THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 91/2020

In the matter between:

TIMASANI (PTY) LTD

FIRST APPELLANT
(in business rescue)
WERNER CAWOOD

SECOND APPELLANT
and
AFRIMAT IRON ORE (PTY) LTD

RESPONDENT

Neutral citation: Timasani (Pty) Ltd (in business rescue) and Another v Afrimat
Iron Ore (Pty) Ltd (91/2020) [2021] ZASCA 43 (13 April
2021)

Coram:
WALLIS, SCHIPPERS AND NICHOLLS JJA AND GORVEN AND
UNTERHALTER AJJA

Heard:
10 March 2021

Delivered: This judgment was handed down electronically by circulation to the
parties’ representatives by email. It has been published on the Supreme Court of
Appeal website and released to SAFLII. The date and time of hand-down is
deemed to be 15h30 on 13 April 2021.

Summary: Business rescue – s 133 of the Companies Act 71 of 2008 (the Act) –
moratorium on legal proceedings against company in business rescue – sale of
company’s assets – deposit provisionally paid pending conclusion of sale

agreements – sale not concluded – deposit not property belonging to company or
lawfully in its possession – recovery of deposit not precluded by s 133.
Section 145(1)(a) of the Act – notice of court proceedings to creditors concerning
business rescue proceedings – a general notification requirement – duty to notify
creditors rests on business rescue practitioner.

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Molefe J sitting
as court of first instance):
The appeal is dismissed with costs.

JUDGMENT

Schippers JA (Wallis and Nicholls JJA and Gorven and Unterhalter AJJA
concurring):

[1] The first appellant, Timasani (Pty) Ltd (Timasani), which formerly
conducted iron and manganese mining, was placed in business rescue on 28 July
2015. The second appellant, Mr Werner Cawood, an attorney, is the business
rescue practitioner of Timasani (the BRP), and was authorised to sell its assets in
terms of a business rescue plan adopted by its creditors. The respondent, Afrimat
Iron Ore (Pty) Ltd (Afrimat), is a mining company that made an offer to purchase
Timasani’s assets, namely a farm located in Kuruman together with fixed
improvements, buildings and fittings of a permanent nature (the farm), and
mineral rights and mining equipment. In terms of that offer, Afrimat paid a
deposit of R1 700 000 to Timasani. However, the contracts for the purchase of
these assets did not materialise due to the non-fulfilment of suspensive
conditions.

[2] The central issue in this appeal is whether Afrimat was precluded from
launching proceedings for repayment of the deposit by the moratorium on legal
proceedings in s 133 of the Companies Act 71 of 2008 (the Act).  The Gauteng

Division of the High Court, Pretoria (the high court), declared that s 133 of the
Act was inapplicable and ordered Timasani to repay the deposit, together with
interest, and the BRP to pay the costs of the application. The appeal is with its
leave.

[3] The basic facts are uncontroversial. The BRP instructed Park Village
Auctions (the auctioneer) to invite offers for the purchase of the farm, mineral
rights and mining equipment. The auctioneer published an invitation on its
website in terms of which offers for Timasani’s assets were required to be
submitted to the auctioneer’s office by 10 March 2017. A deposit of 15% was
payable on submission of an offer and the balance within 30 days of confirmation
of its acceptance. The managing director of Afrimat raised certain queries
concerning the offer with the auctioneer. The latter answered those queries,
provided Afrimat with a draft offer to purchase the assets which it had prepared
(the OTP) and advised Afrimat to contact the BRP directly if it had further
enquiries.

[4] This led to Afrimat making a written counter-offer for the purchase of the
assets on 10 March 2017, subject to certain amendments and additions to the
OTP. The material terms of the counter-offer were these. The base purchase price
for the farm, mineral rights and mining equipment was R17 million excluding
VAT, transfer duties and agent’s commission. Afrimat undertook to pay a deposit
of 15% of the base purchase price within 48 hours of written acceptance of its
offer. The deposit was to bear interest which would accrue for Afrimat’s benefit.
The balance of the purchase price was payable upon fulfilment of the following
conditions precedent: the conduct of a legal, technical and financial due diligence
investigation yielding satisfactory results and approval of an agreement by
Afrimat’s Board of Directors. Afrimat would not be liable for any liabilities of
Timasani, including any costs associated with its business rescue.

