Hazendal Wine Estate v Pure Electrical Solutions (2025/123216) [2025] ZAWCHC 494 (27 October 2025)

Case Note

Hazendal Wine Estate v Pure Electrical Solutions, High Court of South Africa (Western Cape Division, Cape Town), Case No. 2025-123216 (27 October 2025)

Coram: O’Brien AJ
Date heard: 11 September 2025
Date delivered: 27 October 2025

Reportability

This judgment is reportable because it deals with recurring and important questions in company law and civil procedure: the threshold and evidential burden for urgent winding-up applications, the treatment of a debtor’s tender to repay as an admission of indebtedness, and the extent to which an individual may invoke the constitutional right to silence in civil proceedings to avoid accounting for funds. The case is particularly significant in clarifying that, in civil matters, a party’s reliance on the “right to remain silent” is limited and may justify adverse inferences where unexplained dissipation of funds is alleged.

The court also provides a principled application of Uniform Rule 6(12), cautioning against undue formalism in urgency determinations and reaffirming that the rules exist to facilitate the expeditious resolution of disputes. The analysis ties procedural urgency to undisputed financial facts, including large advance payments, non-performance, an unfulfilled repayment tender, and the risk of asset dissipation.

Further, the judgment canvasses the interface between section 35 of the Constitution and civil proceedings, revisiting classic authorities on managing parallel civil and criminal exposure, and the post-Ferreira v Levin framework for compellability and use immunity under section 417 of the Companies Act 61 of 1973 (as amended). These aspects make the decision a useful reference for practitioners in insolvency, commercial litigation, and constitutional procedure.

Cases Cited

• Commissioner, South African Revenue Service v Hawker Air Services (Pty) Ltd; Commissioner, South African Revenue Service v Hawker Aviation Partnership and Others 2006 (4) SA 292 (SCA)

• Federated Trust Ltd v Botha 1978 (3) SA 645 (A)

• Gratus & Gratus (Pty) Ltd v Jackelo 1930 WLD 226

• Equisec (Pty) Ltd v Rodriguez and Another 1999 (3) SA 113 (W)

• Du Toit v Van Rensburg 1967 (4) SA 433 (C)

• Irvin & Johnson Ltd v Basson 1977 (3) SA 1067 (T)

• Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others 1996 (1) SA 984 (CC)

• Afgri Operations Ltd v Hamba Fleet (Pty) Ltd 2022 (1) SA 91 (SCA)

• Kalil v Decotex (Pty) Ltd 1988 (1) SA 943 (A)

Legislation Cited

• Constitution of the Republic of South Africa, 1996, section 35(1)(c), section 35(3), and section 35(3)(j)

• Companies Act 61 of 1973, sections 344(f), 345(1)(a), 346(4A), and 417(2)(b)–(c) (as amended)

• Judicial Matters Amendment Act 55 of 2002, section 10 (amending Companies Act s 417)

Rules of Court Cited

• Uniform Rule 6 and Rule 6(12) of the Uniform Rules of Court

HEADNOTE

Summary

The applicant, Hazendal Wine Estate, brought an urgent application to wind up the respondent, Pure Electrical Solutions, following the payment of a substantial project deposit under a service level agreement to relocate Eskom pylons and to procure electromagnetic field (EMF) reactors. The applicant paid R32,000,000 as an advance deposit for Phase 1 payments to Eskom and Adenco and a further R7,950,000 for EMF reactors. No services were rendered, no reactors were procured, and substantial funds were diverted to the personal bank accounts of a shareholder, Pretorius.

When challenged, the respondent tendered repayment of R39,750,000 by 31 August 2025, which tender the applicant accepted. The tender was not honoured. In the proceedings, Pretorius sought to invoke a “right to silence” to avoid explaining the flow of funds. The court held that such reliance is misplaced in civil litigation and drew adverse inferences from the non-disclosure and the undisputed diversion of funds.

The court held the matter to be urgent within the meaning of Uniform Rule 6(12), granted a provisional winding-up order, and issued a rule nisi with service directions, holding that the admitted indebtedness and failure to pay demonstrated commercial insolvency, and that any speculative counterclaims cannot defeat a liquidation application in the face of an acknowledged debt and inability to meet it.

Key Issues

• Whether the application was appropriately brought as an urgent matter under Uniform Rule 6(12) in light of the risk of further dissipation of funds and the admitted debt.

• Whether the constitutional right to remain silent can be invoked by a company shareholder in civil proceedings to avoid accounting for funds, and the permissibility of drawing adverse inferences.

