THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable

Case No: 598/2021

In the matter between:
ALAN LOUIS N O
FIRST APPELLANT
BRIAN WILLIAM LOUIS N O
SECOND APPELLANT
LOUIS JACOBS CLOETE N O
THIRD APPELLANT
and
NEIL MILLER FENWICK N O
FIRST RESPONDENT
LOUIS GROUP SA (PTY) LTD
(in business rescue)
SECOND RESPONDENT
COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION
THIRD RESPONDENT
DOLE SOUTH AFRICA (PTY) LTD
FOURTH RESPONDENT
SAAD FUND MANAGEMENT (PTY) LTD
FIFTH RESPONDENT
THE TRUSTEES FOR THE TIME BEING
OF THE LGCF TRUST
SIXTH RESPONDENT
D J C DE WITT
SEVENTH RESPONDENT
THE STANDARD BANK OF SOUTH
AFRICA LIMITED
EIGHTH RESPONDENT
UKUSOLA TRADING & INVESTMENTS
(PTY) LTD
NINTH RESPONDENT

A C NEETHLING
TENTH RESPONDENT

Neutral Citation:
Louis N O and Others v Fenwick N O and Others (598/2021)
[2023] ZASCA 59 (28 April 2023)
Coram:
VAN DER MERWE, PLASKET and HUGHES JJA and BASSON and
SIWENDU AJJA
Heard:
Disposed of without oral argument in terms of s 19(a) of the Superior Courts
Act 10 of 2013
Delivered:
28 April 2023
Summary:
Company law – business rescue – binding offer in terms of s 153(1)(b)(ii)
of the Companies Act 71 of 2008 rejected – consequences of – interpretation of s
153(4) – only applicable when binding offer is accepted.

___________________________________________________________________

ORDER
___________________________________________________________________
On appeal from: Western Cape Division of the High Court, Cape Town (Steyn J sitting
as court of first instance):
The appeal is dismissed with costs, including the costs of two counsel.

___________________________________________________________________

JUDGMENT
___________________________________________________________________
Van der Merwe JA and Basson AJA (Plasket and Hughes JJA and Siwendu AJA
concurring)

[1] The parties to this appeal agreed, in terms of Rule 8(8) of the Rules of this
Court, that the matter is likely to hinge exclusively on a point of law. This is whether,
in business rescue proceedings, s 153(4) of the Companies Act 71 of 2008 (the Act)
is to be applied after a binding offer made in terms of s 153(1)(b)(ii) of the Act has
been rejected. More particularly, the issue is whether business rescue proceedings
terminate when a binding offer to purchase the voting interests of the person or
persons who opposed the adoption of a business rescue plan, is rejected or whether
the affected person who made the offer has further remedies in terms of s 153(4) of
the Act. We shall revert to the facts after setting out the relevant provisions of the Act.

Statutory framework
[2] Section 151 of the Act requires a business rescue practitioner to convene and
preside over a meeting of creditors and holders of other voting interests within ten
days after the publishing of a business rescue plan, for the purpose of considering the
plan. Section 152 regulates the procedure to be followed in considering the plan. If it
is supported by the holders of more than 75 per cent of the creditors’ voting interests,
and at least 50 per cent of the independent creditors’ voting interests (that were voted),
the business rescue plan will be considered as approved on a preliminary basis as
contemplated by s 152(2). Section 152(3)(a) provides that if a proposed business
rescue plan is not approved on a preliminary basis, the plan is rejected and may be

considered further only in terms of s 153 of the Act. It is not necessary for purposes of
this matter to consider the rights of holders of securities in this regard.