[5] By letter dated 27 March 2017, the BRP confirmed that Afrimat’s offer had
been circulated to all affected parties and unanimously accepted by creditors. The
BRP was therefore authorised to accept Afrimat’s offer on behalf of Timasani.
The letter also stated the following. Afrimat’s offer was accepted on the terms as
supplemented in correspondence between the parties after receipt of Afrimat’s
counter-offer on 10 March 2017 (although a deposit of 15% of the purchase price
was required in terms of the OTP, the parties had agreed subsequently on a
deposit of 10%). The offer was also accepted on the basis that the agreed 21-day
due diligence period would commence on 28 March 2017. The deposit of 10% of
the purchase price of R17 million, ie R1 700 000 (the deposit) had to be paid
directly into a separate investment account of Timasani held with Investec Bank.
In conclusion the BRP said:
‘We further confirm that the deposit will be retained on behalf of yourselves in this interest-
bearing account pending the outcome of the due diligence proceedings and conclusion of the
final agreements.’

[6] On 29 March 2017 Afrimat paid the deposit into Timasani’s account at
Investec Bank and commenced with the due diligence exercise. When it was
completed Afrimat furnished the BRP with a draft Sale of Assets Agreement
relating to the movable assets, and a draft Sale of Immovable Property Agreement
in respect of the farm. According to those agreements the purchase price of the
assets was R13 million and that of the farm, R4 million.

[7] A dispute then arose concerning the amount of commission for which
Afrimat was liable. In an invoice to the BRP dated 31 May 2017, the auctioneer
claimed commission on the purchase price of all the assets, ie on R17 million, as
well as costs in relation to advertising, publications on social media and security.
On the same day the BRP informed Afrimat that the agreements had to be

amended to cater for the commission and advertising costs of the auctioneer, ‘as
per the initial offer to the public on the auction conditions that Afrimat agreed [it]
would pay additionally to the purchase price’. The BRP said that the deposit was
insufficient to cover those costs and suggested that any shortfall be paid to the
auctioneers on signature of the agreements.

[8] Afrimat’s stance was that it was not liable for the auctioneer’s commission
on the purchase price of all the assets and that it was liable for 10% commission
on the purchase price of the farm, ie R400 000. This was based on clause 9 of the
OTP which provided that the purchaser, in addition to the purchase price, would
pay agent’s commission of 10% plus VAT, calculated on the purchase price of
the property. The OTP defined the ‘Property’ or ‘Farm’ as ‘the immovable
property’. Further, clause 5 of the draft Sale of Immovable Property Agreement
provided that the purchase price of the farm was R4 million. Afrimat also denied
liability for social media and advertising costs.

[9] Whilst this dispute remained unresolved, Soliter Myn Ondernemings BK
(Soliter), a mineral rights-holder, asserted its right to the surface use of the entire
farm in terms of a lease concluded with Timasani. In a letter to the appellants and
the Board of Directors of Timasani, Soliter sought confirmation that the farm
would only be sold subject to its rights under the lease agreement. Soliter also
claimed ownership of certain stockpiles on the farm which were subject to a
mineral beneficiation programme and required an assurance that possession of
the stockpiles would not be handed over to anyone.

[10] In a letter by Afrimat’s attorneys to the BRP dated 13 June 2017, it was
stated that the encumbrance in favour of Soliter had not been disclosed to Afrimat
during the due diligence it had undertaken. In the same letter, Afrimat’s position
concerning the auctioneer’s commission was set out, namely that it had not

participated in any online auction and that it had engaged the BRP on the basis of
the terms in the OTP which was clear on the commission payable, ie 10% of the
price of the immovable property sold. The letter went on to state that Afrimat’s
offer remained open for seven days subject to the following:
‘4.1
It being accepted that our client is only liable to pay R400,000 (excluding VAT) for the
agent’s commission to the auctioneers and that our client is not liable for any other costs . . .
4.2
Soliter in writing waiving in a form acceptable to our client any reliance on any alleged
claim that it has over the immovable property of Timasani; and
4.3
the above to be recorded and inserted into the draft written agreements supplied to you
on 26 May 2017 and to be signed by the parties.
5.
On the lapse of the aforesaid 7 days:
5.1
our client’s offer is withdrawn and it specifically reserves its right to institute any
necessary proceedings to recover any loss suffered by it as a result of this transaction not
proceeding; and
5.2
our client’s deposit held by you to be immediately repaid along with all interest that
accrued thereon.’