• Whether the respondent’s tender to repay, accepted but not honoured, constitutes a binding admission of indebtedness, supporting a finding of commercial insolvency for winding-up purposes.

Held

The court held that urgency was justified and condoned non-compliance with the rules, pointing to the undisputed diversion of monies, the respondent’s tender to repay, and the absence of any coherent explanation of the whereabouts of the funds. The purpose of the rules is to facilitate expeditious resolution, not to obstruct access to relief.

On the “right to silence” contention, the court held that section 35 protections are specific to arrested, detained, or accused persons in criminal matters; in civil proceedings, adverse inferences may be drawn from silence or failure to explain matters peculiarly within a party’s knowledge. The court referenced the jurisprudence on compellability and use immunity in corporate insolvency enquiries to demonstrate that disclosure in civil processes does not necessarily prejudice future criminal proceedings.

The court found that the respondent’s accepted tender to repay R39,750,000, coupled with non-payment and unexplained personal transfers exceeding R21 million, disclosed commercial insolvency. There was no bona fide dispute on reasonable grounds. A provisional winding-up order issued, with a rule nisi return date, and with directions for service, including on employees, trade unions, and SARS. Costs were ordered to be costs in the liquidation.

THE FACTS

Hazendal Wine Estate operates from Stellenbosch and sought to relocate several Eskom pylons which detracted from the tranquility and operations of its estate. The respondent, through its principal, Theart, and shareholder Pretorius, represented that they had access to Eskom expertise and could complete the project by year-end. In early January 2024, preliminary work was mooted; on 10 July 2024 the parties concluded a service level agreement with a total project cost of R63,250,000 (including VAT) plus a 2.5% commission. A deposit of R32,000,000 was payable on signature, with further phased payments to follow. On the same day, the applicant also paid R7,950,000 to the respondent for EMF reactors, based on representations made by Pretorius.

Despite repeated follow-ups and assurances during 2024 and into 2025, the project did not commence. No cost estimate letter from Eskom materialised, no EMF reactors were procured, and the respondent failed to attend a key site meeting arranged by the applicant. An investigation by the applicant uncovered irregularities including allegedly fraudulent invoices generated by a former employee, Coetzee, and invoices purportedly implicating Adenco for work predating the project’s commencement. Eskom had not concluded any agreement with the respondent in relation to the project.

Further, a handwritten schedule provided by Theart revealed that project monies were applied to unrelated items such as a SARS liability. Bank records showed that between March 2024 and May 2025, R13,815,000 was paid into Pretorius’s Capitec account, and between July 2024 and May 2025, R7,579,000 was paid into his Discovery account, totalling R21,394,000 in personal transfers. None of these outflows was explained, and the EMF reactors were never delivered.

In response to the applicant’s termination of the service level agreement and the EMF reactor purchase, the respondent tendered to repay R39,750,000 by 31 August 2025. The applicant accepted the tender. The tender was not honoured by the deadline or by the time of the hearing. The respondent offered no substantive accounting for the funds and took refuge in a purported right to remain silent due to alleged potential criminal implications.

THE ISSUES

The primary issue was whether the court should entertain the matter as one of urgency under Uniform Rule 6(12), given that the applicant sought immediate winding-up relief to prevent further dissipation of funds and in light of the respondent’s unfulfilled repayment tender.

A further issue was the respondent’s reliance on a constitutional right to remain silent as a basis for refusing to answer allegations about the flow of funds. The court had to determine whether, in civil proceedings, a litigant could invoke section 35 rights to avoid disclosure and whether adverse inferences could be drawn from such silence.

Finally, the court had to decide whether the jurisdictional prerequisites for a provisional liquidation order had been met: namely, whether there was an admitted or indisputable indebtedness, an inability to pay (commercial insolvency) within the meaning of sections 344(f) and 345(1)(a) of the Companies Act 61 of 1973, and whether any asserted dispute or counterclaim was bona fide and raised on reasonable grounds.

ANALYSIS

On urgency, the court adopted a practical stance aligned with Commissioner, South African Revenue Service v Hawker Air Services and Federated Trust Ltd v Botha, emphasising that the rules are to secure the expeditious completion of litigation and are not an end in themselves. The undisputed deposit, the non-performance, the admitted tender to repay, and the personal diversion of substantial funds created a cogent case for urgent intervention. The respondent suffered no prejudice: the matter had been postponed, enabling the filing of a supplementary answering affidavit and heads. In these circumstances, the court held that the applicant was justified in invoking Rule 6(12).