[3] Section 153 is headed ‘Failure to adopt business rescue plan’. The subsections
of relevance to this appeal read as follows:
‘(1)(a) If a business rescue plan has been rejected as contemplated in section 152(3)(a) or
(c)(ii)(bb) the practitioner may –
(i) seek a vote of approval from the holders of voting interests to prepare and publish
a revised plan; or
(ii) advise the meeting that the company will apply to a court to set aside the result of
the vote by the holders of voting interests or shareholders, as the case may be, on the
grounds that it was inappropriate.
(b) If the practitioner does not take any action contemplated in paragraph (a) –
(i) any affected person present at the meeting may –
(aa) call for a vote of approval from the holders of voting interests requiring the
practitioner to prepare and publish a revised plan; or
(bb) apply to the court to set aside the result of the vote by the holders of voting
interests or shareholders, as the case may be, on the grounds that it was
inappropriate; or
(ii) any affected person, or combination of affected persons, may make a binding offer
to purchase the voting interests of one or more persons who opposed adoption of the
business rescue plan, at a value independently and expertly determined, on the
request of the practitioner, to be a fair and reasonable estimate of the return to that
person, or those persons, if the company were to be liquidated.
. . .
(4) If an affected person makes an offer contemplated in subsection (1) (b) (ii), the practitioner
must –
(a) adjourn the meeting for no more than five business days, as necessary to afford the
practitioner an opportunity to make any necessary revisions to the business rescue plan to
appropriately reflect the results of the offer; and
(b) set a date for resumption of the meeting, without further notice, at which the provisions of
section 152 and this section will apply afresh.’

[4] Thus, once the business rescue plan is rejected, the business rescue
practitioner may, in terms of s 153(1)(a), either seek approval, from the holders of
voting interests, to prepare a revised plan, or apply to the court for an order setting

aside the result of the vote on the grounds that it was inappropriate.1 If the business
rescue practitioner fails to do so, or decides not to exercise any of these options, this
section provides an affected person with three alternative courses of action. The first
is to seek a vote of approval to prepare and publish a revised plan.2 The second is an
application to set aside the result of the vote as inappropriate3 and the third is to offer
to acquire, by means of a ‘binding offer’, the voting interests of any persons who
opposed the adoption of the plan.4 The first and second options are only available to
an affected person that is present at the meeting. The third is available to any affected
person or combination of affected persons. Once such a binding offer has been made,
according to the text of s 153(4), the business rescue practitioner must adjourn the
meeting for no more than five business days to afford the practitioner an opportunity
to make any necessary revisions to the plan to reflect ‘the results of the offer’5 and set
a date for the resumption of the meeting at which the provisions of s 152 would apply
afresh.6 As we have said, the proper interpretation of s 153(4) lies at the heart of the
appeal.

Background facts
[5] The appellants are the trustees for the time being of the Alan Louis Trust (the
Trust). The second respondent, Louis Group SA (Pty) Ltd (the company), was placed
under supervision on 26 February 2013, when business rescue commenced. At a
meeting held on 14 February 2020 the first respondent, the business rescue
practitioner,7 placed a business rescue plan (the original plan) to a vote to the creditors
of the company in terms of s 151 of the Act. The plan was rejected by the creditors
(the first vote).

[6] After the first vote, the business rescue practitioner informed the meeting that
he did not intend to proceed in terms of s 153(1)(a) of the Act. The first appellant
informed the meeting that the Trust would exercise its rights in terms of s 153(1)(b)(ii)

1 See s 153(1)(a)(i) or (ii).
2 Section 153(1)(b)(i)(aa).
3 Section 153(1)(b)(i)(bb).
4 Section 153(1)(b)(iii).
5 Section 153(4)(a).
6 Section 153(4)(b).
7 Mr Trevor Phillips was initially appointed as the business rescue practitioner of the second respondent.
Therefore, he was cited as the first respondent in the high court. Upon his passing, a notice of
substitution was filed substituting him with Mr Neil Miller Fenwick as the duly appointed business rescue
practitioner of the second respondent.

to make binding offers to purchase the voting interests held by two of the creditors of
the company, namely the fourth and fifth respondents (eventually the Trust made such
offers to all the creditors of the company). The Trust also reserved its right to apply to
court to have the first vote set aside as inappropriate in terms of s 153(1)(b)(i)(bb) of
the Act. The meeting was adjourned, to allow the Trust’s offers to the creditors to be
independently and expertly determined as contemplated by 153(1)(b)(ii) of the Act.

[7] These binding offers were thereafter made but were rejected by all the
creditors. At a reconvened meeting held on 10 March 2020, the practitioner informed
the meeting that, in light of the rejection of the binding offers, the adjourned meeting
was closed and declared his intention to apply for the conversion of the business
rescue proceedings into winding-up proceedings. The appellants objected and
insisted that the business rescue practitioner was required, once the binding offers
were rejected, to proceed in terms of s 153(4). The practitioner disagreed, adopting
the stance that s 153(4) does not contemplate a further meeting once the binding offer
has been rejected and that s 153(4) only caters for the scenario where a binding offer
has been accepted.

