CASE LAW UPDATE

Facts: Arnot Opco was established as a joint venture between Wescoal Mining and Arnot Investco. It owns and operates the Arnot coal mine in Middelburg, Mpumalanga. Wescoal is a wholly owned subsidiary of Salungano. Wescoal was placed under supervision and business rescue. Wescoal and Salungano are creditors of Arnot. Arnot was placed under business rescue at the instance of Wescoal. Mr Mkhombo was appointed as Arnot’s business rescue practitioner. Mashwayi Projects is a creditor of Arnot and a cessionary of the claims of various of Arnot’s creditors. A meeting of creditors of Arnot was held virtually under section 151 of the Companies Act 71 of 2008, convened by the practitioner to adopt a business rescue plan. A forensic accountant, appointed by the practitioner after the meeting to verify the tallying of the votes, subsequently produced a report particularising some errors which had occurred during the tallying of the votes. It seemed the required threshold of 75% had not been achieved as required by section 152(2)(a) of the Act.

Appeal: The High Court was approached and had to decide whether Mashwayi’s vote as post-commencement creditor should have been taken into account. It was common cause that had Mashwayi’s vote been excluded, the relevant 75% threshold would have been met and the plan validly adopted. The High Court held that only pre-commencement creditors are entitled to such voting rights and made consequential orders.

Discussion: Mashwayi, the practitioner and Arnot submitted that post-commencement creditors are entitled to vote on a business rescue plan. They submitted that the High Court’s reasoning was at odds with the relevant provisions of Chapter 6 and did not align with its text, which contained no provisions excluding or limiting post-commencement creditors’ rights to a voting interest. A unitary interpretation of the various sections of Chapter 6 of the Act does not favour the importation of a limitation of the word “creditor” to mean only pre-commencement creditor. One cannot adopt such an interpretation without straining the meaning of the text. Seen in context, the omission of a specific reference to post-commencement creditors, means that the Legislature purposefully elected not to draw the distinction contended for by the respondents.

Findings: Turning to the factual issue of whether the plan was properly adopted, the question is whether the statutory threshold under section 152(2) was met. Mashwayi’s version that numerous other post-commencement creditors’ votes were taken into account, was not challenged. It was further undisputed that there were various tallying errors in the voting, although there were irresoluble factual disputes on the papers regarding what voting percentages were achieved. It was not appropriate for the High Court to make the declaratory orders it did as it effectively substituted its powers for the votes of the creditors. Given the exclusion of the vote of only one post-commencement creditor, Mashwayi, it was by no means clear what the ultimate voting percentages would have been if all post-commencement creditors’ votes were treated equally and the irregularities had not occurred. The matter should have been remitted to the creditors to vote afresh upon the changed landscape. It was common cause that if Mashwayi’s votes were taken into account, the necessary statutory threshold under section 152(2) was not achieved. It must be concluded that the plan was rejected at the creditors meeting as it was not approved as contemplated in section 152(3)(a).

Order: The appeals are upheld and the order of the court a quo set aside and replaced with an order which declares that the amended business rescue plan was not supported by the holders of more than 75% of creditors’ voting interests at the meeting as required by section 152(2) and was accordingly rejected in terms of section 152(3)(a) of the Act.

DIPPENAAR AJA (MAKGOKA JA, SMITH JA, KEIGHTLEY JA and HENDRIKS AJA concurring)

Facts: The applicant (KL) and the respondent (CS) were married in 2008 and have two children. A Rule 43 order was granted in respect of maintenance. The respondent had previously defaulted on maintenance payments, and the applicant alleged that an agreement was reached in 2022 for increased maintenance, which the respondent later reneged on. The applicant no longer drives the BMW X3 motor vehicle, having returned the vehicle to the respondent. The applicant is a British national and is unemployed. The applicant and the children moved in with her boyfriend, CM, and she claimed that she was financially dependent on him. On the applicant's version, CM has paid for her past legal costs, has absorbed the respondent’s financial responsibilities, often deposits funds into the applicant’s account, and the applicant uses a Woolworths card provided for by CM.

Application: The applicant applies for a variation of the Rule 43 order. The applicant seeks maintenance for herself and the couple's two minor children, a contribution towards her legal costs, and the costs of the application. The main issues are whether the applicant is entitled to maintenance for herself and the children, a contribution towards her legal costs, and whether the Rule 43 order should be varied due to a material change in circumstances. The respondent raised a point in limine regarding non-compliance with mediation requirements, which was dismissed.

