Exeo Kholeka Civil Engineering Construction (Pty) Ltd v Schoonspruit Development (Pty) Ltd (2024/142384) [2025] ZAWCHC 472 (17 September 2025)

Case Note

Exeo Khokela Civil Engineering Construction (Pty) Ltd v Schoonspruit Development (Pty) Ltd
Case No 2024-142384; High Court of South Africa (Western Cape Division, Cape Town)
Judgment delivered 17 September 2025

Reportability

This judgment has been marked reportable because it clarifies the continued application of Chapter 14 of the repealed Companies Act 61 of 1973 to insolvent liquidations in terms of Item 9 of Schedule 5 to the Companies Act 71 of 2008.

The decision is significant in that it unequivocally re-endorses the principle of dual jurisdiction—namely that either the court where a company’s registered office is situated or the court where its principal place of business is located may entertain a winding-up application.

A further reason for reportability is the court’s detailed treatment of the interplay between pending business-rescue proceedings and liquidation proceedings, specifically its finding that a last-minute business-rescue application does not, without more, suspend the court’s power to grant a provisional winding-up order.

Cases Cited

Kalil v Decotex (Pty) Ltd 1988 (1) SA 932 (A)
Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf Estate (Pty) Ltd 2013 (1) SA 191 (WCC)
Van der Merwe v Duraline (Pty) Ltd [2013] ZAWCHC 213
Mfwethu Investments CC v Citiq Meter Solutions (Pty) Ltd 2020 JDR 0851 (WCC)
Electrolux South Africa (Pty) Ltd v Rentek Consulting (Pty) Ltd [2023] ZAWCHC 202
Afgri Operations Ltd v Hamba Fleet (Pty) Ltd [2017] ZASCA 24
Lutchman NO and Others v African Global Holdings and Others 2022 (4) SA 529 (SCA)
Absa Bank Ltd v Summer Lodge (Pty) Ltd [2013] ZAGPPHC 544
Richter v Absa Bank Ltd [2015] ZASCA 100
GCC Engineering (Pty) Ltd v Maroos [2018] ZASCA 178
STS Tyres (Pty) Ltd v Bamboo Rock Plant (Pty) Ltd [2024] ZAGPPHC 490
PFC Properties (Pty) Ltd v Commissioner for the SARS and Others [2023] ZASCA 111
Wightman t/a JW Construction v Headfour (Pty) Ltd [2008] ZASCA 6
Wild & Marr (Pty) Ltd v Intratek [2019] ZAGPPHC 613

Legislation Cited

Companies Act 71 of 2008 — sections 131(6) and 224(3); Schedule 5 Item 9
Companies Act 61 of 1973 — sections 12, 344, 345
No other statutory instruments were referred to.

Rules of Court Cited

No specific Uniform Rule of Court was singled out; the court merely ordered service of the rule nisi “in accordance with the rules.”

HEADNOTE

Summary

The applicant, a civil-engineering contractor, sought a provisional winding-up order against the respondent property-development company, alleging commercial insolvency arising from unpaid invoices. The respondent resisted the application on three grounds: lack of jurisdiction, pendency of a last-minute business-rescue application issued in the KwaZulu-Natal Division, and an alleged bona fide dispute about indebtedness.

The court held that it possessed jurisdiction because the respondent’s principal place of business, as opposed to its registered office, was within the Western Cape. It further held that the eleventh-hour business-rescue application did not automatically suspend the liquidation proceedings for purposes of section 131(6) of the Companies Act 71 of 2008. Finally, it found that the debt was not genuinely disputed and that the respondent was commercially insolvent.

Accordingly, the court granted a provisional winding-up order, issued a rule nisi, and awarded costs to the applicant on the higher Scale B.

Key Issues

Whether the Western Cape Division had territorial jurisdiction to entertain the application in light of the respondent’s registered office being elsewhere.

Whether a business-rescue application lodged on the eve of the hearing was “made” for purposes of section 131(6) so as to suspend liquidation proceedings.

Whether the applicant established a prima facie case of indebtedness and commercial insolvency and, if so, whether the respondent raised a bona fide and reasonable dispute.

Held

The court held that dual jurisdiction under sections 12 and 344 of the 1973 Act still applies to insolvent liquidations, thereby conferring jurisdiction on the Western Cape Division.

