THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 733/2022
In the matter between:
VANTAGE GOLDFIELDS SA (PTY) LTD

FIRST APPELLANT
VANTAGE GOLDFIELDS LTD

SECOND APPELLANT
and
ARQOMANZI (PTY) LTD

FIRST RESPONDENT
VANTAGE GOLDFIELDS (PTY) LTD
SECOND RESPONDENT
(in business rescue)
BARBROOK MINES (PTY) LTD

THIRD RESPONDENT
(in business rescue)
MAKONJWAAN IMPERIAL MINING COMPANY (PTY) LTD
(in business rescue)

FOURTH RESPONDENT
ROBERT CHARLES DEVEREUX NO

FIFTH RESPONDENT
DANIEL TERBLANCHE NO                                                     SIXTH RESPONDENT
THE STANDARD BANK OF SOUTH AFRICA LTD               SEVENTH RESPONDENT
THE MINISTER OF MINERAL RESOURCES
EIGHTH RESPONDENT
AND ENERGY
KPMG SOUTH AFRICA INC

NINTH RESPONDENT
LOMSHIYO TRADITIONAL AUTHORITY                                 TENTH RESPONDENT

Neutral citation:
Vantage Goldfields SA (Pty) Ltd & Another v Arqomanzi (Pty) Ltd
& Others (733/2022) [2023] ZASCA 106 (27 June 2023)
Coram:
PONNAN, MOCUMIE, MBATHA and MATOJANE JJA and MALI AJA
Heard:
10 May 2023
Delivered:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of Appeal
website and released to SAFLII. The date and time for hand-down is deemed to be 27
June 2023).
Summary:
Cession in securitatem debiti – realisation by way of parate executie of
property ceded – Mineral and Petroleum Resources Development Act 28 of 2002 -
whether consent of the Minister under s 11 required where there has been a change
of control in the ultimate holding company.

ORDER

On appeal from: Mpumalanga Division of the High Court, Mbombela (Legodi JP,
sitting as court of first instance).
The appeal is dismissed with costs, including those of the Minister and of two counsel
where so employed.

JUDGMENT

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

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

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

1 Vantage Goldfields SA (Pty) Ltd and Others v Arqomanzi (Pty) Ltd [2022] ZASCA 185.

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

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

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

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

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

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

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

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

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

[9] Consequently, on 16 February 2021, Arqomanzi launched urgent proceedings
in the high court to stop the implementation of the amended plans (the second
application). Greyling-Coetzer AJ issued a rule nisi interdicting the BRPs from
implementing the amended plans. The rule was confirmed by Legodi JP on the return
day, who found that the BRPs could not unilaterally amend the adopted plans. On
appeal, this Court made the following key findings: (i) the adopted plans could not be
implemented because of a lack of funding; (ii) a clause in a business rescue plan that
provides for the unilateral amendment of the plan by the BRPs is contrary to the
scheme of the Companies Act 71 0f 2008 (the Companies Act) – at best, such a clause
would only allow for amendments of an administrative nature that do not affect its
substance; (iii) the replacement of the funders and the funding model was not merely
an administrative amendment, it was central to the plans; and, (iv) the BRPs were not
entitled to amend the adopted plans in the manner that they did.2

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

2 Ibid.

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

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

[12] The following issues arise in the appeal: First, whether the affected persons (as
defined in s 128(1)(a) of the Companies Act 71 of 2008)3 should be joined as parties
to the appeal. Second, whether Arqomanzi had validly and lawfully acquired the loan
account claims that had initially been ceded to Standard Bank in securitatem debiti.
Third, whether Arqomanzi is an independent creditor of VGL and Barbrook. Fourth,
whether, by virtue of the two subordination agreements, Arqomani has a voting interest
in the Vantage Companies. Fifth, whether MIMCO’s and Barbrook’s mining rights can
be exercised without the consent of the Minister under s 11 of the MPRDA, in
circumstances where there has been a change of control in the ultimate holding
company of the Vantage Group.

Non-joinder
[13] The appellants appear not to have raised the issue of the non-joinder of affected
persons before the high court, consequently that court did not address the issue in its
judgment. Nor, does it seem that the issue was raised when the application for leave
to appeal was argued before the high court.

3 According to section 128(1)(a), an ‘affected person’, in relation to a company, means-
(i)
a shareholder or creditor of the company;
(ii)
any registered trade union representing employees of the company; and
(iii)
if any of the employees of the company are not represented by a registered trade union, each
of those employees or their respective representatives.

