in the supreme court of appeal of south ...14 g4s casn solutions (sa) (pty) ltd v zandspruit cash...
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IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
In the matter between:
LIMPOPO ECONOMIC DEVELOPMENT AGENCY
and
SCA CASE NO. 405/2020
GLD Case Number: 0049700/17
Applicant
JOHANNES FREDERICK KLOPPER N.O. First Respondent
CHRISTOPHER RAYMOND REY N.O. Second Respondent
LIEBENBERG DAVID RYK VAN DER MERWE N.O. Third Respondent
LEBOGANE MPAKATI N.O. Fourth Respondent
DILOKONG CHROME MINE {PTY} LTD (IN BUSINESS RESCUE) Fifth Respondent
ASA METALS (PTY) LTD (IN BUSINESS RESCUE) Sixth Respondent
EASTERN ASIA METAL INVESTMENT CO. LTD Seventh Respondent
MINISTER OF MINERAL RESOURCES Eighth Respondent
DIRECTOR GENERAL: DEPARTMENT OF MINERAL RESOURCES Ninth Respondent
REGIONAL MANAGER, LIMPOPO REGION OF THE DMR Tenth Respondent
CHEETAH CHROME SOUTH AFRICA (PTY) LTD Eleventh Respondent
FILING SHEET
The First to Sixth Respondents hereby present the following for service and filing:
Page 2 of 4
- First to the Sixth Respondents' Answering Affidavit
SIGNED AT BLOEMFONTEIN ON THIS THE 21 st DAY OF JULY 2020
HOGAN LOVELLS J NNESBURG INC.
TO: THE REGISTRAR SUPREME COURT OF APPEAL BLOEMFONTEIN
AND TO:
First to Sixth Respondents' Attorneys 140 West Street Sandton, Johannesburg Tel: +27 11 052 6100 Email: [email protected] [email protected] Ref: WJJ Badenhorst/yp/762589.000102 c/o WEBBERS ATTORNEYS 96 Charles Street Bloemfontein, 9301 Tel: 051 430 1340 Fax: 051 430 8987 Email: [email protected] Ref : L VAN SCHALKWYK/bv/HOG1/0004
TSHISEVHE GWINA RATSHIMBILANI INC. (TGR ATTORNEYS) Applicant's Attorneys 6th Floor, Vdara 41 Rivonia Road Sandhurst, Sandton, 2196 Tel: (011) 243 5027 Email: [email protected] Ref: P Tshisevhe / P Mudau / MAT2030 c/o MC INTYRE VAN DER POST Box 540, Bloemfontein, 9300 Tel: 051 403 6600 12 Barnes Street Westdene Bloemfontein Email: [email protected] Tel: (051} 505 0200
AND TO: EASTERN ASIA METAL INVESTMENT CO LTD ("EAMI") 7th Respondent 13 Biccard Street POLOKWANE Limpopo Province
Page 3 of 4
NOT PARTICIPATING IN THE APPEAL
AND TO: THE MINISTER OF MINERAL RESOURCES 8th Respondent 2nd Floor, Block 2B Trevenna Campus, 75 Meintjies Street Corner of Meintjies and Francis Baard Streets Sunnyside PRETORIA C/0 THE STATE ATTORNEY, JOHANNESBURG 1 Oth floor, North State Building 85 Albert Sisulu Road and cnr Kruis Street JOHANNESBURG REF : 0339/18/P43 Ref : Rudzani Nemakonde e-mail : [email protected] cell: 083 661 1670
AND TO: THE DIRECTOR GENERAL 9TH Respondent 2nd Floor, Block 2B Trevenna Campus 75 Meintjies Street Corner of Meintjies and Francis Baard Streets Sunnyside PRETORIA Ref : Adv Thabo Mokena e-mail : [email protected]
AND TO: THE REGIONAL MANAGER LIMPOPO REGION 1 oTH Respondent Broll Building 101 Dorp Street 'POLOKWANE Ref : Mr Aaron Kharivhe e-mail : [email protected]
AND TO : THOMSON-WILKS 11 th Respondent 23 Impala Road Chislehurston Sandton Ref: Steven Thompson Tel: 011-7848984 e-mail : [email protected] [email protected]
Page 4 of 4
IN THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
In the matter between:
LIMPOPO ECONOMIC DEVELOPMENT AGENCY
and
SCA CASE NO. 405/2020
GLD Case Number: 0049700/17
Applicant
JOHANNES FREDERICK KLOPPER N.O. First Respondent
CHRISTOPHER RAYMOND REY N.O. Second Respondent
LIEBENBERG DAVID RYK VAN DER MERWE N.O. Third Respondent
LEBOGANE MPAKA Tl N.O. Fourth Respondent
DILOKONG CHROME MINE (PTY) LTD (IN BUSINESS RESCUE) Fifth Respondent
ASA METALS (PTY) LTD (IN BUSINESS RESCUE) Sixth Respondent
EASTERN ASIA METAL INVESTMENT CO. LTD Seventh Respondent
MINISTER OF MINERAL RESOURCES Eighth Respondent
DIRECTOR GENERAL: DEPARTMENT OF MINERAL RESOURCES Ninth Respondent
REGIONAL MANAGER, LIMPOPO REGION OF THE DMR Tenth Respondent
CHEETAH CHROME SOUTH AFRICA (PTY) LTD Eleventh Respondent
FIRST TO SIXTH RESPONDENTS' ANSWERING AFFIDAVIT
I
/l
Page 2 of 21
I, the undersigned,
CHRISTOPHER RAYMOND REY
state under oath that:
1. I am the second respondent and one of the joint business rescue practitioners
("BRPs") of the fifth respondent. I was the deponent to the answering affidavit on
behalf of the first to sixth respondents in the application launched by the
applicant, in the Court a quo. I was duly authorised to depose to that affidavit
and similarly, I am duly authorised to depose to this affidavit and to oppose the
application launched by the applicant for condonation and leave to appeal.