It further held that a business-rescue application issued moments before the hearing does not, by itself, suspend the court’s power to grant a provisional winding-up order, as section 131(6) suspends only post-order liquidation steps undertaken by a liquidator.

On the merits, the applicant established indebtedness and commercial insolvency on a prima facie basis, the respondent failed to put up a credible defence or evidence of solvency, and a provisional winding-up order together with a rule nisi was therefore justified.

THE FACTS

The parties concluded a written construction contract on 30 January 2024. The applicant duly performed, submitted invoices, and demanded payment. The respondent failed to pay, repeatedly citing the need to secure external funding and acknowledging the debt in email correspondence.

Despite further demands, payment remained outstanding. Consequently, the applicant launched a winding-up application in December 2024. On 5 August 2025—one day before the scheduled hearing—the respondent lodged an urgent business-rescue application in the KwaZulu-Natal Division and served an unissued notice on stakeholders.

The respondent’s directors reside and conduct business in Cape Town, although the company’s registered office is in Pietermaritzburg. During the hearing the respondent contested jurisdiction, denied indebtedness through an affidavit deposed to by its attorney, and relied on the pending business-rescue application to stay the winding-up proceedings.

THE ISSUES

First, the court had to decide whether it was the competent forum to entertain the winding-up application in light of the respondent’s registered office being situated outside the Western Cape.

Secondly, it had to determine whether the business-rescue application, filed on the eve of the hearing and formally issued minutes before, was “made” within the meaning of section 131(6) so as to suspend the winding-up application.

Thirdly, the court needed to assess whether the applicant had discharged the low threshold of a prima facie case of indebtedness and commercial insolvency and whether the respondent had raised a bona fide and reasonable defence sufficient to justify dismissal or postponement of the winding-up application.

ANALYSIS

The court began by reconciling the jurisdictional debate. Drawing on Van der Merwe v Duraline and later authorities, it held that Item 9 of Schedule 5 to the 2008 Act preserves the jurisdictional regime of Chapter 14 of the 1973 Act. That regime affords concurrent jurisdiction to the court of the registered office and the court of the principal place of business. Evidence showed the latter to be in Cape Town; jurisdiction was accordingly established.

Turning to the effect of the business-rescue filing, Higgins AJ examined the text of section 131(6), the Supreme Court of Appeal’s guidance in Lutchman, Richter and GCC Engineering, and the persuasive reasoning of STS Tyres. The court concluded that the statutory suspension relates only to actions by a liquidator after a liquidation order is granted; it does not bar the court from issuing a provisional order in the first place.

On insolvency, the court applied the principles from Kalil and Afgri Operations: once indebtedness is shown, the onus shifts to the company to demonstrate a bona fide dispute or solvency. The respondent’s attorney-deposed affidavit contained bare denials unsupported by financial records. Prior written acknowledgements of debt and the admission of financial distress in the business-rescue papers reinforced the inference of commercial insolvency. Consequently, the applicant’s prima facie case remained unrebutted.

REMEDY

A provisional winding-up order was granted placing the respondent in the hands of the Master of the High Court.

A rule nisi was issued calling on the respondent and interested parties to show cause on a future date why a final winding-up order should not be made.

Costs were awarded to the applicant on Scale B, the court finding no equitable basis to depart from the ordinary rule that costs follow the result, particularly in light of the respondent’s last-minute procedural manoeuvres.

LEGAL PRINCIPLES

A company may be wound up in any court within whose area it has either its registered office or its principal place of business; the latter limb remains intact for insolvent liquidations notwithstanding Sibakhulu.

For purposes of section 131(6) of the 2008 Act, a business-rescue application suspends only post-order liquidation steps and does not fetter the court’s jurisdiction to issue a provisional or final winding-up order.

In winding-up applications, once a creditor proves prima facie indebtedness, the evidential burden shifts to the company to show a legitimate dispute or solvency; bare denials unsupported by credible documents will not suffice.

A business-rescue application launched for tactical delay or without reasonable prospects constitutes an abuse of process and does not enjoy statutory protection from liquidation proceedings.

Commercial insolvency can be inferred from the company’s inability to meet debts as they fall due, even in the absence of proof of factual insolvency, provided the evidence—such as acknowledged indebtedness and failed promises of payment—points to financial distress.