[14] Joinder depends ‘on the manner in which, and the extent to which, the Court’s
order may affect the interests of third parties’.4 In the first instance, Arqomanzi sought
an order declaring that the mining rights owned by MIMCO and Barbrook cannot be
exercised under the Vantage proposal without s 11 consent and an interdict prohibiting
the appellants and the BRPs from contending otherwise. The relief sought was
necessary because it had been contended, on the strength of the representation that
s 11 did not find application, that the Vantage proposal is superior to the amended
business rescue plans proposed by Arqomanzi. The affected persons could hardly
have any legal interest in this issue, which is concerned with the interpretation of s 11
of the MPRDA.

[15] In the second, Arqomanzi sought an order declaring that Standard Bank had
lawfully and validly ceded the VGL-Barbrook claim to it. The issue concerned the
validity of the cession. The only parties that had a legal interest in that issue were
Arqomanzi, Standard Bank, VGL and Barbrook, all of whom were parties to the
proceedings. None of the affected persons could contribute anything to this dispute.
In the third instance, Arqomanzi sought orders interpreting the subordination
agreements. The only parties with a legal interest in respect of that issue, were once
again Arqomanzi, VGL and Barbrook, as well as VGSA, who like the other three, had
been joined to the application. In the fourth instance, Arqomanzi sought an order
declaring it an independent creditor of Barbrook. As with the first, this was also
concerned with a question of interpretation – the interpretation of the term
‘independent creditor’, in the context of the Companies Act. None of the affected
parties had a legal interest in the subject matter of the litigation concerning this relief.

[16] In the premises, the appellants’ belated non-joinder argument falls to be
rejected.

The loan account claims
[17] The appellants challenge Arqomanzi’s acquisition of the loan account claims
from Standard Bank. There are two claims on loan account, which were transferred
from Standard Bank to Arqomanzi. The first, is the claim on loan account that VGSA

4 Amalgamated Engineering Union v Minister of Labour 1949 (3) SA 637(A) at 657.

held in VGL that originated in the following circumstances: By 2014, VGL enjoyed the
benefit of banking facilities with Standard Bank, subject to annual review. During
August 2016, VGL requested an increase of an aggregate of R10 million over its
existing banking facilities, which was approved subject to the furnishing of additional
security, including the cession of a loan account in VGL by VGSA, an omnibus
guarantee and other guarantees. The security required was provided and R5 million
was made available to VGL on 7 September 2016 and the balance on 23 September
2016.

[18] As at 23 July 2019, both VGL (under the facilities agreement) and VGSA (in
terms of the omnibus guarantee) were indebted to Standard Bank in the amount of
R8 911 771.35, inclusive of interest and costs. Included in the security, which was held
by Standard Bank, was the cession of VGSA’s rights in and to monies due to it by VGL
dated 6 September 2016 (ie the amount due on loan account). On 23 July 2019,
Standard Bank demanded payment from VGSA of R8 911 771.35, plus interest (being
the facility debt of VGL, for which VGSA was liable) within 10 days, failing which it
would exercise its rights in terms of the cession. A demand notice was also sent to
VGL. Standard Bank indicated that it, without further notification, would endeavour to
dispose of its rights to a prospective purchaser for the sum of R8 911 771.35. VGL
and VGSA failed to timeously make payment, entitling Standard Bank to realise its
security - as it was entitled to do in terms of the cession.

[19] In terms of the sale agreement, which was concluded on 1 August 2019: (i)
Arqomanzi would purchase VGSA’s loan account against VGL from Standard Bank;
(ii) the purchase price of the loan account of R8,9 million was payable within five days
of certain resolutive conditions being either fulfilled or waived; and (iii) the effective
date of the purchase of the loan account would be 7 August 2019, on which date the
right, title and interest in and to the loan account would vest in Arqomanzi.

[20] The second, pertains to the claim on loan account that VGSA held in VGL that
originated in the following circumstances: By July 2020, MIMCO was indebted to
Standard Bank in the collective sum of R6 492 168.46, inclusive of interest and costs,
arising from its overdraft facilities and instalment sale agreements concluded with the
bank, which amount was due owing and payable. In addition, VGL, by virtue of

MIMCO’s overdraft and instalment agreement facility and various suretyships that VGL
had executed in respect of MIMCO’s indebtedness to Standard Bank, was also
indebted to the bank in the amount of R6 492 168.46. Barbrook, in turn, was, as at 6
September 2016, indebted to VGL on loan account in the amount of R178 245 000.
On 6 September 2016, VGL ceded its loan account claims against Barbrook to
Standard Bank. On 17 July 2020, Standard Bank delivered written demands to VGL
and MIMCO (as well as the BRPs), demanding payment of the amount of
R6 492 168.46, which was then owing, together with interest thereon in respect of
MIMCO’s overdraft and instalment sale agreement, as well as R 8 990 508.65 (for the
debts of VGL).

