agency argument
[22] Airlink contended that the revenue in question was not a debt as
provided in s 154(2) of the Act. That section provides:
‘154
Discharge of debts and claims:
(1)
. . .
(2)
If a business rescue plan has been approved and implemented in accordance with
this Chapter, a creditor is not entitled to enforce any debt owed by the company
immediately before the beginning of the business rescue process, except to the extent
provided in the business rescue plan.’
The essence of Airlink’s argument in this regard was that when SAA sold
Airlink tickets it did so as Airlink’s agent. Therefore, the proceeds of such
sales belonged to Airlink and SAA only held them on behalf of Airlink. It was
therefore not claiming a ‘debt’ as envisaged in s 154(2) of the Act. Instead,
the revenue claimed was Airlink’s property which SAA was holding
unlawfully.

12 Arendse and Others v Van der Merwe NO And Another [2016] ZAGPJHC 292 (GJ); 2016 (6) SA 490
(GJ) para 28 as cited in Meskin; supra note 9 at 18.6.

[23] This contention is unsustainable. As the high court highlighted,
clause 12.2 of the Commercial Agreement excluded agency in the relationship
between SAA and Airlink. The clause stated:
‘The relationship between the Parties shall be as independent contractors, and accordingly
no provision of this Agreement shall constitute any partnership or agency between the
Parties, and neither Party shall have any authority to bind the other Party to third persons,
save as may be expressly provided to the contrary herein or in the Alliance Agreement’.

[24] The question is whether there were any contractual provisions that
expressly provided that the relationship between the parties was one of
agency. The high watermark of Airlink’s contention in this regard was the
provision in the Commercial Agreement which provided that SAA would be
entitled to a sales commission similar to that earned by travel agents in respect
of Airlink ticket sales transacted on SAA platforms.13 It suffices to say that
this provision clearly did not expressly provide for agency. This is borne out
by the context of the agreements between the parties. Nothing in the
relationship between SAA and Airlink resembled agency. SAA never acted as
a ‘representative’ of Airlink. The high court was correct in describing the
nature of the business relationship between SAA and Airlink as that of mutual
support. Clause 7 of the Commercial Agreement provided that for the duration
of the agreements SAA and Airlink would provide each other with the support

13 Clause 6.1.4 of Appendix 3 provided that : ‘AIRLINK will be entitled to normal sales commission for the
sales made on SAA schedules services at any airport stations or office handled by AIRLINK, similar to a
travel agent. Similarly, SAA will be entitled to any sales commission for the sales made on the AIRLINK
scheduled services at any airport stations or office handled by SAA, similar to a travel agent.’ Further, clause
8 in the same appendix provided as follows, in part:
‘8.17 On all tickets flown on Airlink flights, Airlink will pay SAA the actual agents commission paid on the
tickets relative to the flown Revenue that accrues to Airlink.
8.18 SAA will pay Airlink any sales commission due on sales made on behalf of SAA in the offices of
Airlink. Similarly, Airlink will pay SAA any commission due on sales due made on behalf of Airlinkin SAA
offices.’

set out in the appendices to that contract on the terms and conditions set out
therein.

[25] The high court also correctly had regard to the fact that SAA had no
obligation to deposit the revenue received in respect of Airlink tickets sales in
a separate bank account and to hold it in trust, as Airlink’s property or on its
behalf. There was no evidence that SAA dealt with revenue received for
Airlink’s ticket sales differently from the manner in which it dealt with its
own moneys. On the contrary, the evidence showed that the revenue was held
by SAA’s bankers on behalf of SAA together with all its other revenue. For
these reasons the contention by Airlink that the ticket sales revenue was not a
debt owed to must fail.

Was the debt a pre or post business rescue debt?
[26] As I have said, Airlink argued in the alternative that the debt became
owing after the commencement of the business rescue proceedings. It
presumably intended to rely thereon that the debt could not be compromised
in the business rescue plan to be approved and that the provisions of s 154(2)
would not bar the claim during business rescue. However, when the
application was launched no business rescue plan had been published, let
alone voted on.

[27] This contention is untenable for the further reason that once SAA
received the funds for Airlink ticket sales an obligation immediately arose for
it to account in respect thereof to Airlink on the agreed date. In this way, on
receipt thereof the funds became a debt owed by SAA to Airlink which would
be due for payment as per agreement between the parties.

[28] Airlink’s argument that, because the accounting statement in relation to
the November revenue was only generated on 6 December 2019, a day after
the
commencement
of
business
rescue,
the
revenue
was
a
post-commencement debt, was misconceived. It was submitted on Airlink’s
behalf that SAA’s debt to Airlink only arose when the statement was rendered
and the debt became enforceable at the instance of the creditor. For this
contention, Airlink relied, among other authorities, on Eravin Construction
CC v Bekker NO and Others.14 This reliance was misplaced.

[29] In Eravin a business plan had been approved and implemented and this
court was concerned with whether certain payments made by a company in
liquidation to Eravin, which had since been placed under business rescue,
were void dispositions and therefore recoverable from Eravin in terms of
s 341(2) of the Companies Act 61 of 1973. The payment was made on
21 October 2010 and, being void, its repayment was immediately owed by
Eravin whose business rescue commenced on 26 September 2012. It was in
this context that this Court considered the meaning of ‘debt owed’ within the
context of s 154(2) of the Act and held that the payment (being the debt owed),
could not be recovered, as it was owed prior to 26 September 2012. This Court
then distinguished between moneys ‘payable’ and moneys ‘owed’, and held
that:
‘[Section 341(2)] states expressly that a disposition in the terms contemplated by it “shall
be void”. The recipient has no right, on this account, to retain it. Consequently, it owes a
debt to the body which made the prohibited disposition, and that debt is owed as soon as
the disposition was received.’