[11] The subsequent waiver by Soliter of its mineral rights was considered
inadequate inter alia on the ground that it was equivocal and Afrimat’s offer was
not accepted within seven days. Consequently, on 21 June 2017 Afrimat’s
attorneys informed the BRP that its offer to conclude the sale agreements had
lapsed and requested that the deposit be repaid. When it had not been repaid by
30 June 2017, Afrimat launched an application against the appellants in the high
court for repayment of the deposit. It sought an order directing the BRP to pay
the costs of the application in his personal capacity on the basis that its claim
arose as a result of his conduct.

[12]  The appellants opposed the application on the following grounds. Afrimat
failed to comply with the provisions of s 133(1) of the Act because the application
could not be instituted without the written consent of the BRP or leave of the
court. Afrimat’s failure to join the auctioneer and Timasani’s creditors as

respondents was fatal to its case. There were material disputes of fact on the
papers which precluded the granting of final relief. The BRP had throughout acted
in an official capacity and Afrimat did not establish any basis for an order that he
pay the costs of the application in his personal capacity.

[13] As stated earlier, the high court (Molefe J) made an order declaring that
s 133 of the Act did not apply to the proceedings instituted and ordered Timasani
to repay the deposit to Afrimat. The court reasoned that s 133(1) was inapplicable
because the deposit was no longer lawfully in the possession of Timasani when
the sale agreements did not materialise and Timasani had exercised the powers of
a trustee as contemplated in s 133(1)(e). The non-joinder point was dismissed on
the basis that neither the auctioneer nor Timasani’s creditors had a direct and
substantial interest in the dispute between Timasani and Afrimat in relation to the
repayment of the deposit. The court held that it was unnecessary to join the
creditors as parties to the application and to the extent that there was any such
duty, it rested on the BRP. Regarding the costs order sought against the BRP, the
court held that there was no evidence to justify such an order.

[14] It is convenient firstly to deal with non-joinder. It was argued on behalf of
the appellants that the application should have been dismissed because Afrimat
failed to join all the creditors of Timasani in terms of s 145(1) of the Act. The
application, so it was submitted, affected Timasani’s financial position which
resulted in less funds being available to creditors. It was further submitted that
the auctioneer should also have been joined since this ‘was imperative for the
dispute to be properly ventilated’.

[15] The appellants’ reliance on non-joinder was misplaced. The test is whether
a party has a direct and substantial interest in the subject matter of the
proceedings, ie a legal interest in the subject matter of the litigation which may

be prejudicially affected by the judgment of the court.1 The deposit was a
provisional payment pending the fulfilment of suspensive conditions and the
conclusion of final agreements. The auctioneer had no interest in the terms upon
which the deposit was paid and it was not held on its behalf. The auctioneer’s
claim for commission and advertising costs – as against the BRP who had
instructed it – remained unaffected by the order directing Timasani to repay the
deposit. The high court correctly held that the auctioneer had no legal interest in
the subject matter of the application.

[16]  As to the interest of creditors, s 145(1) of the Act provides:
‘Each creditor is entitled to–
(a)
notice of each court proceeding, decision, meeting or other relevant event concerning
the business rescue proceedings;
(b)
participate in any court proceedings arising during the business rescue proceedings;
(c)
formally participate in the company's business rescue proceedings to the extent
provided for in this Chapter; and
(d)
informally participate in those proceedings by making proposals for a business rescue
plan to the practitioner.’