[21] The letter of demand, specifically advised that should VGL fail to timeously
repay the indebtedness, Standard Bank would endeavour to dispose of its rights in
terms of the cession to a prospective purchaser for the sum of R1. MIMCO was
similarly advised that should it not pay its indebtedness, the MIMCO claims were
intended to be sold to a prospective purchaser for the sum of R6 492 168.36. No
payments were forthcoming and, on 28 July 2020, Arqomanzi concluded a written
agreement (the addendum) with Standard Bank. In terms of the addendum, the parties
affirmed that the cession of the loan account, which had been the subject of the sale
agreement (ie VGSA’s claim against VGL) had become effective on 7 August 2019
and the purchase price thereof was amended to R8 990 508.65. The parties also
provided in the addendum for the settlement of the debts due to Standard Bank by
VGL, Barbrook and MIMCO by means of the sale agreement. The purchase price
specified for MIMCO’s debt was the sum of R6 492 168.36 and the purchase price for
the loan account was R1. The purchase price was to be payable by Arqomanzi within
five business days of the date on which the resolutive conditions were fulfilled or
waived. The sale and cession of the MIMCO debtors and the VGL loan account in
Barbrook was seen as an indivisible transaction. A composite amount was paid for
both items, with R1 allocated as the nominal amount in respect of the loan account.

[22] The appellants claim that the sales are invalid. Although a plethora of grounds
were raised before the high court, only three are still being persisted with. It is asserted
that: first, the sale agreements have lapsed; second, the loan account claims
automatically reverted to the original cedents upon payment by Arqomanzi of the

purchase price to Standard Bank; and, third, the sales are invalid because they caused
prejudice.

[23] As a precursor to a consideration of each of the three contentions, some
preliminary observations: The appellants argue that Standard Bank’s decision to
realise, by way of parate executie, the loan account claims that were ceded to it in
securtitatem debiti, ‘gives rise to a novel legal issue’. Recently, Grobler v Oosthuizen
settled the doctrinal debate regarding the exact nature and construct of a cession in
securtitatem debiti in favour of the pledge theory.5 As far as the parate executie
(immediate execution) principle is concerned, it permits the cessionary, upon the
cedent’s default to realise the ceded property, without following any judicial procedure.
In Bock v Duburoro Investments (Pty) Ltd, this Court reaffirmed the common law rule
that parate execuie is valid as long as it is not enforced in a manner that is against
public policy.6

[24] Against these introductory remarks, we turn to a consideration of the three
grounds upon which it is suggested that Arqomanzi is not the rightful owner of the loan
account claims.

As to the first
[25] As far as the VGSA-VGL claim is concerned: Roelofse AJ found that Standard
Bank lawfully and validly ceded this claim to Arqomanzi. The appellants argue that the
cession failed after the judgment by Roelofse AJ, due to the non-fulfilment of certain
other conditions. Before the high court, the appellants contended that this caused the
sale agreement to lapse, alternatively, if the sale agreement did not lapse, then the
addendum lapsed. They no longer persist with the first contention. This is important,
because the addendum only revived the sale agreement as a precautionary measure
and only to the extent necessary. It follows that if the sale agreement did not lapse,
any consideration as to whether the addendum lapsed becomes immaterial to the
validity of Arqomanzi’s acquisition of the VGSA-VGL claim.

5 Grobler v Oosthuizen 2009 (5) SA 500 (SCA) (Grobler).
6 Bock v Duburoro Investments (Pty) Ltd 2004 (2) SA 242 (SCA) (Bock).

[26] Regarding the VGL-Barbrook claim: The appellants, who were not privy to the
addendum and had no personal knowledge of the facts relating to its conclusion or
implementation, contend that it failed on account of the non-fulfilment of a resolutive
condition. According to Arqomanzi, however, the resolutive condition had been
fulfilled. Standard Bank confirmed this. In the circumstances, it could hardly have been
open to the appellants, who were strangers to the agreement, to assert that the
resolutive condition had not been met, particularly where the parties to the agreement
had already performed in accordance with its terms.7

[27] As Innes JA observed (obiter) in Wilken v Kohler:
‘It by no means follows that because a court cannot enforce a contract which the law says
shall have no force, it would therefore be bound to upset the result of such a contract which
the parties had carried through in accordance with its terms. Suppose, for example, an . . .
[oral] agreement of sale of fixed property . . ., a payment of the purchase price and due transfer
of the land. Neither party would be able to upset the concluded transaction on the mere ground
that . . . it was in reality an agreement to sell, invalid and unenforceable in law, but which both
seller and purchaser proposed to carry out.’8

[28] Although, this obiter statement did come in for some criticism, it has since
received the unequivocal approval of this Court.9 It may thus not have been open to
the parties to the agreement to seek to upset the result of the agreement that had been
carried through in accordance with its terms, much less strangers to the agreement,
such as the appellants.10 It follows, that the high court correctly rejected the appellants’
argument, in declaring that Standard Bank had lawfully and validly ceded the VGL-
Barbrook claim to Arqomanzi.

