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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
LIMPOPO DIVISION, POLOKWANE
CASE NO: 2037/2023
(1) REPORTABLE: YES/ NO
(2) OF INTEREST TO THE JUDGES: YES/ NO
(3) REVISED.
DATE: 11/03/2025
SIGNATURE
In the matter between:
FIRSTRAND BANK LTD trading inter alia as Applicant
FIRST NATIONAL BANK
Registration Number: 1929/001225/06
And
DR BONGANI INVESTMENTS 066 CC Respondent
Registration Numbers: 2000/006155/06
Delivered : This judgment is handed down electronically by circulation to the parties
through their legal representatives’ email addresses. The date for the hand -down is
deemed to be 11 March 2025.
JUDGMENT
Makoti AJ
Introduction
[1] This is an opposed application for final winding up of the respondent. The root of
the application is a loan agreement (agreement) which was concluded between the
applicant and the respondent on 21 December 2018. In terms of the agreement the
applicant adv ance a loan of R1 000 000 -00 (One Million Rand Only) to the
respondent. Repayment of the loan was to be made on predetermined and agreed
monthly instalments .
[2] The purpose of the loan was to refinance a property, Erf 4 [...] Kengsington B,
Gauteng. Amongst others, the respondent was required to ensure that the property
is kept insured , its rates and taxes are up to -date etc. This is because the property
was put up as security for the respondent’s indebtedness to the applicant.
Applicant’s case on b reach and respondent’s insolvency
[3] The applicant alleges that the respondent breached the loan agreement by:
[3.1] Failing to pay the amounts owing to the applicant as a nd when they
became due;
[3.2] Respondent failing to furnish the applicant with proof of taxes, rentals,
rates, license fees, other imposts and outgoings in respect of the property
have been paid;
[3.3] Respondent failing to provide proof that property was insured in
accordance with the minimum insurance replacement cover.
[4] According to the applicant on 26 August 2022 the respondent was in arrears with
its repayments in the amount of R27 487 -12. Demand was made on that same day
requiring the respondent t o pay the arrears. In addition, the applicant demanded
from the respondent proof of payment of municipal rates and taxes and proof that
the property was insured. The demands were no acceded to . As at 16 January
2023 the respondent’s indebtedness stood at a figure of R816 173 -39.
[5] The applicant made several demands requiring the respondent to make payment of
the arrear amount. Apart from the demand on 26 August 2022, mentioned earlier,
further demands were made on 14, 18 and 19 October of the same year. These
were followed by another demand that was made on 15 Novem ber 2022 . Then, on
20 January 2023, a notice in terms of section 69 of the Close Corporations Act,1
read with Schedule 5(9) of the new Companies Act,2 was issued through the
applicant’s legal representatives. Because of the unanswered notices the
applicants averred in the founding affidavit that:
“40. By virtue of the respondent not having responded to the Notice and not
making pay ment in full or at all to the applicant as demanded in the Notice,
the respondent is deemed to be unable to pay its debts in terms of section
69(1)(a) of the Close Corporation Act.”
[6] Section 69(1)(a) makes reference to liquidation in terms of the provisions of the
now repealed section 68 of the Close Corporations Act , the latter of which provide d
1 Act No. 69 of 1984.
2 Act No. 71 of 2008.
deeming provisions in terms of which a CC could be considered to be unable to pay
its debts. Amon gst such circumstances is where a Corporation has been served
with a notice or demand for payment of the amount due and it has failed to do so
within a period of 21 days of receiving the demand.3 Also, a Corporation may be
wound up where the court is sati sfied that it is unable to pay its debts.4
[7] I did mention already that according to the applicant the respondent’s indebtedness
stood at R816 173 -39 as at 16 January 2023. That amount had become due and
payable , also according to the applicant. Due to the failure to accede to the
demands and notice, the applicant concluded that the respondents is to be deemed
unable to pay its debts and that it ought to be finally wound up.
