SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy



IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)

Case No: 22123 /23

In the matter between :

MELANIE R ÖNTGEN N.O. First Applicant
(In her capacity as a trustee for the time being
of the Wolfkop Landgoed Trust, IT 1054/95 )

EVERHARDUS JOHANNES LOUBSER N.O. Second Applicant
(In his capacity as a trustee for the time being
of the Wolfkop Landgoed Trust, IT 1054/95)

WERNER R ÖNTGEN N.O. Third Applicant
(In his capacity as a trustee for the time being
of the Wolfkop Landgoed Trust, IT 1054/95)

and

AFRICAN BELL TENT COMPANY First Respondent
Registration Number : 2017/024156/07
Registered Address : 5[...] V[...] Street, Ci trusdal ,
Western Cape, 7340

JEREMY NICHOLAS OWEN WYATT Second Respondent
This judgment was handed down electronically by circulation to the parties’ legal
representatives by email publication and release to SAFLII. The date for hand -down
is deemed to be on 06 Februa ry 2025.


JUDGMENT

MAPOMA AJ

Introduction

[1] This is an application in terms of the provisions of section 81(1)(d) (i) and (iii) of
the Companies Act 71 of 2008 (“the Companies Act”) for the winding up of the
first respondent, a solvent company named African Bell Tent Company (Pty) Ltd
(“ABT”, or “the company”) . The application is brought by the trustees of
Wolfkop Landgoed Trust, IT 1054/94 (“the Trust”) on behalf of the Trust which is
a 50% shareholder of ABT. The applicant s allege that disputes between the
directors of the company have mutated to a deadlock in managing the company
and the shareholders are unable to break the deadlock , resulting in the injury to
the company in that the business of the company cannot be conducted for the
benefit of the shareholders.

[2] The alleged disputes relate to the terms on which the respective director s’
related entities would be entitled to buy t ents from the company at cost price
and for their own respective uses. This issue according to the applicants ha s
resulted in a complete breakdown of relationship between the directors and the
shareholders of th e company , a situation that ha s rendered conducting the
business of the company for the benefit of the shareholders i mpossible.

[3] The application is oppos ed by the second respondent , Jeremy Nicholas Owen
Wyatt (“Wyatt”) , one of the only director s presently residing at 1[...] K[...] Road
in Nairobi, Kenya . Wyatt is the shareholder of the remaining 50% of ABT. On 7
February 2024, Wyatt sought and obtained leave to intervene in the winding up
application and was duly joined in the proceedings as second respondent .
Wyatt brought a counter -application to stay the winding up application pending
the final determination of the application that he intend s to launch in terms of
sections 162, 163 and 165 of the Companies Act. Should the relief he seeks in
the application yet to be launched be granted , Wyatt will again seek a further
relief for the stay of the winding up application pending the final determination
of “any action proceedings ” or arbitration proceedings that he intends to launch.

[4] In opposing the winding up application, Wyat t allege s that the breakdown in
relationship is caused by the third applicant , Werner Röntgen (Röntgen ), who is
the other director of ABT . According to Wyatt , Röntgen , being a director of the
company , had breached the fiduciary duties owed to the company and is facing
accusa tions of fra ud.

[5] Wyatt further cites various ground of opposition . Firstly, that the disputes that
have created a deadlock are capable of being resolved through the
proceedings mentioned above . Second ly, that the Trust has contributed to the
deadlock by failing to fulfil its obligations in terms of the shareholder agreement.
Thirdly, that Trust has failed to exhaust the deadlock breaking mechanism s that
are provided for in the shareholders agreement. Fourthly, that Röntgen did not
approach the court with clean hands and as such, the Trust has no basi s to rely
on just and equitable as a ground for winding up of ABT .

Relevant Background Facts

[6] Wyatt is the sole director and shareholder of African Bell Tents in Kenya (“ABT
Kenya”) . On 19 January 2017 , Wyatt found ed a separate but related ABT
company in South Africa . Both ABT Kenya and the ABT company (in South
Africa) are in the business of selling in Kenya and South Africa respectively ,
imported tents from China .