7 MV ‘Tarik III’ Credit Europe Bank NV v The Fund Comprising the Proceeds of the Sale of the MV Tarik
III and Others [2022] ZASCA 136; [2022] 4 All SA 621 (SCA) (MV ‘Tarik III’) para 21.
8 Wilken v Kohler 1913 AD 135 at 144.
9 Legator McKenna Inc. and Another v Shea and Others [2008] ZASCA 144; 2010 (1) SA 35 (SCA)
[2009] 2 All SA 45 (SCA) paras 27 and 28.
10 MV ‘Tarik III’ fn 7 above.

As to the second
[29] The appellants argue that when Argomanzi paid the purchase price of the loan
account claims to Standard Bank, the principal debt in each instance was extinguished
thereby and, as a result, the loan account claims automatically reverted to VGSA and
VGL.

[30] Having purchased the loan account claims from Standard Bank, Arqomanzi
paid the purchase price. The payment by Arqomanzi constituted performance under
the sale agreement and the addendum. It was not paid (as the appellants incorrectly
contend), to repay the debts owing by VGSA and VGL to Standard Bank. Standard
Bank applied the proceeds of the sale to satisfy the principal debt that was owing by
VGSA and VGL. After Standard Bank realised the loan account claims, it no longer
had possession of those claims and VGSA and VGL no longer had any reversionary
right in respect of them. What remained, was a reversionary right to be paid the net
proceeds of the sale of the claims after the monies owing to Standard Bank had been
deducted.

As to the third
[31] The appellants contend that the operation of the parate executie clause in the
cessions in securitatem debiti has caused unacceptable hardship. The cessions
provide for a 10-day notice before a sale and thus an opportunity to avoid the
realisation of the security. It is only if the debt remains unpaid after 10 days that the
relevant clause authorises the realisation of the security by private treaty. Standard
Bank was entitled to realise its security in terms of the cession, when payment of the
debt was not forthcoming. The process of realisation would ordinarily result in a
change of the identity of the creditor. That is neither unexpected, nor, per se,
prejudicial.

[32] It is accepted that a provision for immediate execution (a parate executie
clause) in an agreement is valid and enforceable when it relates to movables that are
held in pledge.11 The cession of a personal right in securitatem debiti is regarded as a

11 Bock fn 6 above para 7.

pledge of that right.12 A debtor may, when the creditor seeks to invoke the parate
executie clause in an agreement, ‘seek the protection of the Court if, upon any just
ground, he can show that, in carrying out the agreement and effecting a sale, the
creditor has acted in a manner which has prejudiced him in his rights’.13 The onus, in
this regard, would be on the debtor. Despite being notified in advance by Standard
Bank, not just that the loan account claims would be sold, but also the amounts at
which they were eventually sold, neither VGSA nor VGL took any steps to prevent the
sales or to have them declared invalid. The appellants also did not institute a counter
application in this matter to have the sales declared invalid. Moreover, insofar as the
VGSA-VGL claim is concerned, the prejudice argument was considered and
dismissed by Roelofse AJ. The issue is accordingly res judicata.

[33] The appellants argue that the sale of the loan account claims was prejudicial to
them for two principal reasons: first, because Standard Bank sold the claims for less
than their fair value; and, second, because Standard Bank refused to accept a tender
of payment from them.

[34] The appellants contend that the value of VGSA’s loan account in VGL was
recorded to be approximately R369 million in the deed of cession. The suggestion
seems to be that this amount (or some other unspecified amount) was the true value
of the loan account when the sale agreement was concluded. However, that is a non-
sequitur. The sale was an arm’s length transaction as between a willing buyer and a
willing seller. VGL, Barbrook and MIMCO are in business rescue because they are
financially distressed. According to the adopted plans, they are both commercially and
factually insolvent and have been for several years after the conclusion of the
agreements of cession.