2. I am supported in the opposition of this application by my joint BRP, the first
respondent, as well as the BRPs of the sixth respondent, being the third and
fourth respondents. I shall refer to the first to sixth respondents collectively as
"the respondents". I will refer to the remaining parties by an abbreviated form of
their names.
3. The facts hereinafter contained are, save where otherwise stated, within my own
personal knowledge and belief, both true and correct.
4. Insofar as I make legal submissions hereafter, these submissions are made on
the advice of the respondents' legal representatives, which advice I accept as
being true and correct.
5. This matter pertains to a mining right. DCM is the holder of a mining right which
was converted from an old order mining right as contemplated by item 7 of
Schedule II of the Mineral and Petroleum Resources Development Act No. 28 of
2002 ("MPRDA") on 20 March 2014 ("the Mining Right").
6. Before I proceed to deal with the respondents' grounds of opposition, I make aj f ~ . 11 ~ '
Page 3 of 21
few preliminary observations.
6.1. The founding affidavit is unduly prolix and cumbersome. It is in effect
a set of founding papers that would ordinarily be filed in a court of
first instance. It is not limited only to such information as may be
necessary for this Court to decide whether to grant the leave to
appeal. For example, the following paragraphs of the founding
affidavit are unnecessary: 6/17, 6/18, 6/19, 6/20, 6/21 ,1 8/26, 8/27,
8/28, 8/29, 8/30, 8/31 , 11/39, 11/41 2, and 12/443
•
6.2. LEDA also sought relief in the court a quo interdicting the transfer of
the Mining Right without the consent of the Minister in terms of
section 11 of the MPRDA. Despite the respondents always having
the intention of obtaining the consent of the Minister, and the Minister
having already granted the consent,4 LEDA still contends that "an
order is sought in the notice of motion accordingly ought to have
been made to this effecf'. 5 Such an order, granted on appeal, will
have no practical effect (because the Minister has already granted
the consent) and is accordingly moot.
7. The only issue raised in LEDA's application for leave to appeal is the
interpretation of clause 17 of the Mining Right. 6
8. The basis of the appeal is as follows:
8.1 . the Court a quo erred in its conclusion and ought to have found in
favour of the interpretation advanced by LEDA regarding clause 17 of
1 The allegations from paragraph 17 to 21 are not made in the founding papers. 2 The deponent to the founding affidavit conceals that the respondents and LEDA attempted to resolve the dispute and had agreed that the matter would be kept in abeyance pending such attempts. 3 Whilst directed at Cheetah, this paragraph adds nothing to the question whether LEDA should be granted leave to appeal. 4 Founding affidavit 12/43 5 Founding affidavit 12/42 6 Founding Affidavit 19/63
Page 4 of 21
the Mining Right. 7
8.2. the matter is of considerable importance to LEDA. 8
8.3. it is important that the nature and extent of the Minister's powers in
terms of the MPRDA to lawfully impose conditions in mining rights
are clarified. 9
9. As I demonstrate below, none of these bases have any merit.
10. In responding to the founding affidavit, as well as the affidavit attached to the
application for condonation ("the condonation affidavit"), I do not respond ad
seriatim but rather thematically. To the extent that I do not deal with a particular
paragraph, unless it is admitted elsewhere in this affidavit, the allegations
contained in that paragraph should be deemed to be denied.
