File Picture: Ian Landsberg / Independent Newspapers
The ongoing legal case surrounding South African company Tariomix took a new turn on December 21, when an urgent virtual hearing was called in the Mahikeng High Court before Judge Mfenyana.
This sudden hearing stemmed from accusations that Justice Morgan had erred previously by failing to officially extend a rule nisi order against Tariomix. To clarify, a rule nisi refers to a temporary court judgment placing a company under provisional liquidation. The company must then argue on a set future date why they should not be fully liquidated through a final court order.
So, when Tariomix was initially placed under provisional liquidation, it was accompanied by a rule nisi judgment — their provisional status would hold only until a later hearing where they could appeal against full liquidation.
Complications emerged when the original two applicants requesting Tariomix's provisional liquidation unexpectedly withdrew their court bid. This forced the appointed provisional liquidators and their extensive legal teams to hurriedly locate replacement applicants in order to continue pursuing the full liquidation order.
It was amidst this rushed applicant substitution process that Justice Morgan adjourned the next Tariomix hearing for judgment after only a single day of sessions rather than the full two days planned. Court documents now allege that in this hasty adjournment, Justice Morgan forgot to officially extend the existing rule nisi order as procedurally required.
By failing to prolong the rule nisi judgment on Tariomix's provisional status, the company was effectively released from liquidation temporarily — even as the ultimate fate still awaited finalisation through judgement and pronunciation on whether or not the original applicants could be substituted with the new replacement applicants.
Once learning that Tariomix had been freed from the provisional judgment through this oversight, directors Louis Liebenberg and Ronelle Kleynhans seized the opportunity to pass a special resolution. They would place the company into independent business rescue instead, arguing that Liebenberg's profitable mining activities could rescue the company by settling all alleged debts.
With no provisional liquidation orders active anymore, the directors exercised their rights and appointed restructuring expert Etienne Naude as lead practitioner to steer Tariomix through the business rescue process. Their stated goal was to protect the company and its creditors from the substantial legal expenses that had already been stacked up by the provisional liquidators and their unrelenting teams of lawyers.
Upon commencement of the legally binding business rescue, Naude dutifully notified the Companies and Intellectual Property Commission (CIPC) regulator. The CIPC then formally updated Tariomix's official status in the commission's records on December 13 to reflect the newly initiated business rescue proceedings rather than provisional liquidation.
However, a mere day later, on December 14, Tariomix's provisional liquidators took urgent steps to fight back against the business rescue resolution.
The liquidators and their lawyers first approached Justice Morgan requesting that he re-issue the rule nisi order against Tariomix. Neither Naude nor Liebenberg were informed of or involved in this crucial legal request. Surprisingly, Justice Morgan agreed to revive the rule nisi, despite allegedly considering the matter on the November 13, when the final liquidation matter was rested for judgment, the order was only stamped and issued on December 14 — the day after Tariomix had already entered business rescue and had its status formally changed by the CIPC.
Emboldened by securing the restored rule nisi, the provisional liquidators' extensive legal battalion proceeded to contact the CIPC. Although the CIPC agreed to comply with Justice Morgan's order and return Tariomix's status to provisional liquidation on their systems, the liquidators' lawyers continued with an urgent application in the Mahikeng High Court.
The rationale for this urgent court application was thrown into question during the hearing itself on December 21, however. It emerged such an enforcement order was completely unnecessary as the CIPC had, for the second time in weeks, already changed Tariomix's official status to provisional liquidation — exactly as requested by the provisional liquidators via Justice Morgan's retrospectively issued rule nisi.
With the core urgent relief rendered moot before proceedings even began, debate swirled around whether Etienne Naude and Louis Liebenberg should still face punitive cost orders for opposing the superfluous urgent application itself.
Arguing against personal liability, Advocate van Niekerk represented both Naude and Liebenberg. He maintained the ordinary court route could decide the cost issue without fabricated urgency. Van Niekerk also challenged why the applicant Daniel Lodewicus van Der Vyver held standing at all when Justice Morgan had never formally recognised him as an intervening party. Lastly, he asserted Mahikeng court in fact held no jurisdiction whatsoever over Naude and Liebenberg as both parties reside in different provinces.
In response, a passionate plea emerged from the floor. Two advocates representing the provisional liquidators proclaimed Naude and Liebenberg's entire business rescue resolution amounted to outright fraud — but failed to furnish factual evidence proving this in the form of a formal court record from the November 13 hearing proving that Justice Morgan did indeed extend the rule nisi order.
In her final December 21 judgment, Justice Mfenyana opted to exceed the narrow cost liability issue in question. Instead, she declared Tariomix's business rescue invalid, ordered CIPC to again change the company's status back to provisional liquidation, and levied punitive cost orders against both Naude and Liebenberg personally. It is worth highlighting that certain aspects of her order had not even been argued before her placing the scope of the judgment into question.
Despite this adversarial judgment, Tariomix director Liebenberg remained optimistic. He vowed to legally challenge the perceived overreach, aiming afresh to return Tariomix to formal business rescue through the correct courts in early January.
IOL