Discussion: The courts have long held that it is improper for a man to be expected to maintain a woman living with another man, as “man and wife”. It is common cause that the applicant is living with another man, being CM, and has been for some time now, on the applicant’s version since November 2023 and on the respondent’s version for the past 3 years. Whilst it is contended by the applicant that her relationship with CM is volatile, the court is of the view that the relationship between them is a continuing relationship, is one that is intended by the parties to continue indefinitely and, with regards to the evidence, court is satisfied that the applicant and CM are living together as “man and wife” on a permanent basis at the time of the application, that CM and the applicant have established and are maintaining and contributing to a joint household and are maintaining an intimate relationship. The court is therefore not persuaded that it would be just and equitable for the applicant to be entitled to maintenance, pendente lite, from her husband, the respondent, albeit that she is currently unemployed, whereby she is flagrantly and deliberately living as “man and wife” with CM and being supported by CM.

Findings: The court has a concern that whilst the applicant says that she returned the BMW X3 to the respondent, she fails to deal with the vehicle she now drives, being a Range Rover, and in respect of which she claims a monthly expense. On an analysis of the applicant’s Financial Disclosure Form, she reflects the Range Rover as an asset in her estate having a value of approximately R340,000, with no corresponding liability, yet she does not take the court into her confidence as to how she acquired same or afforded the purchase, being unemployed, or explain the credit balance in her savings account in the sum total of R45,009.90, against the backdrop of the relief she seeks in respect of herself. To order anything to the contrary, would be contrary to justice and equity and would further be against public policy for the applicant to be entitled to collect support from her husband as well as her “putative” second “husband”, CM. The applicant sets out the expenditure for the children totalling an amount of R29,104.38. The court is satisfied that the applicant demonstrated a material change in respect of the children’s maintenance since the Rule 43 order. In terms of the respondent’s expenses, measured against his income, he has a discretionary income and an affordability amount. Furthermore, the respondent has multiple credit facilities. The respondent can therefore afford to contribute to the children’s monthly expenses.

Order: The court varied the Rule 43 Order, requiring the respondent to pay R16,000 monthly for the children's maintenance, 100% of their educational and extracurricular expenses, and 100% of their medical expenses. The court deleted certain paragraphs of the original order and replaced them with the new terms. No costs were awarded to either party.

MARCANDONATOS AJ

Facts: The applicant, Gruma, is a company that exists under the laws of Mexico. Gruma is the parent company of the Gruma Group of companies. Azteca Milling is a limited partnership under the laws of the State of Texas, United States of America, and a member of the Gruma Group of companies. Azteca Milling manufactures and distributes flour and other products made from corn, including corn-based snacks, such as crackers. Gruma claims to be one of the world's leading producers of corn-based foods. Gruma avers that, since 2021, almost a quarter of all tortillas sold throughout the world are produced by it and members of the Gruma group of companies. Grupo Bimbo, the first respondent, manufactures and distributes bakery products, including breads, crackers, cookies, pies, pastries and sweet rolls. Grupo Bimbo, through its various divisions, manufactures and distributes the product Sanissimo Salmas Oven Baked Corn Crackers (SSO-cracker), the product relevant to the trade mark application. Gruma and Grupo Bimbo are direct trade competitors. One of the products sold by Gruma, its Mission Planitas product, is a product with an almost identical cracker shape, pattern and ornamentation to that of Grupo Bimbo's SSO-cracker.

Application: The applicant opposes the registration and seeks an order refusing trade mark application “Corn Cracker Shape” under class 30 in the name of Grupo Bimbo, on the grounds of sections 9, 10(1), 10(2)(a), 10(2)(b), 10(4), 10(5) and/or 10(11) of the Trade Marks Act 194 of 1993. Gruma furthermore seeks that the court directs the second respondent, the Companies and Intellectual Property Commission (CIPC), to remove the application from the register.

Discussion: Grupo Bimbo, among others, challenged Gruma's locus standi to object to the trade mark application. Grupo Bimbo is correct in its submission that the principle of territoriality applies in trade mark law. The principle restricts the legal operation and effect of a trade mark to the territory for which it is to be registered. An applicant opposing the registration of a mark must first show that it is an "interested person". Gruma competes with Grupo Bimbo in several jurisdictions, but not in South Africa. Its trading interest consists not of actual trade, but an alleged intention to trade its product in South Africa. Gruma will only have standing in the proceedings as an "interested person" if it succeeds in making out a case that it has a substantial interest in the mark. Reliance is placed on the parties being trade rivals, and the possible effect that the registration of the trade mark might have on Gruma if it decides in future to expand its business to South Africa. While the parties might be trade rivals in other jurisdictions, Gruma is, at most, a potential trade rival of Grupo Bimbo in South Africa. It is, however, not sufficient to regard oneself theoretically as a potential trade rival.