THE INTERPRETATION OF CLAUSE 17 OF THE MINING RIGHT
11. Clause 17 of the Mining Right reads as follows:
7 Founding Affidavit 29192 8 Founding Affidavit 29192 9 Founding Affidavit 30/94
"17 Provisions relating to section 2 (d) and (f) of the Act
In the furthering of the objects of this Act the Holder is bound by the
provisions of an agreement or arrangement dated 11 December
2006 entered into between the Holder/empowering partner and it is
being recorded that the parties shall within 3 (three) months of
executing the right, conclude a new agreement wherein Limpopo
Economic Development Agency will hold 40% of stake in the right
without an obligation to dilute. The above is subject to the transfer
of Limpopo Economic Development 40% stake at a later stage in
SOMCO upon due notice by the Minister (the empowerment partner)
Page 5 of 21
which agreement or arrangement was taken into consideration for
purposes of compliance with the requirements of the Act and/or
Broad Based Economic Empowerment Charter developed in terms of
the Act and such agreement shall form part of this right." (Emphasis
Added)
12. According to LEDA's interpretation of clause 17 of the Mining Right:
12.1. DCM is bound by and subject to the "agreement or arrangement
dated 11 December 2006': at least until the conclusion of the new
agreement contemplated in clause 17.
12.2. The Mining Right requires that DCM conclude a new agreement with
LEDA contemplated by clause 17. 10
12.3. LEDA holds alternatively is entitled to hold a 40% stake in the Mining
Right. 11 The underlined portion being the alternative was raised for
the first time during the hearing of this application in the Court a quo
when a draft order was handed up. No amendment was sought from
the bar and the Court a quo was not asked to, nor did it, consider this
alternative, despite LEDA's counsel arguing the point.
12.4. The sale of business would render clause 17 meaningless and
unenforceable. 12
12.5. LEDA has a title interest in the Mining Right as contemplated by
section 134(3) of the Companies Act No. 71 of 2008.
13. In its founding papers filed in the Court a quo, LEDA did not seek to
contextualise clause 17 of the Mining Right taking into account the factual
1° Founding Affidavit 20/66.6 11 Founding Affidavit 20/66.7 12 Founding affidavit 20/66.8
j ll
Page 6 of 21
background known to the parties at the time. Instead, LEDA had sought to
interpret clause 17 of the Mining Right by placing its spin upon the express
wording of same without putting up any credible or admissible evidence and
most importantly, without interpreting the Mining Right in its context. In fact, in
the replying affidavit LEDA expressly stated that it does not rely upon any facts
prior to the appointment of Mr Mphahlele, the deponent to the founding affidavit
in the Court a quo, on 1 January 2015, and has disavowed any reliance upon
contextualising the Mining Right.
14. The Court a quo was accordingly correct in finding that:
"LEDA, fortified by its view that the words used in clause 17 ought to be given
their ordinary grammatical meaning and relying for its interpretation on the
literal meaning of the clause, has ignored the proper approach expounded
above. It ignores not only the context, purpose, and background to the
preparation and production of the mining right, including clause 17, but the
fact that its literal interpretation would produce an illegal result. A proper
interpretation would eschew such a meaning."13
15. LEDA failed to heed the warning of this Court in simply relying on a linguistic
interpretation to discharge its onus. 14 LEDA, in this leave to appeal application,
pays mere lip service to the correct approach to interpretation of documents
including the context, purpose and background to the preparation and production
of the Mining Right. 15 Whatever LEDA may say in this application regarding
context, purpose, background and preparation, when one examines its
interpretation it is nothing more than a "narrow peering at the words used'' and
the giving of words their literal meaning whatever the consequences, and
however absurd, unbusinesslike or insensible the results may be.
13 At para 39. 14
G4S Casn Solutions (SA) (Pty) Ltd v Zandspruit Cash & Carry (Pty) Ltd 2017 (2) SA 24 (SCA) at para 13. 1 15 Most recently confirmed by this Court in lveco South Africa (Pty) Ltd v Centurion Bus Manufacturers (Pty) Ltd 2020) ZASCA 58 (3 June 2020)
•
Page 7 of 21
16. The respondents had sought to interpret the Mining Right in its context, based
upon the admitted contemporaneous documentation in existence at the time and
the subsequent conduct of LEDA. The following factual matrix is significant:
16 Clause 1.2.1
16.1. Prior to the commencement of the MPRDA on 1 May 2004, DCM
was the holder of an old order Mining Right for Chrome Ore;
16.2. ASA holds 100% of the issued share capital of DCM, the
shareholding of ASA being as follows: EAMI - 60% shareholding;
and LEDA - 40% shareholding. EAMI and LEDA are parties to a
Shareholders Agreement concluded on 11 December 2006 ("the
SHA").
16.3. The following clauses in the SHA are relevant:
16.3.1.
16.3.2.
'"BEE transaction' means any transactions in terms of which
shares are sold to a BEE corporate body to ensure that [ASA]
complies with the Mining Charter;" 16
"The parties [EAMI and LEDA] hereby agree that the identified
and approved BEE partner shall be responsible to organize
and raise its own finances to fund the purchase price of the
shares from [LEDA]. The parties further agree that they will
give consent, if necessary, to the said BEE to pledge their
shares as security for the loan to be advanced to them for the
purchase of the shares from Lim Dev, provided that the
financial institution and/or the funder concerned is acceptable
to both [LEDA] and EAMI. It is further agreed that any
agreement that may be entered into between the BEE partner
and [LEDA], either before or after he becomes a shareholder in
the company, sha!I have to be approved by the other
17 Clause 3.1 i ; Clause 4.2 ;s Clause 5.1
16.3.3.