[7] On registration of ABT, Wyatt was the sole shareholder of ABT’s 120 issued
shared until he sold 50% of his shareholding to the Trust on 20 August 2018 .
Pursuant to the sale of share s, a Shareholders Agreement between the Wyatt ,
the Trust and ABT was concluded . Memorandum of Incorporation (“MoI”) was
adopted by a special resolution of the general meeting on 20 August 2018.
Thereafter , the third respondent, who is a trustee of the Trust, was appointed as
a director of ABT on 30 August 20 18. In short , ABT is controlled by the two
shareholders , Wyatt and the Trust , who own equal shares , and is governed by
the two directors , namely , Wyatt and Röntgen .

[8] The relationship between the shareholders of ABT is governed by the
shareholders agreement and memorandum of incorporation. Clause 6.1 of the
shareholder s agreement describes the business of the company as being :

“to import and export different types of tents or any such business is agreed
to in writin g from time to time by a special majority of the Shareholders,
which business and responsibilities and/or responsibilities are divided
between the shareholders as follo ws….”

[9] Clause 6 .1 of the shareholders agreement also defines the business
responsibilities of the two shareholders . In particular , the responsibilities of
Wyatt are : to bring the name , brand, website and company set up; to bring the
customised t ents developed by the manufacturer in China ; to organise the
manufacturer in China for new orders and products development; organise
freight ; to purchase tents for onw ard shipment to his wholly owned African Bell
Tents Company in Kenya and ensure all costs , shipping and taxes will be
refunded to the South African ABT company and that no c osts be incurred by
the South African company for the tents going to Kenya ; exporting of tents from
the South African company to Namibia Mozambique and Botswana ; and lastly,
marketing and capital funding . The responsibilities of the Trust are storage of
tents; stock controlling management of tents; point of sale for direct sales;
marketing and promotion of festivals including websites; marketing at resorts
and capital funding .

[10] Both Wyatt and Röntgen have related entities that procure tents from ABT.
Wyatt is the director of and controls African Bell Tents C ompany in Kenya ,
which uses tents in Kenya . Werner R öntgen is the director of a company called
Wolfkop Camping Villages (Pty) Ltd whose shareholder is h is mother , who is
not a trustee of the Trust. Wolfkop Camping would purchase tents and rent
them out to various festivals and other uses.

[11] Central in the deadlock between the directors and shareholders of ABT is the
dispute relating to the terms on which the directors ’ related entities respectively
are to procure the tents from ABT . Wyatt on the one hand contends that his
related entity , ABT Kenya, is entitled to purchase the tents from the ABT at cost
price and that Röntgen’s related entity, Wolfkop Camping is liable to purchase
the tents from ABT at retail price. To buttress his contention, Wyatt relies on
Clause 6.1.5 of the shareholders’ agreement that st ipulates one of hi s
responsibilit ies as follows :

“6.1.5 Purchase tents for onward transmission to his 100% owned African
Bell Tents C ompany (Pty) Ltd i n Kenya and ensure all costs, shipping and
taxes will be refunded to the South African company and that no cost will be
incurred by the South African company for the t ents going to Kenya”

[12] Röntgen disputes Wyatt’s interpretation of the above clause . He also contends
that it was agreed between him and Wyatt prior to the conclusion of the
shareholders’ agreement that Wolfkop Camping would be entitled to buy tents
from ABT at cost price plus 10% commission to cover administrative costs .
This is disputed by Wyatt , denying that there was any such agreement with the
Trust . He contend s that no such clause exists in the shareholders agree ment .
He insisted that any entity other than ABT Kenya would buy tents at retail price
(which is higher than the cost price). This is how the dispute relating to the
terms of purchase of tents by the related entities gave rise to deadlock between
the directors and the shareholders of ABT.

[13] The dispute regarding the terms of purchase of tents by the related entities
arose between the two directors, in that Wyatt claims that Wolfkop Camping
owes a shortfall in the amount of R 234 907.00 which represents the difference
between the retail price that should have been paid and the cost price that
Wolfkop Camping paid instead . Wyatt also insists that Wolfkop camping is
indebted to ABT for the total of R640 731.00 , arising from all the purchases of
the tents made by Wolfkop from the company at cost price. This is disputed by
Wolfkop and R öntgen. This is not a matter to be adjudicated in these
proceedings , suffice it to say that it an illustration of the deadlock between the
directors that had not and could n ot be resolved by the shareholder being Wyatt
and the Trust of which R öntgen is a trustee.