[8] It was against this background that the appellants launched an urgent
application in the Western Cape Division of the High Court, Cape Town (the high court)
for an order: setting aside as irregular the decision of the practitioner to close the
reconvened meeting on 10 March 2020; directing the practitioner to set a date for the
resumption of the meeting; and directing the practitioner to apply the provisions of ss
152 and 153 at the resumed meeting. The high court agreed with the respondents that
s 153(4)(b) only caters for the scenario where a binding offer has been accepted. As
a result, it dismissed the application. This appeal is with leave of the high court. Only
the company and the practitioner (collectively the respondents) opposed the appeal.
However, they agreed with the appellants that the matter be disposed of without oral
argument, in terms of s 19(a) of the Superior Courts Act 10 of 2013.

The interpretation of s 153(4) of the Act
[9] This Court is required to interpret s 153(4) in accordance with the principles
relating to statutory interpretation that have been articulated in a long line of cases,

notably in Natal Joint Municipal Pension Fund v Endumeni Municipality, where this
Court held:
‘The present state of the law can be expressed as follows. Interpretation is the process of
attributing meaning to the words used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided by reading the particular
provision or provisions in the light of the document as a whole and the circumstances attendant
upon its coming into existence. Whatever the nature of the document, consideration must be
given to the language used in the light of the ordinary rules of grammar and syntax; the context
in which the provision appears; the apparent purpose to which it is directed and the material
known to those responsible for its production . . . The process is objective not subjective. A
sensible meaning is to be preferred to one that leads to insensible or unbusinesslike results
or undermines the apparent purpose of the document . . . The “inevitable point of departure is
the language of the provision itself”, read in context and having regard to the purpose of the
provision and the background to the preparation and production of the document.’8
Fundamental to the process of interpretation, apart from the words used in the statute,
are the context and purpose of the provision under consideration. An interpretation
that leads to unbusinesslike results or undermines the apparent purpose of the statute
should be avoided.9

[10] Returning to the statute under consideration, the provisions relating to business
rescue in general, and in particular those contained in s 153, have been subjected to
criticism from this Court. In African Banking Corporation of Botswana v Kariba
Furniture Manufacturers and Others, this Court stated:
‘I do not believe it is unfair to comment that many of the provisions of the Act relating to
business rescue, and s 153 in particular, were shoddily drafted and have given rise to
considerable uncertainty. Questions which immediately spring to mind in regard to the
procedure envisaged by s 153(1)(b)(ii), and to which no answers are clearly expressed in the
Act, include (this list is not intended to be all-embracing) . . . the effect of an offer being
rejected. . .’.10 (Our emphasis.)

8 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA); [2012] 2 All SA 262 (SCA) para 18; See also Kubyana v Standard Bank of South Africa Ltd
[2014] ZACC 1; 2014 (3) SA 56 (CC); 2014 (4) BCLR 400 (CC) paras 77 & 78.
9 Ibid paras 25-26.
10 African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers (Pty) Ltd and
Others [2015] ZASCA 69; 2015 (5) SA 192 (SCA); [2015] 3 All SA 10 (SCA) para 43. This sentiment
was echoed in a later judgment of this Court in FirstRand Bank Ltd v KJ Foods CC (In business rescue)
[2017] ZASCA 50; [2017] 3 All SA 1 (SCA); 2017 (5) SA 40 (SCA) (FirstRand Bank Ltd) para 74.

[11] This criticism is particularly applicable to the provisions of s 153(4). The literal
meaning of s 153(4) is clear. It says that if an affected person makes an offer, the
practitioner must act as prescribed in ss 153(4)(a) and (b). However, the parties rightly
accept that s 153(4) could not possibly bear its literal meaning. It is trite that a court
may depart from the clear and unambiguous meaning of a statutory provision to avoid
an absurdity.11 The mere making of an offer in terms of s 153(1)(b)(ii) could not have
been intended to trigger the conjunctive steps mentioned in ss 153(4)(a) and (b). And
the offer itself could have no ‘results’: that could only flow from a decision on the offer.
The appellants also recognise that a further vote on a rejected plan would make no
sense. The interpretative solution that the appellants propose amounts to this.
Irrespective of whether the offer is accepted or rejected, the practitioner must proceed
in terms of ss 153(4)(a) and (b). This brings only s 152(3)(a) into play. Its provisions –
that if a business rescue plan is not approved on a preliminary basis as contemplated
in s 152(2), the plan is rejected and may be considered further only in terms of s 153
– must be interpreted to provide the relevant affected person with a further right to call
for the approval a revised plan in terms of s153(1)(b)(i)(aa) at a resumed meeting or
to apply for the setting aside of the original vote under s 153(1)(b)(i)(bb). In contrast,
the respondents submit that on a proper construction, a fresh application of s 153 can
only arise where the binding offer is accepted, resulting in an alteration of the voting
rights, which would necessitate a second round of voting on a revised plan in terms of
s 152 of the Act.