16.3.4.
Page 8 of 21
shareholder/s." 17
Because of the considerable amount of Expansion Capital that
would be required to fund the expansion, it is expected that
financial institutions will require the parties to fund a portion of
the Expansion Capital. The said portion shall be funded by the
shareholders (including the BEE partner when he becomes a
shareholder) pro rata to their shareholding in the company. 18
;The Group's shareholding structure is to be restructured to
cater for the introduction of a BEE shareholder at [ASA] level.
The introduction of the BEE shareholder shall be achieved
through the sale by [LEDA] of its shareholding in [ASA] which
will result in the identified and approved BEE partner holding
30% of the total issued capital of [ASA]. The negotiation and
identification of a BEE shareholder shall be the exclusive
responsibility of [LEDA]. The identified BEE shareholder in
order to become a shareholder or member of [ASA] shall
require the approval of the shareholders [EAMI and LEDA] in
general meeting." 19
16.4. It is common cause that the need for a BEE partner was because
LEDA is not a historically disadvantaged South African as
contemplated in the MPRDA and The Mining Charter ("the Charter").
16.5. During February 2011, the government endorsed the African
Exploration, Mining and Finance Corporation as the State Owned
Mining Company ("SOMCO"), which company would hold all the
State owned mining assets and would undertake the mining of
minerals of strategic significance on behalf of the State.
Page 9 of 21
16.6. By November 2013, the identification and negotiation of a BEE
shareholder in ASA had still not been finalised. In a letter addressed
to EAMI, LEDA stated that it had resolved to dilute its shareholding in
ASA Metals (ASA) from its current shareholding of 40% to 14% and it
had sought approval to do so from the Limpopo Economic
Development Environment and Tourism Department (LEDET) and
the Minister. An in principle approval had been obtained from the
LEDET subject to the DMR lifting the moratorium. 20 LEDA
approached the Minister for a meeting at which it intended to
emphasize the urgency of introducing BEE in ASA to facilitate
conversion of old to new order Mining Rights.
16. 7. In a meeting of the board of directors of ASA and DCM held on
15 January 2014, it was recorded that LEDA had addressed letters to
both the DMR and the Limpopo Provincial Government for the
necessary approvals/permissions to dilute its shares in ASA.
16.8. DCM's old order mining right was converted to a mining right as
contemplated in the MPRDA on 20 March 2014, which Mining Right
included clause 17.
16.9. On 13 May 2014, in a meeting of the shareholders of ASA, the
following was minuted:
"The new order mining right was issued without BEE - one of the
conditions for the conversion was that the parties must amend the
Shareholders Agreement to indicated (sic) that LEDA would not be
diluted and that the 40% LEDA shareholding would be transferred
to SOMCO at the appropriate time;" (emphasis added)
20 On the sale of state-owned mining assets.
16.10.
Page 10 of 21
The directors of LEDA present at this meeting, including its chairman,
did not say that LEDA holds a 40% stake in the Mining Right.
LEDA's attorneys for the first time raised the issue of LEDA holding a
40% stake in the Mining Right in September 2017.
17. LEDA's interpretation is opportunistic and self-serving when considering the
language used for the following reasons:
17.1. In the introductory portion of the clause, 21 in the context of the
heading of clause 17 the phrase correctly refers to the "Holder" as
DCM. But this introduction does not have the significance which
LEDA attaches to it. DCM is not bound by the provisions of the SHA
contractually. The phrase merely records the Minister's recognition
of the BEE objects of the MPRDA22, being complied with at the
shareholder level of DCM (i.e. ASA) pursuant to the SHA. 23 There is
no other magic in the words used, nor is it a "placeholder
arrangement" in that the SHA is also not the agreement that DCM
and its BRPs are "bound by', pending the conclusion of the "new
agreement", allegedly between DCM and LEDA.
17 .2. LEDA's interpretation is entirely dependent upon it being found that
"the parties"24 (which follows from the reference to
Holder/empowering partner) are DCM and LEDA. However, this
cannot be for the following reasons:
17.2. 1. it is common cause that the agreement dated
~1 "In the furthering of the objects of this Act the Holaer is bound by the provisions of an agreement or arrangement dated 11
December 2006 entered into between the Holder/empowering partner .. . ·• 22 As contained in sections 2 (d) and (f) 20 The MPRDA is not concerned with a party arranges its BEE component i.e. by way of a joint venture, shareholding in the applicant or upstream shareholding. 2
" '· .. • the parties shall within 3 (three) months of executing the right. conclude a new agreement wherein Limpopo Economic Development Agency will hold 40% of stake in the right without an obligation to dilute··
17.2.2.