[35] VGSA was itself unwilling to settle the debt of VGL. VGSA had been invited to
pay the VGL debt prior to the sale and afforded a period of 10 days within which to do
so. It did not. It thus declined the opportunity to avoid the sale to Arqomanzi at the
disclosed price. The same applied to the VGL loan account in Barbrook. It refused to

12 Grobler fn 5 above at 508B.
13 Bock fn 6 above para 7.

pay the debt to avoid the sale despite advance notification that the proposed selling
price for the loan account in Barbrook was R1 and for the MIMCO claims was
approximately R6 million. It is noteworthy that no attempt was made by the appellants
to state the true value of the loan accounts – perhaps with good reason. Given the
financial distress of VGL, Barbrook and MIMCO, they appear to have had no value
beyond what was paid for them. The appellants failed to produce any evidence to
establish the real value, which would have been necessary for them to have
discharged the onus resting upon them. The appellants accordingly failed to
demonstrate with reference to any primary facts that the loan account claims were
sold for less than their realisable value.

[36] The contention that Standard Bank rejected the appellants’ tender to pay the
principal debt owed to it, is factually incorrect as was demonstrated in Standard Bank’s
affidavit. Correspondence was exchanged between the appellants’ erstwhile attorney
and Standard Bank’s attorney during September and November 2020. Standard
Bank’s attorney initially declined the tender because it was conditional – having been
made on the basis that the loan account ceded to Standard Bank in securitatem debiti
had to be restored to the bank. By then, the security had been realised and the loan
account had been sold to Arqomanzi. In terms of the sale agreement, ownership of
the loan account had already passed to the latter. Accordingly, the condition of
acceptance could not be met.

[37] In any event, the tender made by VGSA only ever encompassed payment of
the debt due by VGL to Standard Bank, as secured by the cession of VGSA’s loan
account in VGL. No tender was made by VGSA, Barbrook or MIMCO (or any other
member of the Vantage Companies) to pay the debt of MIMCO, as secured by the
cession of VGL’s loan account in Barbrook, as well as MIMCO’s cession of book debts.
By virtue of the omnibus guarantee and cessions, VGSA, VGL and Barbrook were all
liable for the debt of MIMCO.

Is Arqomanzi an independent creditor?
[38] The appellants argue that even if Arqomanzi is the owner of the loan account
claims, it cannot be an independent creditor of VGL and Barbrook. Insofar as the
VGSA-VGL claim is concerned: This issue was considered and decided by Roelofse

AJ in the first application, in which the learned judge held that Arqomanzi was an
independent creditor of VGL. The issue is accordingly res judicata and cannot be
reconsidered.14

[39] Regarding the VGL-Barbrook claim, the reasoning adopted by Roelofse AJ in
the first application must apply. The term ‘independent creditor’ is defined in
s 128(1)(g) of the Companies Act. The definition makes clear that the identity of the
creditor and its relationship to the company in business rescue are the determining
factors. It is common cause that Arqomanzi is not related to any of the Vantage
Companies. Arqomanzi is therefore an independent creditor of Barbrook.

The Subordination
[40] The appellants contend that this issue is moot. However, the extent of the loan
account claims is crucial in determining Arqomanzi’s interest in the Vantage
Companies. The appellants and the BRPs asserted that, based on their interpretation
of the subordination agreements, the loan account claims afford Arqomanzi no voting
interest. Arqomanzi disputes this. Since the resolution of this disagreement will impact
on the voting when the BRPs present the amended business rescue plans to the
creditors, the interpretation of the subordination agreements is still very much a live
issue.

[41] Two subordination agreements are at play: The first was concluded between
VGSA and VGL on 7 April 2015 and relates to the VGSA-VGL claim (the first
subordination agreement). The second was concluded between VGL and Barbrook on
27 February 2013 and relates to the VGL-Barbrook claim (the second subordination
agreement). They are in nearly identical terms. The context within which the
subordination agreements were concluded was that the auditors were unwilling to
render an unqualified opinion. The purpose of the subordination agreements was thus
to render VGL and Barbrook commercially solvent.

[42] Standard Bank was not informed of the existence of either subordination
agreement. It was certainly not informed by VGL or VGSA or any other party of the

14 Prinsloo N O & Others v Goldex 15 (Pty) Ltd & Another 2014 (5) SA 297 (SCA) para 10.

first subordination agreement, when the additional facility was granted to VGL in 2006.
It was accordingly unaware thereof. It did, however, have access to the audited
financial statements (the AFS) of VGL for the 2014 financial year, which had been
signed by its directors on 7 April 2015. The AFS recorded that R14 million (and not the
full face-value) of the VGSA-VGL claim had been subordinated. Arqomanzi asserted
that VGSA’s financial statements would confirm that only R14 million of the VGSA-
VGL claim had been subordinated and challenged VGSA to provide them. VGSA
refused. The appellants failed to deal with this in their affidavits. The audit report is
unqualified, albeit that the statement of assets and liabilities reveals factual insolvency.
It was noted in the AFS that the loan by VGSA to VGL (which was to become the
subject-matter of the cession) had been subordinated by VGSA to the tune of R14
million in favour of other creditors and until the assets fairly valued exceeded its
liabilities.