[17] Two points are required to be made. First, s 145(1) sets out in some detail
the rights and obligations of creditors when participating in business rescue
proceedings as a whole, in addition to the rights conferred on creditors as
‘affected persons’ by specific provisions of Chapter 6 of the Act.2 Subsection 1(a)
is a general notification requirement to creditors of court proceedings, decisions
and meetings concerning the business rescue. It has nothing to do with the joinder
of creditors in legal proceedings involving a company in business rescue. Having

1 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 657; Transvaal Agricultural
Union v Minister of Agriculture and Land Affairs and Others 2005 (4) SA 212 (SCA) para 66.
2 Professor P Delport et al  Henochsberg on the Companies Act 71 of 2008 at 506.

regard to the language, context and purpose of s 145,3 this is underscored by
ss 145(2) and 145(3). Subsection (2) provides that in addition to the rights in
subsection (1), each creditor has the right to vote to amend, approve or reject a
proposed business rescue plan and if that plan is rejected, to propose an alternative
plan or make an offer for the interests of other creditors.4 In terms of subsection
(3), creditors are entitled to form a committee to be consulted by a business rescue
practitioner in the development of a business plan.

[18] Second, and consistent with the text, context and purpose of s 145,
subsection (1)(b) confers on creditors a statutory right to participate in any legal
proceedings that arise during the business rescue proceedings of a company.  In
this respect s 145(1)(b) stands on an equal footing with s 131(3) of the Act, in
terms of which each affected person has a right to participate in an application to
place a company in business rescue.5 In both cases the leave of the court to
intervene in the proceedings is not required, but the court may need to regulate
the procedure to be followed if the affected person or creditor wishes to file
affidavits.6

[19] Inasmuch as a company in business rescue must be cited in legal
proceedings against it, the duty to give notice to creditors in terms of s 145(1)(a)
rests on the business rescue practitioner. Being a general notification requirement,

3 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13, 2012 (4) SA 593 (SCA),
affirmed recently in Airports Company South Africa v Big Five Duty Free (Pty) Ltd and Others [2018] ZACC 23;
2019 (5) SA 1 (CC) para 29.
4 Section 145(2) Companies Act 71 of 2008 (the Act) provides:
‘In addition to the rights set out in subsection (1), each creditor has–
(a)
the right to vote to amend, approve or reject a proposed business rescue plan, in the manner contemplated
in section 152; and
(b) if the proposed business rescue plan is rejected, a further right to–
(i)
propose the development of an alternative plan, in the manner contemplated in section 153; or
(ii) present an offer to acquire the interests of any or all of the other creditors in the manner contemplated
in section 153. . . .’
5 In terms of s 128(1)(a) of the Act, an ‘affected person’ includes ‘a shareholder or creditor of the company’.
6 Cape Point Vineyards (Pty) Ltd v Pinnacle Point Group Ltd and Another (Advantage Projects Managers (Pty)
Ltd Intervening) 2011 (5) SA 600 (WCC) para 21; Engen Petroleum Ltd v Multi Waste (Pty) Ltd and Others 2012
(5) SA 596 (GSJ) para 30.

the purpose of s 145(1)(a) is to inform creditors of court proceedings brought
during business rescue: it does not require the joinder of every creditor in such
proceedings. This is hardly surprising as the business rescue practitioner has full
management control of the company during business rescue proceedings;7 is
obliged under the Act to keep creditors abreast of developments in the business
rescue, and knows who the creditors are and which of them may wish to
participate in the relevant legal proceedings. Two cases were cited in support of
the submission that s 145(1)(a) required the joinder of all creditors in any legal
proceedings involving the company in business rescue.8 However, both these
cases involved the fate of the business rescue plan and contentions that directly
affected the financial interests of creditors. They were not authority for the
submission advanced.

[20] It follows that in the circumstances, Afrimat was not required by s 145(1)
of the Act to join all Timasani’s creditors in the application to recover its deposit.
The deposit was paid provisionally pending the conclusion of final agreements.
When this did not happen Afrimat was entitled to repayment thereof. No right of
any creditor to payment of any amount was affected by the high court’s order
directing Timasani to repay the deposit. On this aspect too, the high court was
correct.

[21] This brings me to the alleged disputes of fact in the answering affidavit.
They have no substance. In short, the appellants alleged that Afrimat
‘misrepresented its commitment toward the purchase of the assets’ as a result of
which Timasani did not proceed with the online auction. Afrimat, the BRP said,
‘effectively hijacked the online auction’, snatched at a bargain and was trying to

7 Section 140(1)(a) of the Act.
8 Absa Bank Ltd v Naude NO and Others [2015] ZASCA 97; 2016 (6) SA 540 SCA and Kransfontein Beleggings
(Pty) Ltd v Corlink Twenty Five (Pty) Ltd [2017] ZASCA 131.

force Timasani to agree to terms and conditions relating to costs and commissions
that suited Afrimat. Then it was alleged that all prospective purchasers were
required to pay a deposit which ‘represented a payment to secure participation’
in the sale of Timasani’s assets. The BRP went on to say that ‘[t]he deposit never
represented a payment that was to be paid back to the Applicant’.