[14] Attempts of a buyout of the Trust by Wyatt have also failed. The dispute
regarding an offer by Wyatt to purchase the shares of the Trust arose on or
about 19 September 2022 when Wyatt offered to purchase the shareholding of
the Trust in the company . The offer made by Wyatt for buyout of the Trust was
predicated o n him insisting that t he fair market value of the share be arrived by
recognising and including the disputed claim of R640 731.00 against Wolfkop
Camping in the assets of the company. This offer was rejected by the Trust,
contending that the price offered by Wyatt was one-half the cost price of the
assets of the company . This dispute also remains unresolved by the shared
shareholders of the company who are at poles apart in arriving at a fair price for
the p urchase of shares by Wyatt.

[15] Another dispute arose when Wyatt made allegations of fraud against R öntgen ,
where Wyatt claimed that Röntgen lodge d a fraudulent insurance claim on
behalf of the company for alleged theft of tents that Röntgen purportedly bought
from the company without Wyatt ’s knowledge. In a letter dated 31 January
2023, Wyatt through his legal representatives , issued a Notice of Breach in
terms of Clause 17 .1.5 of the shareholders agreement, where he alleged that
the company was the owner of those tents , and that R öntgen had no
authorisa tion to remove them from the company. Röntgen denies these
allegations. The above number of disputes is by no means an exhaustive list.

Issues

[16] Whilst t he parties have file d voluminous papers , each setting out their
allegations against another regarding the causes of the differences between the
two directors and putting blame on the doorsteps of each other, the real issues
are narrow . It is my considered view that in these proceedings, the court is not
called upon to adjudicate the dispute and accusations placed by the directors
against each other .

[17] In my view, the central issue for determin ation in th ese proceedings is whether
based o n facts presented before court there is indeed a deadlock between the
directors that results in an injury to the company or that renders the business of
the company unworkable for the benefit of the shareholders , and whether the
shareholders are unable to resolve the deadlock. Alternatively, whether based
on all the facts it is just and equitab le to wind up the company. Further, the
court will determine whether the grounds advanced by the second respondent
justify the stay of the winding up proc eedings .

[18] The applicant s contend that the directo rs of the company a re deadlocked in the
management of the company , and that the shareholders have not been able to
break the deadlock . This deadlock, so goe s the applicant s’ argument, is
result ing or may result in irreparable harm to the company , or that as a result of
the deadlock the business of the company cannot be conducted to the
advantage of the shareholders. On this basis the applicant s contend that the
company should be wou nd up in terms of section 81 (1)(d)(aa) and (bb) of the
Companies Act . The alternative ground is that it is just and equitable for the
company to be wou nd up in the circumstances in terms of section 81(1) (d)(iii) of
the Companies Act .

[19] In resisting the application, t he second respondent contends that there is no
basis for the winding up , in that he disputes that created the deadlock are
capable of being resolved through other legal proceedings . His further
contention is that it would be prejudicial to him as a shareholder and director of
ABT, and to ABT itself being a solve nt company to be wou nd up. Essentially,
Wyatt contends that it is just and equitable to wind up the company on various
bases mentioned in this judgment.

The applicable legal principles

[20] Section 81 (1)(d)(i) and (iii) of the Companies Act provides for the winding up of
a solvent compan y by court order if the company , or its director(s) or its
shareholder(s) applied for the winding in certain circumstances . The first
scenario is in terms of section 81(1)(d)(i) (aa), where is a deadlock by the
directors in the management of the company and the shareholders are unable
to bre ak the deadlock , resulting or which may result in the irreparable injury to
the company. The secon d scenario is in terms of section 81(1)(d) (i)(bb), in
circumstances where the deadlock referred to above result in a situation where
the business of the company cannot be to the advantage of the shareholders
generally. The third scenario is in terms of section 81(1)(d)(iii) in circumstances
where it is otherwise just and equitable for the company to be wound up. More
precisely, t he relevant sub -section of section 81 reads:

“(1) A court may order a solvent company to be wound up if:

(a) …….