[8] The applicant contends that the respondent is unable to pay its debts and therefore
commercially insolvent. It is opportune to reference what the court in Murray and
Another NNO v African Global Holdings (Pty) Ltd5 held commercial insolvency to
be:
“The argument about timing misunderstands the nature of commercial
insolvency. It is not something to be measured at a single point in time by
asking whether all debts that are due up to that day have been or are going
to be paid. The test is whether the company “is able to meet its current
liabilities, including contingent and prospective liabilities, as they come due”
. . . .Determining commercial insolvency requires an examination of the
financial position of the company at present and in the immediate future to
determine whether it will be able in the ordinary course to pay its debts,
existing as well as contingent and prospective, and continue trading.”
[Emphasis added]
3 Section 69(1)(a).
4 Section 69(1)(c).
5 Murray and Others v. NNO v. African Global Holdings (Pty) Ltd. and Others 2020 (2) SA 93 (SCA) at
para 31.
[9] Apart from the allegations of commercial insolvency, the applicant did not provide
much as to why it averred that the respondent was also factually insolvent. I deal
with this matter on the basis, therefore, upon the allegation that the respondent is
commercially insolvent.
Respondent’s case
[10] To ward off the winding up case , the respondent raised four points in limine as well
as substantive defenses. In the first place it asserts that this application ought to be
kicked out on the basis of a defense of lis alibi pendens . The essence of this
defense is that the applicant has initiated a money judgment against the
respondent in Gauteng Local Division, Case No: 2023 -020116, which case is still
pending adjudication. Default judgment was granted against the respondent on 04
May 2023.
[11] This point avails no defense for the respondent. Though the same parties are
involved in both suits, the causes of action and reliefs sought in both matter s are
not the same or similar. It is now settled that lis alibi pendens is a dilatory defen se
in whic h a respondent seeks a stay of proceedings on the basis that there is
pending prior litigation between the same parties, based on the same cause of
action, in respect of the same subject matter.6 The party raising this defense bears
the onus of satisfy the requirements.
[12] On this point I am not with the respondent and have no difficulty in dismissing the
point in limine . This is not the same dispute as what was before the court where the
applicant was pursuing a monetary claim.7 In Caesarstone Sdot -Yam Ltd v The
World of Marble and Granite 2000 CC and Others , lis pendens as a defense was
described thus:
6 George v Minister of Environmental Affairs & Touri sm 2005 (6) SA 297 (EqC).
7 FirstRand Bank Limited v Mokoena and Others 2024 JDR 1722 (GJ) para [37]. Standard Bank of South
Africa Limited and Another v Mandlakomoya Trade and Projects CC and Another (Counter Application)
2024 JDR 4505 (WCC) para [13]. Electrolux South Africa (Pty) Ltd v Rentek Consulting (Pty) Ltd 2023
(6) SA 452 (WCC) para [15].
"[2] As its name indicates, a plea of lis alibi pendens is based on the
proposition that the dispute (lis) between the parties is being litigated
elsewhere and therefore it is inappropriate for it to be litigated in the court in
which the plea is raised. The policy underpinning it is that there should be a
limit to the extent to which the same issue is litigated between th e same
parties and that it is desirable that there be finality in litigation. The courts
are also concerned to avoid a situation where different courts pronounce on
the same issue with the risk that they may reach differing conclusions. It is
a plea that h as been recognised by our courts for over 100 years.”
[Emphasis added]
[13] Then, the respondent also raised a defense of non -service on the South African
Receiver of Revenue (SARS) and a trade union that represents its employees. The
contention here is that section 346(4A)(a) and (b) of the old Companies Act8 makes
it obligatory for service to be effected on every registered trade union and to the
employees by affixing a copy of the application on a notice board which is
accessible to the employees. If upheld, this would also be dilatory. Section 346(4A)
of the old Companies Act provides that:
“(a) When an application is presented to the court in terms of this section, the
applicant must furnish a copy of the application –
(i) registered trade union that, as far as the applicant can reasonably
ascertain, represents any of the employees of the company; and
(ii) to the employees themselves –
(aa) by affixing a copy of the application any noticeboard which
the applicant and the employees access i nside the
premises of the company; or
8 Act No. 61 of 1973.
(bb) there is no access to the premises by the applicant and the
employees, by affixing a copy of the application to the front
gate of the premises, where applicable, failing which to the
front door of the premises fr om which the company
conducted in a business at the time of the applica tion;
(ii) the South African revenue service; and
(iv) to the company, unless the application is made by the company, or
the court, at its discretion, dispenses with the furnishing of a copy if
the court is satisfied that it would be in the interests of the company
or of the creditors to dispense with it.