Findings: To have standing on the basis that it is a potential trade rival, Gruma must establish at least a reasonable possibility that it is a potential trade rival in the sense of having at the time of registration some definite and present intention to deal in certain goods or description of goods, and not a mere general intention of extending its business at some future time to anything which it may think desirable. Gruma did not explain why it had not extended its business to South Africa to date. Neither did it provide a proposed timeline for any foreseen or planned entry into the South African market. Gruma made a bold averment but did not substantiate it with facts. The remark made in passing that Gruma reasonably wishes to distribute its product in South Africa in the future, is not sufficient to establish that a reasonable possibility existed that Gruma had and has the intention of expanding its business to South Africa in the foreseen future. Gruma failed to establish that it has a definite, genuine and present intention of becoming a trade rival of Grupo Bimbo in South Africa. Gruma lacks the necessary locus standi.

Order: The applicant's opposition is dismissed with costs.

VAN DER SCHYFF J

Facts: Mr Louw is a regional magistrate based in Krugersdorp and Ms Steenkamp also resides in Krugersdorp. Mr Louw is also a member and a trustee of several body corporates in Krugersdorp. Mr Louw instituted an action against Ms Steenkamp and alleged that she uttered and published defamatory statements which injured his reputation as a well-known member of the community. Ms Steenkamp requested a magistrate from outside the area to preside over the trial. She explained her difficulty in obtaining an attorney to represent her because attorneys don't want to take the case as they say they appear in front of Mr Louw on a weekly basis. A magistrate was called in from outside Krugersdorp to preside over the trial. At the commencement of the trial, Advocate Smith requested a postponement. The magistrate dismissed the application for postponement. The expectation was for the trial to commence, but Advocate Smith withdrew from the case, informing the court his mandate was limited to the application for postponement.

Application: It appears that an incident occurred in court when the magistrate called Ms Steenkamp to the witness stand after accepting the withdrawal of counsel. She fell or fainted after being sworn in. She takes issue with the remarks by the magistrate that he was "unsure" whether Ms Steenkamp had a medical issue "or it was an act." The trial proceedings were adjourned and Ms Steenkamp was ordered to consult with a medical practitioner and provide a comprehensive report about her condition. Instead, Ms Steenkamp launched an application for the recusal of the magistrate to stop the resumption of the proceedings. She claimed she endured bias based on the remarks by the magistrate after she fell or fainted. She says she had a reasonable apprehension of bias in the future conduct of the trial. The magistrate, Mr Netshiozwi, dismissed the recusal application, pursuant to which Ms Steenkamp approached this court on appeal.

Discussion: The magistrate was not satisfied with the details provided in the medical certificate. The magistrate subpoenaed Dr Louw who has issued the certificate to clarify the medical condition. When questioned whether Ms Steenkamp had put on an act, Dr Louw opined that although she did not fall in front of him, it was possible that she could fall and faint because of low blood pressure. The magistrate was not persuaded and rejected the medical evidence as lacking in explanation on why she fainted. Instead, he found that she had no intention to proceed with the trial on the date and awarded costs in favour of the plaintiff on attorney and client scale, which costs were to include the cost of preparations. Ms Steenkamp takes issues with the remarks made by the magistrate. She challenges being called to the witness stand and being compelled to take an oath and the decision to proceed with the trial while she was unrepresented. According to Ms Steenkamp, this should not have occurred since the duty to begin as well as the onus to prove his case rested on Mr Louw.

Findings: It is not inappropriate for the presiding officer to express views about certain aspects of the evidence in the conduct of the proceedings. The remarks by the magistrate must be viewed in the proper context of the litigation. The adjournment or postponement Ms Steenkamp sought is not for the asking or taking if not obtained by consent between the parties. Mr Loock, for Mr Louw, had mentioned that the action proceedings commenced in 2019. He submitted that Ms Steenkamp had five different attorneys representing her, resulting in continuous postponements. Two pre-trial conferences were already held. The perception or apprehension of bias, including "one-sided" or uneven handed treatment, is not borne out by the facts or the conduct of the proceedings. Contrary to the complaint about bias or apprehension of bias, here the magistrate was cautious and indulged Ms Steenkamp in circumstances where its court processes were not complied with and were repeatedly undermined.

Order: The appeal is dismissed with no order as to costs.

SIWENDU J (LIEBENBERG AJ concurring)