(b) ……. ; or

(c) ……..;

(d) the company, one or more directors or one or more shareholders
have applied to the court for an order to wind up the company on
the grounds that -

(i) the directors are deadlocked in the management of the
company, and the shareholders are unable to break the
deadlock, and;

(aa) irreparable injury to the company is resulting, or may
result, from the deadlock; or

(bb) the company's business cannot be conducted to the
advantage of shareholders generally, as a result of the
deadlock; or

(ii) ……………………….

(iii) it is otherwise just and equitable for the company to be
wound up ”.

[21] In all cases where the ground of winding up has been established the co urts
has a discretion , which should be exercised judici ously , whether to grant the
winding up order sought irrespective of the ground upon which the order is
sought .1

[22] The destruction of the relationship may result in literal deadlock, where the
shareholders hold equal vot ing power i n general meeting , in which even t
winding up must or dinarily inevitably ensue .2 But it is not necessary to establish
literal deadlock (formal deadlock) . It suffices to show that as a result of the
particular conduct , there is no longer a reasonable possibility of running the
company consistently with basic arrangements between the members or
share holders ;3

[23] Constant quarrelling between the only two shareholders with the voting rights
as such , who are also only two directors , leading to a situation where they are
not on speaking terms is the ground f or winding up of the company .4

Discussion

Is there a deadlock?

1 F & C Building Construction Company (Pty) Ltd v Macsheil Investments (Pty) Ltd 1959(3) SA 841
(D) at 844.
2 Henoschberg on the Companies Act , 71 of 2008, Vol 1, 332(1) Issie [19] ; See also In re Yenidje
Tobacco Company Ltd [1916 ] 2 Ch at 435
3 In re Yenidje Tobacco Company Ltd [1916] 2 Ch at 43 1
4 Apco Africa v Incorporated v Apco Worldwide (Pty) Ltd [2008] 4 All SA 1 (SAC) at para 21

[24] The first issue t hat requires consideration is whether on the fact s before court
there exists a deadlock between the directors in managing the c ompany and
whether the shareholders are unable to resolve the deadlock. Wyatt admits
that the relationship between the directors has irretrievably broken down and
parties cannot work together in ABT in future . It is the view of the court that the
disputed accusations of one director against the another and vice versa are an
illustr ation that indeed there is deadlock between the directors in managing the
company. The shareholder s who are represented by the directors are unable to
break the deadlock, for they themselves are deeply immersed in the deadlock.
This situation is inflicting sustained injury to the company, in that since the
deadlock , the business of the company is not being conducted and managed
by the directors working together. As things are, conduc ting the business of the
company for the benefit of the shareholders generally is not possible in the
circumstances.

[25] Regarding the relationship between the directors, in Erasmus v Pentamed
Investments (Pty) Ltd 1982 (1) SA 178 , the court held as follows:

“the relationship between the directors was more than a purely commercial
one; that an understanding or at least a contemplation that the original
shareholders of respondent, whilst they remained such, would also be and
remain directors, thus participating in the management of the company, is to
be inferred. As Mr Du Toit put it, the partnership relationship outside the
company characterised the relationship of the shareholders inside it.”

[26] This brings me to the grounds advanced by Wyatt for the stay o f the winding up
application. Wyatt contends that there are other avenues to be explored
through court proceedings to break the deadlock, and that winding up should
be a last resort . For this rea son, he seeks to stay the winding up applicat ion.
Wyatt’s seeks to stay the winding up application pending the application
proceedings he intends to launch in terms of section 162 to have Röntgen
declared delinquent director. He also intends to seek relief in terms of section
163 for a n order t o regulate the affairs of the company by directing ABT to
amend the memorandum of association to provide for an additional director to
be appointed , and another director to be appointed to replace Röntgen once
removed . He inten ds to launch the application in terms of section 162 and 163
once the process prescribed in section 165 of the Companies Act has been
exhausted. His further plan is to institute derivative action later on should the
section 162 and 163 reliefs be successful.