[43] Once again, by reference to the 2014 AFS of VGL, Standard Bank had become
aware that the loan to Barbrook (which was to become the subject-matter of the
cession) was recorded as a non-current asset in the amount of R137 502 000.46, and
had been subordinated by VGL to the tune of R17 million in favour of the creditors of
Barbrook, until its assets fairly valued exceeded its liabilities. In Barbrook’s AFS for
2014, the subordination of the loan account in favour of VGL to the extent of R17
million was repeated.

[44] After the loan account claims had been ceded to Standard Bank on 6
September 2016, nothing could lawfully have been done that would have adversely
affected the bank’s security. VGSA and VGL could not, for example, agree to increase
the extent of the subordination agreements. That would have been a source of serious
concern to Standard Bank, if discovered at the time, as it could potentially have entirely
undermined the security offered by the cessions. In the result, the high court was
correct in rejecting the appellant’s interpretation of the subordination agreements and
declaring that only R14 million of the VGSA-VGL, and R7 million of the VGL-Barbrook,
claims had been subordinated.

Section 11 of the MPRDA
[45] The question that arises for consideration is whether the implementation of the
Vantage proposal requires the consent of the Minister as contemplated in s 11(1) of
the MPRDA, which states that:
‘[a] prospecting the right mining right or an interest in any such right, or a controlling interest
in a company of close corporation, may not be seated, transferred, let, sublet, assigned,
alienated or otherwise disposed of without the written consent of the Minister, except in the
case of change of controlling interest in listed companies’.

[46] The shareholders of Vantage held the controlling interest in MIMCO and
Barbrook. Each of MIMCO and Barbrook owns a new order mining right. Before the
Australian-based Macquarie acquired an interest in Vantage, 34 shareholders owned
100 percent of the issued shares and therefore the controlling interest in Vantage. In
2020, and in order to obtain funding for the implementation of the Vantage proposal,
Vantage issued 98 percent of its shares to Macquarie. After the issuing of the shares,
Macquarie now holds the controlling interest in Vantage.

[47] The issue of shares to Macquarie resulted in a substantial dilution of the
interests previously held by the 34 shareholders. The effect of the issuing by Vantage
of the shares to Macquarie was that the 34 shareholders relinquished, by consent,
their controlling interest in Vantage. Arqomanzi thus contends that the controlling
interest in Vantage, and indirectly in MIMCO and Barbrook, was alienated or otherwise
disposed of to Macquarie and that Ministerial consent as contemplated in s 11(1) of
the MPRDA is required.

[48] In interpreting s 11(1), the objects of the MPRDA in s 2 must be borne in mind.
The provisions of ss 2(a) and (b) are particularly relevant.15 They are buttressed by ss
3 and 4. Section 11(1) prohibits any change in ownership or control of a mining right
or an interest in a mining right, without the consent of the Minister. This seeks to
enhance the objects in ss 2(a) and (b).

15 Section 2 headed ‘Objects of the Act’, provides:
(1)
The objects of the Act are to –
(a) recognise the internationally accepted right of the State to exercise sovereignty over the
mineral and petroleum resources within the Republic;
(b) give effect to the principle of the State’s custodianship of the nation’s mineral and petroleum
resources.’

[49] Although s 11(2) does not expressly mention ‘controlling interest’, Coppin J held
in Mogale Alloys that reference to ‘the right’ in subsection 2, must include ‘the
controlling interest’ in subsection 1.16 Mogale Alloys further held that where the effect
of the alienation or disposal would be that the holder of the controlling interest would
lose such control, then the alienation of disposal would require Ministerial consent,
even if no one else acquires that controlling interest.17 Here, the controlling interest in
Vantage was held by 34 shareholders before the new shares were issued to
Macquarie. The issuing of 98 percent of the authorised shares in Vantage to
Macquarie resulted in the controlling interest being ‘alienated or otherwise disposed
of’. This change in the controlling interest of Vantage, resulted in a change in the
controlling interest in MIMCO and Barbrook, both of whom held the mining rights.
Macquarie’s acquisition of the 98 percent of the shares in Vantage had the effect of
essentially disposing of or otherwise alienating the mining right or interest in the mining
right as contemplated in s 11 of the MPRDA. Put differently, the new issue by Vantage
of shares, which formed part of its authorised but unissued capital to Macquarie,
resulted in an alienation or other disposal of such mining rights, since the ultimate
owner and controller of such mining rights changed from the 34 Vantage shareholders
to Macquarie. This required Ministerial consent.

