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Judge rules Sugar Industry Agreement is statutory – THL obliged to pay

Home Business Management Legal Judge rules Sugar Industry Agreement is statutory – THL obliged to pay

SA Canegrowers welcomed the Durban high court judgment on 6 May which confirmed outstanding levies are due to be paid by Tongaat Hulett to the sugar industry.  These levies are essential to the economic survival of sugarcane farmers and the tens of thousands of livelihoods that they support, according to SA Canegrowers chairman, Andrew Russell.

Judge Rashid Vahed confirmed that the Sugar Industry Agreement (SIA) is statutory legislation and payments due under it are still required to be made during the business rescue process, which suspends many other payments.

The business rescue practitioners of Tongaat Hulett Limited (THL) had sought leave to appeal the December 2023 ruling by Judge Vahed. The December ruling found that the SIA must be honoured during business rescue and the Companies Act, which legislates business rescue, did not override it. This means payments due under this agreement were required to be paid by the millers, such as Tongaat, even as it was in business rescue.

Tongaat applied for leave to appeal the ruling. THL’s application was opposed by the Minister of Trade, Industry and Competition, the South African Sugar Association (SASA), SA Canegrowers, SA Sugar Export Corporation, SA Sugar Miller’s Association, South African Farmers’ Development Association, RCL, Illovo, Gledhow Sugar Company (itself in business rescue), Umfolozi Sugar Mill, UCL, and thousands of affected growers, amongst others.

On Monday, 6 May 2024, Judge Vahed dismissed THL’s application with costs.

The purpose of the SIA is to ensure that growers, millers and refiners each receive an equitable share of the proceeds from local sugar production. It follows from the ruling that THL must honour the financial obligations under the SIA and pay the almost R526 million the new owners agreed to pay the industry, including growers, when the court battle came to an end.

Judge Vahed was clear that the sugar industry was unified in its understanding of the SIA, and the importance of the sugar industry in South Africa’s economy.

Although the Tongaat business rescue practitioners may still petition the Supreme Court of Appeal or the Constitutional Court on the matter, SA Canegrowers remains hopeful that the clarity of Judge Vahed’s ruling may bring closure to the matter. The overdue payments of THL’s obligations are putting growers and livelihoods at risk, Russell said.

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