[22] None of these allegations however established any dispute of fact. Neither
are they sustainable on the evidence. Nowhere was it stated – in either the
auctioneer’s invitation to submit offers or the correspondence that passed
between Afrimat and the BRP which culminated in the draft agreements – that a
non-refundable deposit was payable. On the contrary, the BRP’s letter of 27
March 2017 makes it clear that the deposit would be retained on behalf of Afrimat
and kept separately in an interest-bearing account, ‘pending the outcome of the
due diligence proceedings and conclusion of the final agreements’.

[23] Regarding the costs and commissions relating to the auction, the high
watermark of the appellants’ case was that the auctioneer’s attorneys had
‘confirmed that the terms and conditions of sale, pertaining to the costs and
commissions, apply to any agreement reached’. This is hearsay. No affidavit by
the auctioneer was filed. The appellants simply did not present a factual version
in the answering affidavit. And there was no dispute concerning Afrimat’s
commitment to an agreement as is evidenced by the BRP’s letter of 27 March
2017 and the reasons why the final agreements were not concluded. Neither was
there any genuine dispute of fact in relation to Afrimat’s stance that it did not
participate in an online auction and that in accordance with the OTP, it was liable
for a commission of only 10% of the purchase price of the farm.

[24] There remains the question whether s 133(1) of the Act precluded Afrimat
from claiming repayment of the deposit. It 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–
(a)
with the written consent of the practitioner;
(b)
with the leave of the court and in accordance with any terms the court considers
suitable;
(c)
. . .
(d)
. . .
(e)
proceedings concerning any property or right over which the company exercises the
powers of a trustee;
(f)
. . .
(2)
During business rescue proceedings, a guarantee or surety by a company in favour of
any other person may not be enforced by any person against the company except with the leave
of the court and in accordance with any terms the court considers just and equitable in the
circumstances.
(3)
If any right to commence proceedings or otherwise assert a claim against the company
is subject to a time limit, the measurement of that time must be suspended during the company’s
business rescue proceedings.’

[25] Section 133 must be read as a whole: the different subsections of a
provision dealing with the same subject matter must not be considered in isolation
but read together so as to ascertain the meaning of the provision.9 Section 133(1)
is a general moratorium provision that applies in relation to the assets and
liabilities of the company at the stage when business rescue comes into effect.10
It protects the company against legal action in respect of claims in general, save
with the written consent of the business rescue practitioner and failing such
consent, with the leave of the court. This Court has stated the purpose of s 133(1)
as follows:

9 Aziz v Divisional Council, Cape and Another 1962 (4) SA 719 (A) at 726E.
10 Chetty t/a Nationwide Electrical v Hart and Another NNO [2015] ZASCA 112; 2015 (6) SA 424 (SCA) para
28.

‘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.’11

[26] Both Cloete Murray v FirstRand Bank and Chetty v Hart were concerned
with claims existing prior to the commencement of business rescue. The same is
true of the cases in the High Court involving attempts to recover possession from
companies in business rescue of leased premises or a leased motor vehicle, the
possession of which had been lawful prior to the commencement of business
rescue.12 So far as we can ascertain, this is the first occasion on which it has been
sought to invoke the moratorium in s 133(1) in relation to a transaction concluded
after the commencement of business rescue or property coming into a company’s
possession after that date. Entirely different factors come into play in that
situation. A business rescue practitioner may borrow money, employ people or,
as in this case, sell property, in the course of business rescue. If the business
rescue practitioner does not meet those commitments, it is not apparent that
imposing a moratorium on the enforcement of those contracts, or the recovery of
what is due to third parties, serves any significant purpose of business rescue. It
may operate to dissuade third parties from entering into transactions that are
necessary to keep the business afloat while attempts are made to rescue it. We
raised with counsel whether properly construed s 133(1) is concerned only with
transactions concluded prior to the commencement of business rescue and the
possession or ownership of property acquired or possessed prior to that date.
However, neither was in a position to make any helpful submissions to us and it