(b) the applicant must, before or during the hearing, file an affidavit by the
person who furnished a copy of the application which sets out the manner
in which paragraph (a) was complied with.”
[14] Concerning service on SARS, in Pilot Freight v Von Landsberg Trading9 it was held
that:
“[29] The furnishing to SARS is usually uncontroversial and an affidavit from the
person who delivered the application to SARS, together with the stamp
from SARS on the notice of motion acknowledging receipt thereof, would
constitute sufficient proof that the application was furnished on SARS.
[15] Service to employees, either through a registered trade union or, where no ne
exists, directly to the employee is peremptory. In EB Steam Company (Pty) Ltd v
Eskom Holdings SOC10 the Court held that:
9 2015 (2) SA 550 (GJ) at par [29] .
10 Ltd [2014] All SA 294 (SCA) at paragraph [9].
“The requirement that the application papers be furnished to the person
specified in s346(4A) is peremptory, when furnishing them to the
respondent’s employees, that this be done in any of the ways specified in
s346(4A)(a)(ii). If those modes of service are impossible or ineffectual
another mode of service will satisfy the requirements of the section. If the
applicant is unable to furnish the application papers to employees in one of
the methods specified in the section, or those methods are ineffective to
achieve that purpose and it has not devised some other effective manner,
the court should be approached to give directions as to the manner in
which this is to be done. Throughout the emphasis must be on achieving
the statutory purpose of so far as reasonably possible bringing the
application to the attention of the employees.”
[16] With regard to SARS the applicant served through email transmission to various
officials on 24 May 2023 and 06 June 2023. In relation to the employees and / or
trade union, the application was served through the Sheriff on 08 March 2023 and
a return of ser vice was filed by the applicant as part of the papers before court.
There is sufficient proof of service as required by legislation and the objection for
non-service cannot be upheld. A service affidavit deposed to by Z.W Shabalala
explaining how service w as carried out in compliance with section 346(4A)
accompanied this application.
[17] Another point that was raised by the respondents was that inability to pay debt is
not a ground for winding up a close corporation. It is contended that section 68(c)
of the Close Corporations Act is no longer part of the law as section 68 has been
repealed. Further that, it was contended by the respondent, inability to pay debts is
not an indication that a close corporation is insolvent. The contention was that
sectio n 81 of the Companies Act was applicable and that in terms of its provisions a
winding up order can only be granted upon conclusion of business rescue and it is
just and equitable to do so.
[18] There are no business rescue proceedings pending in this case . Neither have any
such rescue proceedings been completed. On that basis the respondent contends
that the application was prematurely instituted and that it should be dismissed . This
as a point in limine is bad and does not make sense. I therefore dismiss it.
[19] The final point in limine was that the application was an abuse of court processes. It
is connected to the first point of lis pendens . This point was raised because
according to the respondent t he applicant has instituted proceedings in two
divisions, and in circumstances where the same parties are involved and the
matters arose out of the same set of facts . The respondent then wants the
application to be dismissed on the basis of its contentions mentioned above. Apart
from its repetitious nature, it is difficult to fathom what in reality is this as a point in
limine . It fails .
[20] Regarding its substantive defense, the respondent first contended that its
indebtedness was not what the applicant claimed, but an amount of R600 000 -00
(Six Hundred Thousand Rand Only) has averred that it has made a number of
payments of R100 000 -00 (One Hundred Thousand Rand Only) amounts . These
were made in May 2024; June 2024; July 2024; August 2024; and September
2024. These payments were recorded in the respondent’s supplementary affidavit
that was filed on 31 October 2024. The acknowledgement of inde btedness in the
amount of R600 000 -00 is proof of the respondent’s breach of its repayment
obligations and, importantly, a concession of its inability to settle its liabilities when
the fall due.