[27] It is my considered view that the intended application by Wyatt fortifies the
reality that the deadlock between the directors of ABT has reached a point of no
return in the management of the company. This is so because Wyatt’s intended
litigation in terms of section 162 to declar e Röntgen a delinquent director i s
based on allegations that are denied and thus the contestation between the
parties would be endless . In any event, the declaration of R öntgen a
delinquent , if at all it is feasible, would not break the deadlock between the
shareholders of ABT . The shareholders are the Trust that is owned by
Röntgen’s mother and Wyatt himself. While the court does not pre -empt the
outcomes of the intended application , it is worth considering that t he change of
directors in circumstances where the shareholder s are inseparably intertwined
with the directors will not solve the underlying deadlock between the
shareholders themselves. The same applies to the section 163 application , for
this section applies in cases that do not obtain in the present case.

[28] Moreover, the intended applications are aimed at dealing with the person of
Röntgen as a director, and do not serve a s a mechanism to break the prevailing
deadlock between the shareholders who appoint the directors. The allegations
levelled against R öntgen are denied by R öntgen who has provided detailed
explanation that vitiates the allegations . The court is not persuaded that the
intended future application s in terms of section 162 , 163 and 165 justify the
stay of the proceedings. As mentioned above, these applications will not
resolve the deadlock. The dispute regarding the denied allegations by Wyatt
against R öntgen is a matter to be best dealt with by the liquidator.

[29] Having considered all the facts, I am satisfied that indeed there is true deadlock
between the directors of ABT. The shareholders are also deeply immersed in
the deadlock themselves so much so that they are incapable of breaking the
deadlock. The current situation has severely harmed the company in that it is
not possible to conduct business for the benefit of the s hareholder generally
under the circumstances. I have also considered the alternative remedies
raised by the second respondent but have found that these alternatives are not
suitable to break the deadlock.

[30] The applicants have, in my view, succeeded in ma king out a case for the
winding up of the first respondent on the basis that there is a deadlock between
the directors in the management of the company and the shareholders are
unable to break the deadlock. The deadlock has resulted in the irreparable
injury to the company, and the business of the company cannot be conducted
for the advantage of the shareholders generally in the circumstances as a result
of the deadlock.

[31] While the court has found that in casu , a case has been made out by the Trust
for winding u p of the company based on the existing deadlock , the court finds it
prudent to deal with the alternative ground and address the question whether it
is otherwise just and equitable t hat the company be wound up in the
circumstances of this case.

Just and Equitable

[32] the Trust relies on section 81 (1)(d) (iii) of the Companies Act in alleging that it
would otherwise be just and equitable to company to be wound up based on
the grounds that first, that the substrat um of the company has disappear ed;
second , that there is a justifiable lack of confidence by all in the corner to
management of the affairs of a pity ; and third that ABT is a quasi -partnership
and grounds exist for the dissolution of the partnership . In opposing the
winding up application, Wyatt conten ds that the Trust is not enti tled to rely on
the just a nd equitable ground to support the winding up of ABT on the basis that
the sh areholder s agreement requires that there must be a special resolution
taken by 85% votes for ABT to be wound up.

[33] This court , per Ndita J in Navigator Property Investment (Pty) Ltd v Silver Lakes
Crossing Shopping Centre (Pty) Ltd and Others [2014] JOL 32101 (WCC) held
that a provision in a shareholders agreement that preclude s a shareholder from
applying for winding up because of a deadlock between the shareholders is pro
non scripto as the Legislature could not have intended the parties to contract
contrary to the statutory provision. Clause 6.5 of the shareholders agreement
is pro non scripto to the extent that it excludes or restricts the right afforded to a
shareholder by the Companies Act to approach the court for winding up in
appropriate circumstances. It there cannot stand as ground to muzzle the Trust
from postulat ing just and equity as a basis to seeking winding up.