11 Cloete Murray and Another NNO v FirstRand Bank Ltd t/a WesBank [2015] ZASCA 39; 2015 (3) SA 438
(SCA) para 14. See also Chetty fn 10 para 28.
12 Madodza (Pty) Ltd v Absa Bank Limited and others [2012] ZAGPPHC 165; Kythera Court v Le Rendez Vous
Café CC & another 2016 (6) SA 63 (GJ); JVJ Logistics (Pty) Ltd v Standard Bank of South Africa Ltd and others
2016 (6) SA 448 (D); Southern Value Consortium v Tresso Trading 102 (Pty) Ltd 2016 (6) SA 501 (WCC).

would not be appropriate to decide the point without full argument. Fortunately
the case can be resolved on the assumption that the moratorium may have effect
in relation to transactions occurring after the commencement of business rescue.

[27] Section 133(2) is a special provision that deals specifically with the
enforcement of claims against the company based on a guarantee or suretyship
given by the company, which may be enforced only with the leave of the court.
Being a special provision, s 133(2) applies to the exclusion of s 133(1) in relation
to claims based on guarantees or suretyships.13 In keeping with the purpose of the
moratorium to provide a company in business rescue with breathing space to
enable it to restructure its affairs, and to protect creditors, s 133(3) extends the
time within which proceedings must be commenced or claims asserted against
the company.

[28] The general moratorium in s 133(1) is a defence in personam: it is a
personal, temporary benefit in favour of a company undergoing business rescue
that cannot be utilised indefinitely to delay the claims of creditors or result in the
extinction of their claims.14 Indeed, and as stated, legal proceedings in relation to
those claims may be initiated or continued with the consent of the BRP or leave
of the court.

[29] The section is not easy to construe.15 The prohibition says that 'no legal
proceeding … may be commenced or proceeded with in any forum', save in the
circumstances specified in the various sub-paragraphs. That stark prohibition is
then qualified by inserting the words 'including enforcement action against the
company, or in relation to any property belonging to the company, or lawfully in
its possession'. Enforcement action appears to relate to contractual or other

13 Investec Bank Ltd v Bruyns 2012 (5) SA 430 (WCC) para 17.
14 See Henochsberg fn 2 at 482(32) and the authorities there cited.
15 See the detailed discussion by Olsen J in JVJ Logistics fn 12.

obligations incurred prior to the business rescue. It would include any claim for
specific performance, payment of a purchase price, or delivery of property or
goods that had been sold. The second and third instances involve property that is
either owned by the company or in its lawful possession. The insertions must be
directed to some purpose, because they are unnecessary if a blanket prohibition
on legal proceedings of any kind was the aim. But, prefacing them with the word
'including', suggests that there are other unspecified situations hit by the
prohibition. On the other hand, if all claims of whatever type were the target, the
insertions serve no useful purpose. Courts have treated the reference to property
'belonging to the company, or in its lawful possession' as excluding such property
from the prohibition of legal proceedings. It would have been simpler then to
refer to it in a sub-paragraph, as was done with property over which the company
exercised the powers of a trustee. However, we must take the section as we find
it and there seems no other reason for this insertion. No purpose connected to the
process of business rescue warrants the company under business rescue being
protected against proceedings to recover property that it neither owns, nor
lawfully possesses.

[30] In my view, properly construed s 133(1) provides that during business
rescue proceedings:
(1) no legal proceedings, including enforcement action, against the company; and
(2) no legal proceedings in relation to property belonging to or in the lawful
possession of the company,
may be commenced or proceeded with in any forum. Put differently, the words
‘no legal proceedings’ straddle both the circumstances envisaged in (1) and (2).
Thus, in Cloete Murray v FirstRand Bank,16 it was stated that the inclusion of the
term ‘enforcement action’ under the generic phrase ‘legal proceedings’ seems to

16 Cloete Murray fn 11 para 32.

indicate that ‘enforcement action’ is a species of ‘legal proceeding’ or meant to
have its origin in legal proceedings.