On the “right to silence”, the court distinguished criminal from civil contexts. Section 35(1) and (3) of the Constitution protect arrested, detained, and accused persons in criminal proceedings. In civil proceedings, however, courts may draw adverse inferences from a litigant’s failure to explain facts within their peculiar knowledge. The court traced the jurisprudence on managing parallel civil and criminal exposure, noting that while courts may guard against compelling self-incrimination, the ordinary remedy is not to stay civil proceedings. Authorities such as Gratus & Gratus v Jackelo, Equisec v Rodriguez, Du Toit v Van Rensburg, and Irvin & Johnson v Basson illustrate judicial approaches that limit prejudice without halting civil processes.

The court also referred to Ferreira v Levin; Vryenhoek v Powell and the legislative response in section 10 of the Judicial Matters Amendment Act 55 of 2002, which amended section 417(2) of the Companies Act 61 of 1973. The current regime permits compulsion to answer in enquiries while conferring use immunity (save for perjury), underscoring that disclosure in civil contexts does not automatically prejudice future criminal proceedings. Against that framework, Pretorius’s blanket invocation of the right to silence in an answering affidavit was untenable, and his failure to account for the funds properly invited adverse inferences.

Turning to insolvency, the court found that the respondent’s accepted tender to repay R39,750,000 was a binding admission of indebtedness. The failure to honour that undertaking indicated commercial insolvency. The suggestion of countervailing claims or damages was speculative and unsupported; relying on Afgri Operations Ltd v Hamba Fleet (Pty) Ltd, the court reiterated that a speculative counterclaim cannot defeat a winding-up application where the debt is admitted and the debtor cannot pay. Applying Kalil v Decotex, the court concluded that there was no bona fide dispute on reasonable grounds.

REMEDY

The court condoned the applicant’s non-compliance with the forms and service provisions under Uniform Rule 6, and directed that the matter be heard as one of urgency in terms of Rule 6(12). Condonation for the respondent’s late filing of a supplementary answering affidavit, which was unopposed, was granted.

A provisional winding-up order was granted, placing the respondent under provisional liquidation in the hands of the Master of the High Court, Cape Town. The court issued a rule nisi calling upon the respondent and interested parties to show cause on 5 December 2025 why a final winding-up order should not be made and why the costs of the application should not be costs in the liquidation.

The court directed comprehensive service measures: service by the Sheriff at the respondent’s registered office; publication in one English and one Afrikaans newspaper circulating in the Western Cape; Sheriff’s service on the respondent’s employees in the manner prescribed by section 346(4A) of the Companies Act 61 of 1973; service on any trade union(s) representing the employees; and service on the South African Revenue Service. Costs were ordered to be costs in the winding-up.

LEGAL PRINCIPLES

• Urgency and procedural flexibility: Uniform Rule 6(12) permits deviation from ordinary forms and timelines where the facts justify urgency. Courts eschew formalism; the rules exist to facilitate expeditious, inexpensive adjudication. Where undisputed facts show an admitted debt, non-performance, and risk of dissipation, urgency will ordinarily be upheld.

• Right to silence in civil proceedings: Section 35 rights to silence and non-compulsion apply to arrested, detained, or accused persons in criminal matters. In civil litigation, a party cannot invoke a blanket right to silence to avoid accounting for funds or answering pertinent allegations. Courts may draw adverse inferences from unexplained silence, particularly regarding facts peculiarly within the party’s knowledge.

• Compellability and use immunity: Following Ferreira v Levin and the statutory amendments, persons may be compelled to answer in s 417 enquiries, with the safeguard that incriminating answers are generally inadmissible in subsequent criminal proceedings (save for perjury). This undercuts the notion of prejudice from civil disclosure and supports the court’s expectation of accountability in civil processes.

• Commercial insolvency and liquidation thresholds: Under sections 344(f) and 345(1)(a) of the Companies Act 61 of 1973, a company is liable to be wound up where it is unable to pay its debts, including where it fails to satisfy a demand for payment of a sum exceeding R100. An accepted tender to repay that remains unfulfilled is a powerful indicator of indebtedness and inability to pay. A speculative or unparticularised counterclaim cannot defeat a liquidation application where the debt is admitted and the debtor is plainly unable to meet it.

• Adverse inference from unexplained transfers: Where substantial corporate funds are diverted to a principal’s personal accounts without explanation, and no services are rendered, the court may draw adverse inferences of misappropriation, reinforcing the conclusion that the corporate entity is not operating as a going concern and should be wound up to protect creditors and the public.