REDISA's vindication & why it matters to you

REDISA was set up in 2012 to manage the national waste tyre problem and to carry out a programme that by 2017 employed over 3000 people in collection, transport, depots and processing plants.

It appeared to be working, yet in June 2017 the then Minister of Environmental Affairs, the late Edna Molewa, brought ex parte applications against REDISA and Kusaga Taka (the company appointed by REDISA to manage the operational aspects of the programme) for their provisional liquidation. Ex parte applications are carried out without the responding party (REDISA and KusagaTaka in this case) being given an opportunity to oppose the application, and indeed without them even being notified.

An extraordinary aspect of this case was that both companies were solvent.

The allegations against the two companies were voluminous, amounting to more than 1000 pages, and consisted of myriad allegations, untested hearsay and suspicions: a veritable litany of supposed wrongdoing.

All, as confirmed after 20 months of court battles culminating in a hearing in the Supreme Court of Appeal (SCA) on 1 and 2 November 2018, unfounded. Finally, on 24 January 2019, the SCA delivered its judgment. The judgment (a 4-1 opinion, with one dissenting judgment) was voluminous and scathing in its criticism of the conduct of the late Minister Molewa.

It is clear from the judgment found that the late Minister Molewa, and by association her Department and DG, Nosipho Ngcaba, ran a persistent campaign to destroy REDISA and take over its assets, based on misrepresentation, selective reporting, contradictions and lack of comprehension, and highly questionable actions deployed against the companies.

The Cape Town High Court also did not escape censure for its handling of REDISA and KT’s applications to dismiss the provisional liquidation orders. Indeed, there was even an indication (paras 48 and 49 of the judgment) that the Court had some concern that those responsible for preparing the late Minister Molewa's affidavits might not have had due regard for the onus laid on the appellants to act fairly towards the respondents when ex parte applications are brought.

The actions of the late Minister Molewa and her Department have caused the near collapse of a national network established to deal with South Africa’s waste tyre problem. It has wiped out hundreds of millions of rand in investment in systems and infrastructure, and destroyed the livelihoods of thousands of people.

It took nearly two years of litigation, and tens of million of rand in legal costs, to right the wrong. If the directors of the companies had not had the ability to fight the case all the way to the SCA, it would have established a precedent hereby a solvent company can be put into liquidation on the say-so of a Minister with unfounded suspicions, a grudge, or some other arbitrary motive, without even the chance to defend itself.

There are few businesses that an survive the process, since the directors immediately get cut off from heir information and assets, and must contest the provisional liquidation from their personal resources. And as we have seen in this case, that can mean fighting for two years without access to their livelihoods or business assets.

The judgment was scathing, both against the misuse and abuse of ex parte provisional liquidation applications, and the attempt to construe the Companies Act to allow a Minister to bring such applications.

If this case had not been so decisively settled, any company in the country could face the same attack, on equally spurious grounds, as REDISA. That would have been a serious blow to business confidence, at a time when we most desperately need to build, not break it.