[50] It would be an absurdity to confine the interpretation of s 11(1) of the MPRDA
to direct cessions, transfers, leases, etc, since, by doing so, Ministerial consent (and
therefore two of the principle objects of the MPRDA) could easily be thwarted. The
interpretation contended for by the appellants is subversive of the objects of the
MPRDA. Section 11(1) must accordingly be interpreted as including both direct and
indirect cessions, transfers, leases, etc and a change of control by the issue of new
shares in a company that controls the mining right. It follows, that the interpretation of
s 11(1), which has been advanced by the appellants, was correctly rejected by the
high court.

16 Mogale Alloys (Pty) Ltd v Nuco Chrome Bophuthatswana (Pty) Ltd 2011 (6) SA 96 (GSJ) para 37.
17 Ibid para 38.

[51] The appellants advance no argument as to why, if their interpretation of s 11 is
to be rejected, the high court was incorrect in granting the order interdicting them from
contending that the Vantage proposal does not require s 11 Ministerial consent.

[52] Accordingly, for the reasons given, the appeal must fail. Costs remain: Costs,
including those of two counsel, must obviously follow the result. Standard Bank was
cited as the eight respondent in the application a quo, on the basis that it was an
interested party in the relief sought. It had filed its own affidavit (and subsequently a
supplementary affidavit) in the application ‘to avoid speculation and hearsay evidence
in respect of the cessions by the other parties’. It did indicate, as before the high court,
that it would abide the judgment of this Court and, irrespective of the outcome, it did
not seek costs in either court.

[53] The Minister initially did not file any papers, when the affidavits were exchanged
in the litigation before the high court. The Minister came to participate in the matter at
the instance of the high court. This, to deal with the competing contentions raised in
the heads of argument filed by the parties insofar as the interpretation of s 11 of the
MPRDA, was concerned. Counsel, who represented the Minister, both before this
court and the one below, supported the interpretation advanced by Arqomanzi. In the
circumstances, costs were sought on behalf of the Minister in the event of the appeal
failing. There was no resistance from the appellants to such an order issuing.

[54] In the result:
The appeal is dismissed with costs, including those of the Minister and of two counsel
where so employed.

______________

VM Ponnan

Judge of Appeal

_____________
KE Matojane
Judge of Appeal

APPEARANCES

For appellants:

CE Watt Pringle SC (with HA van der Merwe)
Instructed by:

Beech & Veltman Incorporated, Johannesburg.
Phatsoane Henny Attorneys, Bloemfontein.

For the first respondent:

A Subel SC (with JL Myburgh and M Sechaba)
Instructed by:

Fluxman Incorporated, Johannesburg.
Lovius Block Attorneys, Bloemfontein.

For seventh respondent:
S Symon SC
Instructed by:

Jason Michael Smith Incorporated, Johannesburg.
Symington De Kok, Bloemfontein.

For eighth respondent:

MP van der Merwe
Instructed by:

State Attorney, Pretoria.
State Attorney, Bloemfontein.
IN 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:

27 June 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 judgment of the Supreme Court of Appeal
Vantage Goldfields SA (Pty) Ltd & Another v Arqomanzi (Pty) Ltd & Others (733/2022) [2023] ZASCA
106 (27 June 2023).
Today the Supreme Court of Appeal (SCA) dismissed an appeal against the judgment of the
Mpumalanga Division of the High Court, Mbombela (the high court).