[31] This appeal concerns the moratorium in (2). Afrimat contends that s 133(1)
is inapplicable because the deposit does not belong to Timasani and it is in
unlawful possession thereof. The plain language of the words, ‘no legal
proceedings in relation to any property belonging to the company or lawfully in
its possession may be commenced or proceeded with’, limits the reach of the
moratorium and renders it inapplicable to legal proceedings in relation to property
belonging to an entity other than the company in business rescue, or property
unlawfully possessed by the company.17 Property ‘belonging to the company’ in
s 133(1), sensibly construed, can only mean property belonging in a legally valid
sense, such as property owned by the company,18 which in s 133(1) is expressly
distinguished from property ‘lawfully in its possession’. Common sense dictates
that it could never have been intended that the restructuring of the affairs of a
company during business rescue should prevent recovery of property not
belonging to it or unlawfully in its possession.19

[32] This construction is reinforced by the immediate context. Section 134(1)(c)
of the Act which deals with the protection of property interests during business
rescue of a company is cast in similar terms and provides:
‘134  Protection of property interests –(1) Subject to subsections (2) and (3), during a
company’s business rescue proceedings–
. . .
(c)
despite any provision of an agreement to the contrary, no person may exercise any right
in respect of any property in the lawful possession of the company, irrespective of whether the
property is owned by the company, except to the extent that the practitioner consents in
writing.’

17 Kythera Court fn 12 para 9.
18 Southern Value Consortium fn 12 para 30.
19 Southern Value Consortium fn 12 para 35.

[33] Section 134(1)(c) conditionally prohibits the exercise of any right in
respect of property ‘in the lawful possession of the company’ during business
rescue proceedings, regardless of whether that property is owned by the company.
It does not prohibit the exercise of a right in relation to property in the unlawful
possession of the company.20

[34] Thus, in Cloete Murray v FirstRand Bank,21 the cancellation of an
instalment sale agreement by a creditor rendered unlawful the continued
possession by a company in business rescue of the goods that formed the subject
matter of that agreement. This Court held that although the moratorium in
s 133(1) of the Act grants the company breathing space, the legislature did not
intend to interfere with contractual rights and obligations of parties to an
agreement. Likewise, in Kythera Court v Le Rendez-Vous Café CC,22 it was held
that the moratorium did not preclude vindicatory proceedings or proceedings for
the repossession or attachment of property in the unlawful possession of a
company in business rescue. The case concerned legal proceedings for ejectment
where a lease had been validly cancelled and the company was an unlawful
occupier.

[35] Applied to the present case, the agreement in terms of which the deposit
was paid did not materialise. It is trite that when a contract is subject to a
suspensive condition which is fulfilled, the obligations under the contract become
enforceable.23 On the other hand, if the condition is not fulfilled then it is as if the
contract never came into existence, ie it is regarded as being void ab initio.24 A

20 Kythera Court fn 12 paras 10-11.
21 Cloete Murray fn 11 para 40.
22 Kythera Court fn 12 paras 9, 14 and 15.
23 Tamarillo (Pty) Ltd v BN Aitken (Pty) Ltd 1982 (1) SA 398 (A) at 432C; Jurgens Eiendomsagente v Share 1990
(4) SA 664 (A) at 674E-J, approving Design and Planning Service v Kruger 1974 (1) SA 689 (T) at 695C-E.
24 JW Wessels The Law of Contract in South Africa 2 ed (1951) para 1380; Command Protection Services
(Gauteng) (Pty) Ltd t/a Maxi Security v South African Post Office Ltd [2012] ZASCA 160; [2013] All SA 266,
2013 (2) SA 133 (SCA) para 10.

party who has made a payment under a contract in anticipation of the fulfilment
of a suspensive condition is entitled to the return of the money, unless the contract
provides otherwise.25 Once Timasani and Afrimat did not conclude the draft
agreements submitted by Afrimat, there was no right to retain the deposit because
it was not money that belonged to the company; neither was it property lawfully
in its possession. The agreement in regard to the deposit was that it would be held
in a specific account and would accrue interest for the benefit of Afrimat. That
made it clear that if the anticipated agreement did not materialise the deposit had
to be repaid. Timasani was rightly ordered to repay the deposit.