[21] When the case was eventually heard in November 2024, t he respondent has
provided no indication of further payments after the ones that have been mentioned
above. Based on those payments, the respondent contends that i t is neither
commercially nor factually insolvent. It also contends that it is not jus t and equitable
that an order for its winding up be granted. Thus, it contends, the application should
be dismissed. The question is whether, with that pattern of payments the
respondent can be regarded as a party that is able to pay its debts when they
become due.
Discussion
[22] Section 68 of the Close Corporations Act has been repealed. However, section 69
of the same legislation has survived the repeal. This provision caters for
circumstances under which a close corporation may be deemed unable to pay i ts
debts for purposes of winding up in terms of section 68 of the Act. This has created
confusion.
[23] In HBT Construction and Plant Hire CC v Uniplant Hire CC11 the court held that in
light of the appeal of section 68, a close corporation may only be wound up if it is
proven to be insolvent or if it is just and equitable that it be liquidated. A similar
conclusion was reached a year later in Herman and Another v Set-Mak Civils CC ,12
the court reiterating that a close corporation may only be liquidated under section
81 of the 2008 Companies Act.
[24] Siwendu J recently held , with reference to Murray and Others NNO v African Global
Holdings (Pty) Ltd and Others ,13 in ABSA Bank Limited v 93 Quartz Street Hillbrow
CC14 that:
“[16] The Court in Murray NO , has put to rest any previous debates about the
pathway for the winding up of an insolvent company. It clarified the position
that a company that is commercially insolvent is liable to be wound up in
terms of Chapter 14 of the provisions of the old Act as provided in
Schedule 5, Item 9 (1) of the new Act . By virtue of the amendment of
section 66 of the Close Corporations Act referred to above, the deci sion in
Murray NO applies with equal force to the winding up of insolvent close
11 2012 (5) SA 197 (FB).
12 2013 (1) SA 386 (FB) at [13] and [14].
13 2020 (2) SA 93 (SCA).
14 ABSA Bank Limited v 93 Quartz Street Hillbrow CC (2022/5554) [2023] ZAGPJHC 1416 (6 December
2023).
corporations. The nett result is that sections 344 to 348 of the old Act apply
to a winding up of an insolvent close corporation by a court.” {Emphasis
added]
[25] I have menti oned the applicant’s reliance for th is liquidation application also o n the
terms of section 69 of the Close Corporations Act, read with Schedule 5 (9) of the
new Compan ies Act. Section 69 does not confer self -standing authority to liquidate
a close corporation, but plays a subservient role to section 68 which is repealed.15
The opening sentence to section 69 makes it clear that it is concerned with
liquidation of a close corporation in terms of section 68. Thus, i t is difficult to see
how section 69 remains useful after the legislative demise of section 68.
[26] Schedule 5(9) deals with the continued application of the provisions of the old
Companies Act in so far as winding up applications are concerned. The schedule
reads inter alia that:
“(1) Despite the repeal of the previous Act, until the date determined in terms of
subitem (4), Chapter 14 of that Act continues to apply with respect to the
winding -up and liquidation of companies under this Act, as if that Act had
not been repealed subj ect to subitems (2) and (3).
(2) Despite subitem (1), sections 343, 344, 346, and 348 to 353 do not apply to
the winding -up of a solvent company, except to the extent n ecessary to
give full effect to the provisions of Part G of Chapter 2.
(3) If there is a conflict between a provision of the previous Act that continues
to apply in terms of subitem (1), and a provision of Part G of Chapter 2 of
this Act with respect to a solvent company, the provision of this Act
prevails. ”
15 Ibid.
[27] What this does not mean, in my view, is that the deeming provisions contained in
section 68 of the Close Corporations Act remain applicable and that, despite its
repeal, an entity under that statute may be wound up because it is deemed unable
to pay its debts.