17.2.3.
17.2.4.
Page 11 of 21
11 December 2006 was entered into between LEDA and
EAMI.
the reference to "Holder/empowering partner" is obviously
wrong. 25 To contend otherwise would be to ignore the
common cause fact that the "agreement or arrangement
dated 11 December 2006" is the shareholders agreement
entered into between EAMI and LEDA and DCM is not a
party thereto.
"Holder/empowering partner" is therefore a reference to
EAMI and LEDA
"the parties" is therefore a reference to EAMI and LEDA.
17 .3. The phrase "without an obligation to dilute" arise from clause 5 of the
SHA, more particularly the obligation on LEDA to dilute 30% of its
shares in ASA in favour of a BEE shareholder. The "obligation to
dilute" was also expressly referred to between the parties in the
documentation reflecting the context of clause 17 of the Mining Right,
particularly when LEDA advised EAMI of its communications with the
Minister regarding his approval for LEDA to dilute its shareholding. At
the time when clause 17 was inserted, the Minister knew of the SHA
and the obligation to dilute in clause 5 thereof. Plainly, "without an
obligation to dilute" can only arise if there was an obligation to dilute
in the first place, which obligation arose in the context of LEDA's
shareholding in ASA. The "40% stake in the mining righf' can
therefore only be a reference to the 40% shareholding in ASA. If the
phrase is interpreted otherwise, "without an obligation to dilute" would
25 An apparent error in the language-see NJMPr v Endumeni Municipality 2012 (4) SA 593 (SCA) at para 25.
Page 12 of 21
have no meaning. Furthermore, if there is to be a "new agreemenf',
there is no purpose to the words "without an obligation to dilute".
17.4. The ordinary meaning of stake is wide enough to include an indirect
interest in the Mining Right. 26
18. LEDA's interpretation would also result in an insensible and unbusinesslike result
and would be absurd (the Court a quo expressed this as a "bizarre and illegal
outcome"27)":
18.1. LEDA requested the Minister to approve its resolution to comply with
its obligation in terms of the SHA to dilute its shareholding in ASA
(i.e. obligation to dilute). But even though it did not ask for a 40%
stake in the Mining Right (or for an entitlement to such a stake by
concluding an agreement with DCM), the Minister and/or DG acting
on their own deprived DCM of its asset28 and gave it to LEDA without
seeking representations from DCM or ASA or EAMI (all of those
whose rights were affected by such an astounding decision by the
Minister or DG).
18.2. The absurdity is explained by having regard to the diagrams attached
hereto marked "DCM1", "DCM2" and "DCM3" respectively. LEDA's
interpretation means that the Minister in clause 17 effectively
reduced EAMl's indirect interest in the Mining Right from 60% to
36%, ASA's indirect interest in the mining right from 100% to 60%
and DCM's direct interest from 100% to 60% without any right to be
heard . All the while, the Minister increased LEDA's interest from a
26 The ordinary meaning of "stake' is "an interest or share in an undertaking or enterprise" (https://www.merriamwebster.com/dictionary/stake) 27 At paragraph 47 28 Requiring DCM to conclude an agreement where it gives away 40% of the Mining Right is the same as effectively giving it
away.
Page 13 of 21
40% indirect interest to a 24% indirect interest and 40% direct
interest meaning that LEDA gains a 64% interest in the Mining Right.
18.3. What is even more bizarre on LEDA's interpretation is that it was not
even aware after the execution of the Mining Right, for period of
three years, that the Minister had given it this Mining Right.
18.4. In summary LEDA's case is that got what it did not ask for and it did
not know (for three years) that it got what it did not ask for.
19. Having regard to the correct principles of interpretation bearing in mind LEDA's
request to the Minister to dilute its shareholding because of the moratorium
regarding its obligation to dilute its shareholding in ASA, and LEDA's subsequent
affirmation that the SHA needed to be amended, as well as LEDA's silence for
more than three years that it was the holder of a 40% stake in the Mining Right,
the respondents contend that LEDA's interpretation is wrong and that when one
considers the context in which the Mining Right was issued:
19.1. DCM was not bound as if it was party to the SHA. In fact, an
interpretation where DCM is regarded as a party to the SHA is non
sensical.
19.2. The reference to "new agreement" can only be a new agreement to
be concluded between LEDA and EAMI which new agreement would
have the effect of constituting an amendment to the existing
shareholders agreement. Any other interpretation is opportunistic
and self-serving to LEDA when one considers the language and
would result in an absurdity.
20. In the result, the Court a quo was correct and there can accordingly be no
reasonable prospect of success on appeal.