[34] Similarly , the court held that an agreement that provides that such a deadlock
will be referred to arbitration , thereby denying share holder the right to access to
a court was found to be a vo id in the Navigator Property Investment (Pty) Ltd
case at para 22 . Wyatt contends that the Trust is bound b y Clause 27 of the
shareholders agreement to exhaust a dispute resolution procedure, and in
particular arbitration , before seeking winding up. Clause 27 provides for
negotiation and mediation as dispute resolution mechanism , and not arbitration.
It is not in dispute that mediation has not yielded results. The expedited
arbitration process agree d upon between the parties related only to a specific
dispute between ABT and Wolfkop Camping regarding t he amount of
R234 907.00 not the deadlock between the directors and shareholders . The
insistence on arbitration as a condition precedent to winding up application is
unmeritorious . Thus, th e court finds that there is nothing in th e arbitration
agreement that prevents any of the shareholders from approaching court for
winding up application in the event of there being a deadlock as envisaged in
section 81(1)( d) of the Companies Act.

[35] The ground of just and equitable postulates not facts but a broad conclusion of
law, justice and equity as a ground of winding up. (See Moosa NO v Mavjee
Bhawan (Pty) Ltd 1967 (3) SA 131 (T) . A decision as to what is just and
equitable involves a balancing of the interests of the individuals affected with
the interests of good governance and the smooth administration of justice . (See
Niland v Huntershill Safari CC and Another (5622/2 015) [2016 ] ZAECGHC ).

[36] It is common cause that there is a complete breakdown of relationship between
the directors and shareholder of the company inter se , so much so that there
are no reasonable prospects of the parties work ing together and conduct
business of the company for the benefit of the shareholders generally. The
mutual trust and confidence between the shareholders w ho w ield equal power
in a relatively small company has been destroyed, yet there is a deadlock on
the sale of shares by one shareholder to the other , so that the latter could
remain operating the company’s business. The company is suffering , in that
the purpose for which it was found ed is not being pursue d because of the lost
relationship. The purpose for which the stay of the proceedings is sought is not
intended to reconcile the directors and shareholders but to advance vengeful
litigation against each other. All the factor mentioned above point to the
conclusion that the substratum of the company has disappeared.

[37] An applicant who relies o n this ground must come to court with clean hands.
What this means is that the applicant must not have building fully responsible
for will have connived at the bringing about the state of affairs wh ich he asserts
results in its being just equitable to wind up the company . (See Ebrahimi v
Westbourne Gallaries [1973] AC 360 [HL] at 374 ). However, lack of clean
hands is not always a bar to apply for winding up. In Thunder Cats Investment
92 (Pty) Ltd and Another v Nkonjane Economic Projects and Investments (Pty)
Ltd and Others [2014] 1 All SA 474 (SCA) para 28 , the Supreme Court of
Appeal said:

“as a matter of logic , lack of clean hands could not be an absolute bar , else
otherwise for example where both partners are equally at fault , neither could
obtain a winding up order . Nonetheless it must be an important factor in the
exercise of the court's discretion along with other factors such as whether the
partnership is truly deadlocked.”

[38] On proper conspectus of the facts, the court takes the view that both the Trust
and Wyatt , as well as Wyatt and R öntgen in their respective capacities directors
stand to blame for the impasse in the company . It would not be just to adopt
the lack of clean hands approach a s a bar to the winding up application in the
circumstances.

[39] In conclusion, having considered all the facts , the court is satisfied that a case
has been made out for the winding up of the first respondent in terms of section
81(1)(d)(i) (aa) and (bb) of the Companies Act of 2008, on the basis that there
is a deadlock between the directors in the management of the company and the
shareholders are unable to break the deadlock. Further, having considered the
totality of the facts and circumstances of this case, the court holds a considered
view that it is just and equitable that the first respondent be wound up in terms
of section 81(1)(d)(iii) .

[40] Accordingly, I make the following order:

1) The application to stay the winding up application is dismissed with costs.

2) The second respondent shall pay costs of the application to stay the
winding up as between party and party on the High Court Scale B.

3) The first respondent is placed under final winding up in the hands of the
Master of the High Court .

4) Costs shall be costs in the winding up .


________________________
Z.L. MAPOMA
Acting Judge of the High Court


Appearance s

For the Applicants : David V Gess SC
Instructed by : Springer Nel Attorneys
Cape Town

For the Respondents : Renee Graham
Instructed by : Dingley Marshall Law
Claremont