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voted to re­ject the plan.

The at­tor­ney for the Kariba share­hold­ers said his clients wished to make a bind­ing of­fer to pur­chase the bank’s vot­ing in­ter­est, in terms of sec­tion 153(1)(b)(ii). The prac­ti­tioner im­me­di­ately ruled that the bank could not re­spond to the of­fer be­cause it was bind­ing, and that the bank’s vot­ing in­ter­est had been im­me­di­ately trans­ferred to the share­hold­ers.

The bank brought an ap­pli­ca­tion, and in the court a quo con­tended that it could not be bound by an of­fer it had not been al­lowed to re­spond to. It fur­ther con­tended that the of­fer was im­proper, in that it lacked clar­ity as to the iden­tity of the of­feror, the amount and pay­ment terms, and whether there were any con­di­tions at­tached to it. The bind­ing of­fer only stated that the pur­chase of the bank's vot­ing in­ter­ests would be “at a value in­de­pen­dently and ex­pertly de­ter­mined to be a fair and rea­son­able es­ti­mate of the re­turn to the bank, if Kariba were to be liq­ui­dated”.

In dis­miss­ing the bank’s ap­pli­ca­tion, Judge Kathree-Setiloane held that the prac­ti­tioner had ap­plied sec­tion 153(1)(b)(ii) prop­erly. The “bind­ing of­fer” en­vis­aged in sec­tion 153(1)(b)(ii) did not an­tic­i­pate an “op­tion” or an “agree­ment” in the con­trac­tual sense, but was “a set of statu­tory rights and obli­ga­tions, from which nei­ther party could re­sile”.

This meant that the of­fer was au­to­mat­i­cally bind­ing on both the of­feror and the of­feree once it was made. Ac­cord­ing to the court, this in­ter­pre­ta­tion was con­sis­tent with the in­ten­tion of the leg­is­la­ture to en­sure “co­op­er­a­tion” by op­pos­ing cred­i­tors in busi­ness res­cue pro­ceed­ings.

On ap­peal to the Supreme Court, the bank ar­gued that the bind­ing of­fer made in terms of sec­tion 153(1)(b)(ii) did not au­to­mat­i­cally bind the of­feree. Use of the term “bind­ing of­fer” was in­tended to con­vey that once the of­fer had been made, the of­feror would not be able to with­draw it.

Judg­ments were writ­ten by Dam­buza AJA and Leach JA of the Supreme Court of Ap­peal, with Mpati P, Mh­lantla JA and Schoe­man AJA con­cur­ring with both judg­ments.

Dam­buza AJA dis­agreed with the ap­proach adopted by the high court. He stated that it is a well-es­tab­lished prin­ci­ple of law that an am­bigu­ous pro­posal can­not be clas­si­fied as an of­fer be­cause the terms of an of­fer must cover the min­i­mum re­quire­ments of the pro­posed con­tract.

Even if the bank had wanted to re­spond to the ‘bind­ing of­fer’ there was no valid bind­ing of­fer to which it could re­spond

Pic­ture: iS­TOCK

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