[36] The deposit was not property over which Timasani exercised the powers
of a trustee as contemplated in s 133(1)(e) of the Act. The high court, with
reference to the definition of ‘trustee’ in the Concise Oxford Dictionary, namely
‘a person or a member of the board given control or powers of administration of
property in trust with a legal obligation to administer it solely for the purposes
specified’, concluded that s 133(1)(e) also limited the application of the
moratorium.

[37] The high court erred. Timasani held no title to any trust property belonging
to Afrimat. The deposit was not paid as property in trust. Timasani was not given
any powers of administration typically exercised by a trustee, such as taking
investment decisions regarding trust assets, advancing trust capital or distributing
trust assets to beneficiaries. It did not incur any fiduciary duty in respect of the
deposit. Fundamentally, Afrimat’s claim was not founded on any breach of trust
on the part of the appellants. The section is addressed to companies that hold
funds in trust, such as incorporated firms of attorneys, estate agents, professional

25 See G B Bradfield and R H Christie Christie's Law of Contract in South Africa 7 ed (2016) at 172 and the
authorities collected in fn 162.

trustees and financial institutions owing fiduciary duties in terms of the Financial
Institutions (Protection of Funds) Act 28 of 2001.

[38] In the result the appeal is dismissed with costs.

_______________________

A SCHIPPERS
JUDGE OF APPEAL

APPEARANCES

For appellant:
L K van der Merwe

Instructed by:

Koster Attorneys, Pretoria
McIntyre van der Post, Bloemfontein

For respondent:
A J Daniels SC

Instructed by:

Webber Wentzel, Johannesburg

Noordman Attorneys, Bloemfontein

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From: The Registrar, Supreme Court of Appeal

Date: 13 April 2021

Status: Immediate

Please note that the media summary is for the benefit of the media and does not form part
of the judgment.

Timasani (Pty) Ltd in business rescue) and Another v Afrimat Iron Ore (Pty) Ltd (91/2021)
[2021] ZASCA 43 (13 April 2021)
The SCA today dismissed an appeal against an order by the Gauteng Division of the High
Court, Pretoria, directing Timasani (Pty) Ltd (in business rescue) (Timasani) and its appointed
business rescue practitioner (the BRP) to repay the sum of R1.7 million to Afrimat Iron Ore
(Pty) Ltd (Afrimat). Afrimat paid this amount as a deposit which was held in a separate interest-
bearing account pending the fulfilment of suspensive conditions. These included the conclusion
of two contracts for (a) the sale of a farm in Kuruman owned by Timasani; and (b) mineral
rights and mining equipment. However, those contracts were never concluded.
Timasani contended that the application for repayment of the deposit was precluded by s 133(1)
of the Companies Act 71 of 2008 (the Act), which places a general moratorium on legal
proceedings against a company in business rescue. The section provides that ‘no legal
proceedings, 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 with the written consent of the BRP or leave of the court. Timasani also
claimed that its creditors had to be joined in the proceedings as envisaged in s 145(1) of the
Act, which states that creditors are entitled to notice of, and to participate in, court proceedings
concerning the business rescue.
The SCA held that s 145(1) is a general notification requirement to inform creditors of court
proceedings brought during business rescue. It does not require the joinder of every creditor in
such proceedings. The duty to inform creditors of court proceedings relating to business rescue
rests on the BRP. It held further that s 133(1) means that during business rescue proceedings,
(1) no legal proceedings, including enforcement action against the company; and (2) no legal
proceedings in relation to property belonging to or in the lawful possession of the company
may be commenced or continued. Property ‘belonging to the company’ means property
belonging in a legally valid sense, such as property owned by the company; and s 133(1) does

not apply to property unlawfully in possession of the company. It could not have been intended
that the restructuring of the affairs of a company during business rescue should prevent
recovery of property not belonging to it or unlawfully in its possession. Once Timasani and
Afrimat did not conclude the contracts for the farm and the movable assets, the deposit had to
be repaid. The SCA did not uphold the finding of the court below that the deposit was property
in respect of which Timasani exercised the powers of a trustee, as envisaged in s 133(1)(e) of
the Act. The deposit was not paid as property in trust and Afrimat’s claim was not founded on
any breach of trust.