Page 14 of 21
RELIANCE ON CLAUSE 15.2 OF THE SHAREHOLDERS' AGREEMENT
21 . The interpretation of clause 17 as contended for by the respondents should put
paid to LEDA's reliance on clause 15.2 of the SHA. But there was a further
reason why the Court a quo said that LEDA was not entitled to rely on clause
15.2 of the SHA. This was expressed as follows:
" .. . In any event, it is also unsustainable for any of the following
reasons. DCM was not a party to and is not bound by the
shareholders' agreement. The shareholders' agreement deals with the
rights and obligations of LEDA and EAMI as shareholders of ASAM.
Clause 15.2, in particular, deals with the resolutions of those
shareholders, in terms of which they undertake to each other, not to
dispose of the material assets of ASAM, unless the requisite
shareholders' resolution had been obtained. Even though ASAM is
DCM's sole shareholder, neither ASAM, nor its BRPs, is disposing of
the mining right and, in any event, ASAM is not the holder of that
mining right. "
22. LEDA in dealing with its grounds of appeal does not challenge paragraph 54 of
the judgment.
23. The Court a quo was correct in its finding regarding LEDA's reliance on clause
15.2 of the SHA and there can accordingly be no reasonable prospect of
success on appeal.
TITLE INTEREST ARGUMENT
24. In the founding affidavit, LEDA states that it also has a "title interesf' in the
Mining Right as contemplated in section 134 (3) of the Companies Act, 2008.
LEDA goes on to say that because of its "title interest" its consent was required
Page 15 of 21
by the Companies Act. 29
25. The interpretation of clause 17 as contended for by the respondents should put
paid to LEDA's reliance on "title interest'.
26. However, when LEDA deals with the grounds of appeal, it does not challenge
paragraphs 55 and 56 of the judgment which sets out a further reason why LEDA
does not have a title interest:
"LEDA's argument, that it has title interest as envisaged in section
134(3) of the Companies Act must also fail. The rejection of its
interpretation of clause 17 of the mining right is also decisive of this
issue. In addition, it must fail because the reliance is in any event
misplaced and based on an erroneous reading of that section. The
arguments made by the respondents and Cheetah in that regard has
merit. LEDA has no security over any of the property of DCM
(including its mining right), nor does it have any utle interest over that
right. Moreover, DCM is not indebted to LEDA, and no case has
been made out to the effect that there is such indebtedness.
Section 134 is intended to protect creditors of a financially distressed
company which is in business rescue. The section's purpose is not to
give persons. such as LEDA, who are not creditors (and at best are
indirect beneficial shareholders) a say concerning the assets of the
company in business rescue." (emphasis added)
27. The Court a quo was correct in its finding regarding title interest and there can
accordingly be no reasonable prospect of success on appeal.
CONSIDERABLE IMPORTANCE
28. LEDA has not said anything to distinguish itself from any other litigant Every
29 Founding affidavit 21/66. 10 to 66. 13 read with 22/67.
Page 16 of 21
case is of considerable importance to the litigant concerned.
29. Regarding LEDA's allegation that the "Judgment as it stands will result in the
loss of the mineral reserves concerned to the nation", is alarmist. LEDA whilst a
state owned entity is not the State as contemplated in the MPRDA.
CLARIFYING MINISTERS POWERS
30. The power of the Minister in imposing conditions in a Mining Right under the
MPRDA are trite and does not require any clarification.
31 . The Minister's inability to arbitrarily deprive parties like EAMI, ASA and DCM of
property is equally trite and requires no clarification.
CONDONATION APPLICATION
32. LEDA seeks condonation for the late filing of this application . In terms of section
17(2) (b ), LEDA should have delivered this application by no later than 24 April
2020. However, a copy of the application was initially provided to the
respondents on 4 June 2020, and was only filed in court on 22 June 2020. I
understand that the period between 4 June 2020 and 22 June 2020, was
occasioned due to the delay in obtaining the court order refusing leave to appeal.
The respondents do not challenge the period between 4 June 2020 and 22 June
2020.
33. However, the respondents oppose the application for condonation and contend
that as at 4 June 2020, the application was woefully out of time.
34. I am advised that condonation is not to be had merely for the asking. LEDA is
required to furnish a full, detailed and accurate account of the causes of the
delay and their effects so as to enable the court to understand clearly the
reasons and to assess the responsibility.
Page 17 of 21
35. The explanation provided by LEDA is entirely inadequate. LEDA, speaking
through its attorney (without any confirmatory affidavit from a representative of
LEDA), says that it could not deliver the leave to appeal application in time
because of the effects of the COVID-19 pandemic, and the National State of
Disaster declared pursuant thereto. Relying on various Regulations and
Directions issued, the following is stated in the condonation affidavit:
"TGR Inc. could not obtain instructions from client as TGR Inc and LEDA
were subject to various lockdown regulations and directives and were not
operating normally during this period. As indicated below the Applicant was
closed during this period and only recommenced its activities in May 2020."30
36. When one examines LEDA's explanation, one quickly realises that it does not
bear scrutiny. Whilst the deponent to the condonation affidavit refers to the
various restrictions that were placed on people during the period of the "hard
/ockdown" between 27 March 2020 to 30 April 2020, he misrepresents the true
effects of the lockdown.