[12] It is not in dispute that the voting interest of a creditor will be altered where a
binding offer has been accepted, as the voting interest of the creditor who accepts the
binding offer and sells their voting interests to the offeror will fall away. The creditor’s
voting interest, as explained by the court in DH Brothers Industries (Pty) Ltd v Gribnitz
NO and Others,12 ‘. . . are transferred on payment of the determined sum. Once this
has taken place, the voting interests are settled and the vote on the plan can take
place’. Conversely, a creditor who has purchased the voting interests of another will
hold an increased voting interest. This alteration in the voting interests of the creditor
sensibly and logically necessitates the resumption of the meeting at which the

11 Hanekom v Builders Market Klerksdorp (Pty) Ltd and Others [2006] ZASCA 2; 2007 (3) SA 95 (SCA)
para 7.
12 DH Brothers Industries (Pty) Ltd v Gribnitz NO and Others [2014] 1 All SA 173 (KZP); 2014 (1) SA
103 (KZP) para 60.

provisions of ss 152 and 153 will apply afresh to allow for a second vote to take place.
Should the second vote be successful, the revised plan will be adopted. If the revised
plan is again rejected, s 153 will again apply and the options referred to herein above
will once again become available to the business rescue practitioner and to any
affected person, should the practitioner decide not to take any action as contemplated
in s 153(1)(a). It is also not in dispute that where a binding offer has been rejected, the
voting interests remain unaffected.

[13] The interpretation of the respondents thus makes good sense. The construction
favoured by the appellants, on the other hand, would lead to an absurd result. After
the rejection of a binding offer, on the appellants’ interpretation, the relevant affected
person would again have the right to call for the approval of a revised plan or to apply
to the court to set aside the original vote, even though nothing has changed. This
would be manifestly absurd.

[14] This conclusion accords with the broader purpose of business rescue
proceedings, which is ‘. . . geared at providing a window of opportunity to restore an
ailing company to financial health and functionality’.13  Business rescue, as stated by
this Court in Diener NO v Minister of Justice and Others,14 ‘is not an open-ended
process. Its very rationale is that it must end, either when its aim has been attained or
when the realisation arises that rescue is not attainable’. It follows that once a
business rescue plan is accepted, it will be implemented by the business rescue
practitioner on the terms stipulated therein. But once a business rescue plan has been
put to a vote and rejected as contemplated in s 152 of the Act and, the parties have
unsuccessfully exhausted their remedies as provided for in s 153(1)(b), business
rescue must come to an end.

[15] In sum, it could not have been the legislature’s intention that a party whose
voting interests remains unaltered as a result of the rejection of a binding offer, would
be entitled to a further opportunity to exercise one of the alternatives provided for in s
153(1)(b)(i)of the Act. The interpretation contended for by the appellants simply does
not amount to a sensible and business-like interpretation of s 153(4) and would cause,

13 Ibid para 27.
14 Diener N O v Minister of Justice and Others (Diener) [2017] ZASCA 180; 2018 (2) SA 399 (SCA);
[2018] 1 All SA 317 (SCA) para 28.

as pointed out by this Court in Firstrand Bank Ltd v KJ Foods CC (in business
rescue),15 a ‘never- ending loop’. For these reasons we conclude that s 153(4) of the
Act only finds application when a binding offer in terms of s 153(1)(b)(ii) is accepted.

[16] The appeal is dismissed with costs, including the costs of two counsel.