14 Eravin Construction CC v Bekker NO and Others [2016] ZASCA 30; 2016 (6) SA 589 (SCA) para 21.

Eravin is therefore no authority for Airlink’s contention that the revenue
received by SAA could only be owed when it became due for payment.

[30] Equally unsupportive of Airlink’s case are two other decisions on
which it relied, namely, Trinity Asset Management (Pty) Ltd v Grindstone
Investments15 and Standard Bank of South Africa Ltd v Miracle Mile
Investments 67 (Pty) Ltd and Another.16 There, the Constitutional Court and
this Court, respectively, were not concerned with the question of when a debt
became owed. The issue in both decisions was when a debt became due and
payable for determination of prescription.

SAA’s election to abide by the pre-business rescue agreements.
[31] Airlink contended that SAA was bound by its election to abide by the
Alliance Agreement and was therefore precluded from seeking refuge under
s 133(1). There is no merit in this contention. On Airlink’s case SAA was in
breach of the Alliance Agreements by refusing to pay the money in question.
Therefore an election to abide by the agreement was not open to it. 17 The
option would only be open to Airlink as the innocent party. It is, in any event,
not correct that SAA had opted to abide by the terms of the original Alliance
Agreements. As stated earlier, after the commencement of business rescue
SAA and Airlink concluded an ad hoc agreement in terms of which SAA
would remit to Airlink, on a daily basis, the moneys received in respect of
Airlink’s ticket sales after the start of business rescue. This was an interim
arrangement designed to limit the adverse impact of SAA’s business rescue

15 Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd [2017] ZACC 32; 2018 (1)
SA 94 (CC).
16 Standard Bank of South Africa Ltd v Miracle Mile Investments 67 (Pty) Ltd and Another [2016] ZASCA
91; 2017 (1) SA 185 (SCA).
17 G B Bradfield Christie’s Law of Contract in South Africa 7 ed (2016) at 639.

on Airlink. Its terms differed materially from the terms of the Alliance
Agreements and the Commercial Agreement.

[32] For all these reasons Airlink’s appeal must fail. Consequently:
The appeal is dismissed with costs, including the costs of two counsel.

________________________
N DAMBUZA
JUDGE OF APPEAL

Appearances:

For Appellant:
A R Bhana SC (with him J P V McNally SC and
L M Spiller)
Instructed by:

Webber Wentzel Attorneys, Johannesburg

Symington & De Kok, Bloemfontein

For the First Respondent: J M Suttner SC (with him J E Smit)
Instructed by:

Edward Nathan Sonnenbergs, Johannesburg

Matsepes Inc. Bloemfontein.

THE SUPREME COURT OF APPEAL OFSOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL
FROM
The Registrar, Supreme Court of Appeal
DATE
30 November 2020
STATUS
Immediate
Please note that the media summary is for the benefit of the media and does not form part of
the judgment.
SA AIRLINK v SAA & OTHERS (238/2020) [2020] ZASCA 156 (30 November 2020).
MEDIA STATEMENT
On 02 March 2020 the Gauteng High Court, Johannesburg dismissed an application
by the SA Airlink in which it sought to have certain revenue held by South African
Airways (SAA) released to it. Today the Supreme Court of Appeal handed down a
judgment dismissing an appeal against the order of the high court.
On 5 December 2019 SAA was placed under business rescue. At the time
conducting business as air transportation provider in alliance with Airlink. This
arrangement was regulated by an Alliance Agreement together with several other
related agreements concluded between SAA and Airlink about twenty years ago. In
terms of these agreements, Airlink’s passengers could book and buy their flight
tickets through SAA operated platforms. SAA would pay over to Airlink revenue
received for these ticket sales on the 7th working day of the month following the
purchases.

When SAA was placed under business rescue on 5 December 2019 it had not yet
paid over to Airlink the funds received for ticket sales for the preceding month.
When Airlink demanded payment SAA’s business rescue practitioner, Mr Matuson
expressed the view that the funds could not be paid over to Airlink as they
constituted a pre-commencement debt (ie debt that preceded commencement of
business rescue).
Airlink instituted proceedings in the high court seeking an order that the amount of
R430 000 838.80 be released to it because SAA had merely been acting as its agent
in receiving the funds; therefore they always belonged to it. The high court dismissed
Airlink’s application, finding that Airlink had not made out any case for lifting of the
moratorium imposed under the Companies Act on legal proceedings against
businesses in business rescue. That court further found no evidence of an agency
relationship between Airlink and SAA.
In dismissing the appeal against the judgment of the high court, the Supreme Court
of Appeal held that the moratorium on legal proceedings against companies in
business rescue applies in respect of all legal proceedings except in instances set
out in s133(1) of the Companies Act 71 of 2008. Airlink was therefore precluded
from instituting legal proceedings without either consent of the business rescue
practitioner or leave of the court. Airlink had not made out any case for the lifting of
the moratorium in this case. The SCA confirmed the findings of by the high court that
there was no agency relationship between Airlink and SAA. It also confirmed the
finding of the high court that the two companies were in a mutually supportive
relationship. The SCA also found that the funds received by SAA were deposited in
SAA’s general bank accounts together with its other funds. They were never kept
into a special account as belonging to Airlink. The court rejected Airlink’s alternative
argument that SAA’s liability for the funds was a post-commencement debt and held
that on receipt of the funds by SAA a liability immediately arose for it to account to
Airlink in respect thereof at the agreed time. The fact that the agreed accounting day
fell on a date subsequent to commencement of business rescue did not alter the
date on which the liability arose.
--- ends ---