37. In this regard, I refer to the Disaster Management Act, 2002: Amendment of
Regulations Issued in Terms of Section 27(2) of the Disaster Management Act,
Government Notice R419 issued by the Designated Minister31 on 26 March
2020. The new Regulation 118(1 )(b) issued reads as follows:
3° Condonation affidavit 4/16
"During the lockdown, all businesses and other entities shall cease
operations, except for any business or entity involved in the manufacturing,
supply, or provision of an essential good or service, save where operations
are provided from outside of the Republic or can be provided remotely by a
person from their normal place of residence"32
31 Minister of Co-Operative Governance and Traditional Affairs 32 This was missing from Government Notice R398 issued on 25 March 2020 and there was a realisation that people could work from home.
Page 18 of 21
38. It is a well-established fact that most commercial businesses like financial
institutions, and law firms continued operating throughout the lockdown period
albeit that the members of staff worked from home. Video conference calls using
platforms like Microsoft Teams and Zoom has become popular because of this.
To date, and notwithstanding the lifting of the restrictions in certain respects,
most commercial businesses continue to operate on such a remote basis.
39. So whilst it is strictly speaking correct that there were restrictions on the extent of
legal services that could be performed, the deponent misrepresents what the true
effect was of the regulations and restrictions that were placed on the
performance of legal services. Simply stated, a permit was only required if one
needed to travel to court and physically appear. I note that the deponent to the
condonation affidavit does not say definitively that TGR was closed over the
period 27 March 2020 to 30 April 2020 in a sense that none of the lawyers did
any work.
40. The only restrictions that may have had an effect, was the directions issued by
the Minister of Justice on 26 March 2020 33 which suspended all court time
periods. However, as accepted by the deponent to the condonation affidavit,
these directions were promptly replaced with the directions issued on 31 March
2020. 34
41 . The fact that no restrictions were placed on the performance of legal services,
albeit that they are carried out remotely, and that it was accepted by all
practitioners that time periods were not suspended, is self-evident, for example,
from the following:
41 .1.
33 Condonation affidavit 3/11 34 Condonation affidavit 4/12.
The Judge President's directive of the Gauteng Division of the High
Page 19 of 21
Court of South Africa issued on 2 April 2020, wherein provision was
made for the uploading of documents on the Caselines platform
used by the Gauteng Courts. It was accordingly self-evident to all
practitioners in Gauteng, that court time periods were not suspended.
41 .2. When the period of the "hard lockdown" was extended from 17 April
2020 to 30 Aprii 2020, the motion courts in Johannesburg and
Pretoria started operating remotely in virtual hearings using platforms
like Microsoft teams or Zoom. In terms of the Court Directive
Relating to the Management of Cases During the Lockdown Period,
26 March -16 April 2020: Supreme Court of Appeal issued by the
Honourable President of the Supreme Court of Appeal on 26 March
2020, this Court remained open for the limited purpose of receiving
due court process.
41.3. In terms of the Court Directive Relating to the Management of Cases
During the Second Court Term, 1 May to 31 May 2020, inclusive:
Supreme Court Of Appeal (24 April 2020 Directive), issued by the
Honourable President of the Supreme Court Of Appeal, this Court
stated that remote hearings would occur.
42. In addition, the deponent to the condonation affidavit baldly states that LEDA
was closed during the lockdown. He does not specify whether any of the
representatives of LEDA worked from home or were contactable by telephone or
email. There is simply no explanation why the deponent to the condonation
affidavit could not contact the representatives of LEDA by telephone, nor is there
any explanation why the board of LEDA could not meet using a virtual platform
or by way of teleconference to discuss this matter. This is especially so, when
the founding affidavit says that this is a matter of "considerable importance" to
Page 20 of 21
LEDA and the people of the Limpopo Province. If the matter was that important,
surely one would have expected the board members of LEDA to act with some
level of alacrity and not to just throw their hands up in the air and do nothing
whilst the lockdown regulations were in place. This is particularly so when the
regulations themselves place no restrictions on LEDA's staff members and board
members working from their place of residence. Quite simply, the important
issues that LEDA perceives could have been discussed over the telephone or
video conference and decisions made in that way.
43. A further factor which this Court should take into account when assessing
condonation is that ASA and DCM are in business rescue and have been for a
period of about four years. The BRPs of both entities have a duty to implement
the respective business rescue plans and this litigation with LEDA has, inter-alia,
delayed the finalisation of the business rescue plans. The respondents are
entitled to finality and accordingly for this additional reason, condonation should
be refused.
44. In addition, LEDA's poor prospects of success should count against it being
granted condonation.