The second appellant, Vantage Goldfields Ltd (Vantage), is the ultimate holding company of
the Vantage group of companies (the Vantage Companies). It holds 100 of the issued shares
in the first appellant, Vantage Goldfields SA (Pty) Ltd (VGSA). VGSA, in turn, owns 74 percent
of the issued shares in the second respondent, Vantage Goldfields (Pty) Ltd (VGL), and 42
percent of the issued shares in the fourth respondent, Makonjwaan Imperial Mining Company
(Pty) Ltd (MIMCO). VGL owns the remaining 58 percent of the issued shares in MIMCO and
100 percent of the issued shares in the third respondent, Barbrook Mines (Pty) Ltd. An
Australian company, Macquarie Metals Proprietary Limited (Macquarie), recently acquired a
98 percent stake in Vantage.
This appeal relates to an ongoing dispute between the first respondent, Arqomanzi Proprietary
Limited (Arqomanzi) and the appellants in respect of the business rescue proceedings of the
Vantage Companies.The Vantage Companies faced financial distress after the collapse on 5
February 2016 of the crown pillar at MIMCO’s Lily Mine, a gold mine located near Barberton
in Mpumalanga, which claimed the lives of three workers and rendered the mine inaccessible.
Consequently, MIMCO was placed in business rescue on 4 April 2016. In August 2016, VGL
requested an increase of R10 million in its existing banking facilities from the seventh
respondent, the Standard Bank of South Africa Limited (Standard Bank), which was granted
on condition that certain additional security be provided in the form of a cession to Standard
Bank of the VGSA-VGL claim and the VGL-Barbrook claim. The condition was accepted and
the claims were ceded to Standard Bank.
MIMCO’s financial turmoil contributed to VGL and Barbrook facing similar difficulties, leading
to them being placed in business rescue in 2016. The creditors of VGL and Barbrook adopted
business rescue plans on 16 February 2017 and 6 August 2018, respectively. The adopted
plans were interdependent and their success was dependent on finance that was principally
to be sourced from the Industrial Development Corporation.
When it became apparent that the necessary funding for the adopted plans would not become
available, Arqomanzi held discussions with Standard Bank on different occasions with a view
to acquiring both the VGSA-VGL and the VGL-Barbrook claims. Following those discussions,
Standard Bank sold those claims to Arqomanzi. However, the fifth and sixth respondents, the
Business Rescue Practitioners (the BRPs), refused to acknowledge Arqomanzi as the owner
of the claims. This led to two earlier high court applications, the second of which was recently
disposed of by the SCA on appeal.

Despite Arqomanzi paying the purchase price for the claims to Standard Bank, the appellants
and the BRPs denied that Arqomanzi had lawfully acquired the claims. They also contended
that the loan account claims were fully subordinated under two subordination agreements.
They further asserted that the Vantage proposal (the Vantage proposal) was superior to
Arqomanzi’s proposed amended business rescue plans because the former would not require
the consent of the eight respondent, the Minister of Mineral Resources and Energy (the
Minister), under s 11 of the Mineral and Petroleum Resources Development Act 28 of 2002,
whereas Arqomanzi’s amendment would. As the issues raised would likely have an impact on
Arqomanzi’s voting interest, when the new business rescue plans were to be voted on,
Arqomanzi launched a third application (the application the subject of this appeal). The high
court found in Arqomanzi’s favour. It held that: (i) the Vantage proposal cannot be
implemented without s 11 consent and the BRPs and appellants were interdicted from
representing otherwise; (ii) Standard Bank lawfully and validly ceded the VGL-Barbrook claim
to Arqomanzi and the latter is an independent creditor of Barbrook; (iii) the
subordinationagreements subordinated only R14 million and R17 million (and not in each
instance the full amount) of the claims in favour of VGL’s and Barbrook’s creditors respectively.
Five issues were raised by the appellants in the appeal: (a) whether certain affected persons
should be joined as parties to the appeal; (b) whether Arqomanzi had validly and lawfully
acquired the loan account claims that were ceded to Standard Bank; (c) whether Arqomanzi
is an independent creditor of VGL and Barbrook; (d) whether Arqomani has a voting interest
in the companies in business rescue; and (e) whether MIMCO’s and Barbrook’s mining rights
can be exercised without the consent of the Minister under s 11, where there has been a
change of control in the ultimate holding company of the Vantage Group.
This SCA held: As to (a) – that the affected persons could hardly have any legal interest in
this issues that arose, the only parties that had a legal interest in those issues were Arqomanzi,
Standard Bank, VGL and Barbrook, all of whom were parties to the proceedings. It therefore
rejected the appellants’ belated non-joinder argument. As to (b) – where the parties to the
agreement had already performed in accordance with its terms, it could hardly be open to
persons in the position of the appellants, who were strangers to the agreements, to challenge
the validity thereof. As to (c) - the Companies Act makes it clear that the identity of the creditor
and its relationship to the company in business rescue are the determining factors. Therefore,
because Arqomanzi had validly acquired the claims and was not related to any of the Vantage
Companies, it was an independent creditor of Barbrook. As to (d) – with reference to the other
relevant facts particularly the relevant financial statements of the companies, the high court
was correct in rejecting the appellant’s interpretation of the subordination agreements and
declaring that only R14 million of the VGSA-VGL and R7 million of the VGL-Barbrook claims
had been subordinated. As to (e) - the main object of s 11 is ‘to prohibit any change in
ownership or control of a mining right or an interest in a mining right, without the consent of
the Minister.’ Section 11(1) should accordingly be interpreted as including both direct and
indirect cessions, transfers, leases, etc’.
In the result, the SCA concluded that the appeal should be dismissed with costs, including
those of the Minister and those of two counsel where so employed.

~~~~~~~~~~~~~~ends~~~~~~~~~~~~~~