[28] Ultimatel y, it seems that I am left to determine whether the respondent is either
economically or factually insolvent. If so, liquidation may result. The same result
may be reached if it is just and equitable to wind up the affairs of the respondent. A
court may order a solvent company to be wound up if it is just and equitable for the
company to be wound up .16 The applicant has raised this as one of the grounds
upon which it relies in seek ing the winding up of the respondent. But t his will
become a consideration only if I find that the respondent is solvent.
[29] Liquidation of a solvent company was discussed in Thunder Cats Investments 92
(Pty) Ltd v Nkonjane Economic Prospecting & Investment (Pty) Ltd in which it was
held as follows :
“… postulates not facts but only a broad conclusion of law, justice and
equity, as a ground for winding -up. The subsection is not confined to cases
which were analogous to the grounds mentioned in other parts of the
section. Nor can any general rule be laid down as to the nature of the
circumstances that had to be considered to ascertain whether a case came
within the phrase. There is no fixed c ategory of circumstances which may
provide a basis for a winding -up on the just and equitable ground.”
[30] The facts before me raise serious questions on whether the respondent is
economically solvent. By all accounts, even from the respondent’s own version, it is
not is a position to pa y its liabilities or debts when they become due. The reveal
even from the respondent’s version that it made payments intermittently in June
2024, skipping July, then in August and September the same ye ar. No record of
payment for October and November 2024, during which months payments were still
16 Section 81(1)(d)(iii) of the new Companies Act.
to be made for amounts which became due . All what the respondent did was to
show that it has recently made payments and according to it that should serve as
proof that it is not commercially insolvent. Those do not prove commercial
solvency.
[31] In my view, the full facts before me make it abundantly clear that the respondent is
unable to pay its liabilities when they become due and that, for all intents and
purposes , it is commercially insolvent. The applicant is entitled to a liquidation order
where it is proven that the respondent is unable to discharge its debts,17 which, in
this case, was reflected by the acknowledgement of indebtedness to the tune of
R600 000-00. In Afrgri Operations Ltd18 it was held inter alia that:
“[12] Notwithstanding its awareness of the fact that its discretion must be
exercised judicially, the court a quo did not keep in view the specific
principle that, generally speaking, an unpaid creditor has a right, ex debito
justitiae , to a winding -up order against the respondent company that has
not discharged that debt. Different conside rations may apply where
business rescue proceedings are being considered in terms of Part A of
chapter six of the new Companies Act 71 of 2008 . Those considerations
are not relevant to th ese proceedings. The court a quo also did not heed
the principle that, in practice, the discretion of a court to refuse to grant a
winding -up order where an unpaid creditor applies therefor is a ‘very
narrow one’ that is rarely exercised and in special or unusual
circumstances only.” [Footnotes excluded]
[32] Upon reaching that conclusion that the respondent is commercially insolvent, it is
not necessary to determine whether it is factually insolvent or that it is just and
equitable within the contemplation of section 81(1)(d)(iii) of the Companies Act to
liquidate the close corporation. The applicant proposed that the respondent be
17 Afgri Operations Ltd v Hamba Fleet (Pty) Ltd 2022 (1) SA 91 (SCA) para [12].
18 Ibid.
placed under provisional liquidation with ancillary orders as to service of the orde r
to be made in this case.
[33] In applications of this nature, and in light of the ultimate decision which I have
made, the applicants costs which were occasioned by this application are to be in
the liquidation.
Order
[34] I make the following order:
[a] The applicant is placed under final liquidation.
[b] The applicant’s costs are to be costs in the liquidation of the respondent.
_______________________
MOKGERWA MAKOTI
ACTING JUDGE OF THE HIGH COURT
LIMPOPO DIVISION, POLOKWANE
APPEARANCES
FOR APPLICANT S : ADV M DE OLIVEIRA
JASON MICHAEL SMITH INC ATT.
C/O BOSMAN ATTORNEYS
POLOKWANE
FOR FIRST RESPONDENT S : ADV M KUFA
ADV M TSHIVHASE
TALANE AND ASSOCIATES ATT.
C/O LEBEPE & ASSOCIATES INC
POLOKWANE
HEARD ON : 18 NOVE MBER 2024
DELIVERED ON : 11 MARCH 2025