WHEREFORE the respondents seek an order that the application for leave to appeal and
the application for condonation be dismissed with costs, including the costs consequent
upon the employment of two counsel.
lJ DEPONENT
I HEREBY CERTIFY THAT THE DEPONENT HAS ACKNOWLEDGED THAT HE KNOWS
AND UNDERSTANDS THE CONTENTS OF THIS AFFIDAVIT, WHICH WAS SIGNED AND
Page 21 of 21
SWORN TO BEFORE ME AT --'-~-· ____;;__-"-,,t,,_~_M ____ ON THIS THE I
DAY OF--~-~-~~'--, ___ 2.CJ_·_?._D ___ , THE REGULATIONS CONTAINED IN
GOVERNMENT NOTICE NO 3619 OF 21 JULY 1972 AND NO 1648 OF 19 AUGUST 1977
HAVING BEEN COMPLIED WITH.
N2 COMMISSIONER OF OATHS
SHAUN DAVID LOURENS l<ommlssarls van Ede/ Commissioner of Oaths
Praktlserende Prokureur / Practicing Attorney R.S.A Unit CS Clearview Office Park, 77 Wilhelmina Avenue
Allensnek, Roodepoort ti 011675 2881/ Faks/Fax 011675 2899
£mall: [email protected]
"DCM1"
POSITION BEFORE CONVERSION OF MINING RIGHT ON 20 MARCH 2014 (COMMON CAUSE)
East Asia Mineral Investment Limited
(EAMI) (ih Respondent) ...
60% shareholding (60% indirect "stake" in mining right held through ASA and DCM)
Shareholders Agreement (concluded on 11 December 2006)
40% shareholding with obligation to dilute 30% (40% indirect "stake" in mining right held through ASA and DCM with obligation to dilute)
ASA Metals (Pty) Ltd (ASA)
(6th respondent rerresented by BRPS = 3r and 4th respondents)
ASA = 100% shareholder of DCM
Dilokong Chrome Mine (Pty) Ltd
(DCM) (5th respondent represented by
BRPs = 1st and 2nd
respondents
DCM is the sole holder of an old order mining right
Limpopo Economic Development Agency
(LEDA) (Applicant)
.. (old order) Mining Right
"DCM2"
POSITION AFTER CONVERSION OF MINING RIGHT ON 20 MARCH 2014 (LEDA'S VERSION)
East Asia Mineral Investment Limited
(EAMI)
Shareholders Agreement (concluded on 11 December 2006)
(th Respondent)
60% shareholding (now only has a 36% indirect "stake" in mining right
---
' .
40% shareholding (now has 64% stake in mining right = 24% indirect "stake" in mining right held through ASA and DCM + 40% direct stake as per clause 17
...
held through ASA and DCM = 60% of 60%)
ASA Metals (Pty) Ltd (ASA)
(6th respondent represented by BRPS = 3rd and 4th respondents)
ASA = 100% shareholder of DCM
Dilokong Chrome Mine (Pty) Ltd
(DCM) (5th respondent represented by
BRPs = 1st and 2nd
respondents
DCM is the sole holder of the mining right as contemplated in the MPRDA but will only have a 60% stake in Mining Right because the DG effectively gave 40% to LEDA by requiring DCM in terms of clause 17 to conclude an agreement with LEDA in terms where a 40% stake in mining right is given to LEDA without receiving any value
Limpopo Economic Development Agency
(LEDA) (Applicant)
LEDA retains 40% shareholding in ASA. LEDA acquires 40% stake in Mining Right even though it did not ask the DG for this stake and it didn't realise that the DG granted it this stake until 17 September 2017
Director-General (DG) (9th respondent) acting under delegated authority of Minister (8th
respondent)
Granted in terms of the provisions of item 7 of Schedule 11 of the MPDRA
MINING RIGHT
"DCM3"
POSITION AFTER CONVERSION OF MINING RIGHT ON 20 MARCH 2014 (RESPONDENTS' VERSION)
East Asia Mineral Investment Limited
(EAMI) (th Respondent)
Shareholders Agreement (concluded on
11 December 2006)
Limpopo Economic Development Agency
(LEDA) (Applicant)
60% shareholding (retains 60% indirect "stake" in mining right held through ASA and DCM)
40% shareholding wi-tP oi31i§!ation to diluto 3Q% (retains 40% indirect "stake" in mining right held through ASA and DCM with oi31igation to GHHte)
ASA Metals (Pty) Ltd (ASA)
(6th respondent represented by BRPS = 3rd and 4th respondents)
ASA = 100% shareholder of DCM
If the new agreement contemplated in clause 17 was concluded the obligation to dilute would have been deleted from the Shareholders Agreement
Director-General (9th respondent) acting under delegated authority of Minister (8th
respondent)
Granted in terms of the provisions of item 7 of Schedule Ii of the MPDRA
Dil@kong Chrome Mine (Pty) Ltd
DCM is the sole holder of a mining right as contemplated in the MPRDA
(DCM) (5th respondent represented by
BRPs = 1st ancl 2nd
respondents
MINING RIGHT