Kurt Robert Knoop and Others v Tegeta Exploration and Resources (Pty) Ltd and Others

The appellants were the duly appointed business rescue practitioners (BRPs) of several companies placed under business rescue. Two directors of those companies, Ms Ragavan and Mr Archery, purported to act on behalf of the companies and instituted High Court proceedings seeking the removal of certain BRPs and declaratory relief that others were not validly appointed. They appointed attorneys to represent the companies without the consent or authority of the BRPs. The BRPs disputed the attorneys’ authority under Rule 7 of the Uniform Rules of Court. The High Court held that while the attorneys lacked authority for most companies, they were authorised to represent one company (Koornfontein Mines). The BRPs appealed that declaratory order to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The High Court’s declaratory order authorising the attorneys to represent Koornfontein Mines was set aside and replaced with an order dismissing the relevant relief. The fifth and sixth respondents (the directors) were ordered to pay the costs personally, jointly and severally.

This judgment authoritatively confirms that during business rescue, only business rescue practitioners have the power to institute or defend litigation and to appoint attorneys on behalf of the company. It clarifies the application of Rule 7 in the context of business rescue, reinforces the wide management authority conferred on BRPs under ss 137 and 140 of the Companies Act, and limits directors’ powers once business rescue has commenced. The case strengthens legal certainty around control of litigation and costs in business rescue proceedings.