_________________________
C H G VAN DER MERWE
JUDGE OF APPEAL

_________________________
A C BASSON
ACTING JUDGE OF APPEAL

15 Firstrand Bank Ltd fn 10 para 88.

Appearances

For the appellants:

R M van Rooyen
Instructed by:

Strauss Daly, Umhlanga

EG Cooper Majiedt Inc, Bloemfontein

For the first and second respondents:
G W Woodland SC and C Morgan
Instructed by:

Bowman Gilfillan Inc, Cape Town

Matsepes Inc, Bloemfontein.
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

28 April 2023
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Louis N O and Others v Fenwick N O and Others (598/2021) [2023] ZASCA 59 (28 April 2023)
Today the Supreme Court of Appeal (SCA) dismissed an appeal with costs including costs of two
counsel.
The issue before the SCA was whether in business rescue proceedings, s 153(4) of the Companies Act
71 of 2008 (the Act) is to be applied after a binding offer made in terms of s 153(1)(b)(ii) of the Act has
been rejected. More particularly, whether business rescue proceedings terminate when a binding offer
to purchase the voting interests of the person(s) who opposed the adoption of a business rescue plan
is rejected, or whether the affected person(s) who made the offer has further remedies in terms of s
153(4) of the Act.
The appellants are the trustees for the time being of the Alan Louis Trust (the Trust). The second
respondent, Louis Group SA (Pty) Ltd (the company), was placed under supervision on 26 February
2013 when business rescue commenced. At a meeting held on 14 February 2020 the first respondent
(the business rescue practitioner), placed a business rescue plan (the original plan) to a vote to the
creditors of the company in terms of s 151 of the Act. The plan was rejected by the creditors (the first
vote).
After the first vote, the business rescue practitioner informed the meeting that he did not intend to
proceed in terms of s 153(1)(a) of the Act. The first appellant informed the meeting that the Trust would
exercise its rights in terms of s 153(1)(b)(ii) to make binding offers to purchase the voting interests held
by two of the creditors of the company, namely the fourth and fifth respondents (eventually the Trust
made such offers to all the creditors of the company). The Trust also reserved its right to apply to court
to have the first vote set aside as inappropriate in terms of s 153(1)(b)(i)(bb) of the Act. The meeting
was adjourned in terms of s 153(4), to allow the Trust’s offers to the creditors to be independently and
expertly determined as contemplated by 153(1)(b)(ii) of the Act. These binding offers were thereafter
made but were rejected by all the creditors. At a reconvened meeting held on 10 March 2020, the
practitioner informed the meeting that, in light of the rejection of the binding offers, the adjourned
meeting was closed and declared his intention to apply for the conversion of the business rescue
proceedings into winding-up proceedings. The appellants objected and insisted that the business
rescue practitioner was required, once the binding offers were rejected, to proceed in terms of s 153(4).
The practitioner disagreed, adopting the stance that s 153(4) does not contemplate a further meeting
once the binding offer has been rejected and that s 153(4) only caters for the scenario where a binding
offer has been accepted.

It was against this background that the appellants launched an urgent application in the Western Cape
Division of the High Court, Cape Town (the high court) for an order: setting aside as irregular the
decision of the practitioner to close the reconvened meeting on 10 March 2020; directing the practitioner
to set a date for the resumption of the meeting; and directing the practitioner to apply the provisions of
ss 152 and 153 at the resumed meeting. The high court agreed with the respondents that s 153(4)(b)
only caters for the scenario where a binding offer has been accepted. As a result, the high court
dismissed the application.
The SCA, in coming to a conclusion, held that the literal meaning of s 153(4) is clear in that it says that
if an affected person makes an offer, the practitioner must act as prescribed in ss 153(4)(a) and (b). It
further held that it is trite that a court may depart from the clear and unambiguous meaning of a statutory
provision to avoid an absurdity and that the mere making of an offer in terms of s 153(1)(b)(ii) could not
have been intended to trigger the conjunctive steps mentioned in ss 153(4)(a) and (b).
Lastly, the SCA went further to state that it could not have been the legislature’s intention that a party
whose voting interests remains unaltered as a result of the rejection of a binding offer, would be entitled
to a further opportunity to exercise one of the alternatives provided for in s 153(1)(b)(i) of the Act, holding
that the interpretation contended for by the appellants simply does not amount to a sensible and
business-like interpretation of s 153(4) of the Act.
In the result, the SCA held that s 153(4) of the Act only finds application when a binding offer in terms
of s 153(1)(b)(ii) is accepted, thus dismissing the appeal with costs including costs of two counsel.
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