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IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
(1) REPORTABLE: YES!@
(2) OF INTEREST TO OTHER JUDGES: YES (ij)
(3) REVISED
CASE NO.: 39063/22
In the matter between:-
AFGRI AGRI SERVICES (PTY) LTD
V
MULLER, JOHANNES ZACHARIAS HUMAN N.O.
MADIMI, IMANI N.O.
POLLOCK, RICHARD KEAY N.O.
(In their capacity as the duly appointed joint liquidators
Of Grain Marketing (Pty) Ltd (in liquidation)) Excipient
First Respondent
Second Respondent
Third Respondent

39063/22 2
In re:
In the matter between:-
MULLER, JOHANNES ZACHARIAS HUMAN N.O.
MADIMI, IMANI N.O.
POLLOCK, RICHARD KEAY N.O.
AFGRI AGRI SERVICES (PTY) LTD
(Registration Number: 1995/005872/07)
ERNST, LUKAS WILLEM BOTHA V
BADENHORST, PETRUS JOHANNES PRETORIUS
JACOBS, ZELDA
DE VILLIERS, JACOB
PIETERSE, NICOLAAS MARIUS
Heard on: 5 June 2025 JUDGMENT
• First Plaintiff
Second Plaintiff
Third Plaintiff
First Defendant
Second Defendant
Third Defendant
Fourth Defendant
Fifth Defendant
Sixth Defendant
Delivered: 17 June 2025 -This judgment was handed down electronically by
circulation to the parties' representatives by email, by being uploaded to
the CaseLines system of the GD and by release to SAFLI I. The date and
time for hand-down is deemed to be 16:00 on 17 June 2025
39063/22 3 JUDGMENT
Summary:
1. It is sufficient to plead that the company is in the process of winding up and it is
unable to pay its debts.
2. In respect of the winding up of an insolvent company in terms of Section 424 of
the Companies Act 61 of 1973, a juristic person can be held liable.
3. In order to sustain a cause of action in terms of Section 424 the fact mut be
alleged that the first defendant was a party to the carrying of the business or
gained knowledge of the fact that the business of the company was carried on
recklessly with the intent to defraud creditors or for any fraudulent purpose. It
must further be alleged that the first defendant gained such knowledge and
participated in the affairs of the company through its directing mind/s.
4. A cause of action should comprise of every fact which would be necessary for the
plaintiff prove in order to sustain an action in terms of Section 424.
',·.
ORDER
It is ordered:-
1. The first and second grounds of the exception are dismissed .
2. The third ground of the exception is upheld. ·
3. The costs of these proceedings are costs in the cause.
39063/22 4 JUDGMENT
JUDGMENT
KOOVERJIE J
(11 THE EXCEPTION
The first defendant excepted to the particulars of claim on the premises that it
does not disclose a cause of action. It is the first defendant's case that the
allegations contained in the particulars of claim are not sufficient to support the
cause of action for the relief claimed in terms of Section 424 of the Companies
Act 61 of 1973 (" 1973 Act").
[2] In the main action the plaintiff instituted proceedings against the defendants jointly
and severally for an order in terms of Section 424 to declare each of the
defendants personally liable for all the debts of Grain Marketing (Pty) Ltd (in
liquidation) in the amount of R130,703,611.98. Alternatively an order in terms of
Section 424 declaring each of the defendants to be personally liable for all the
claims of the Copenship entities against the company in an amount of
R98,755,669.50.
[3] Section 424 of the Companies Act of 61 of 1973 stipulates :
"(1) When it appears, whether it be in a winding up, judicial management , or
otherwise, that any business of the company was or is being carried on
39063/22 5 JUDGMEN T
recklessly or with intent to defraud creditors of the company or creditors of
any other person or for any fraudulent purpose, the court may, on
application of the master, the liquidator, the judicial manager,· any creditor
or member or contributory of the company, declare that any person who
was knowingly a party to or carrying on of the business in the manner
aforesaid, shall be personally responsible, without any limitation of liability,
for any of the debts or other liabilities of the company as thr-· r:ourt may
direct. "1
[4] For the .Purposes pf this judg,:nent, the parties will be referred to a.s they have
been cite.d in the main .actjon proceedings .. The Companies Ac~ 61 of 1973 will be
referred .to as the 197.3 Act and the Companie~ Act 7,1 of 2008 will be referred to
as the 2008 Act. Grain Marketing (Pty) Ltd wil.I be referred to as "the company".
The company is ~ subsidia.ry. of th~ first defenoant. The first d~(endant/excipient,
Afgri Agri Services (Pty) Ltd, is the shareholder of the said company. The
company was placed under a creditors voluntary winding up on 11 May 2020 and
is unable to pay its debts within the meaning of Section 339 of the Companies Act
of 1973.
[5] The defendant raised three grounds of exception:
5.1 the first ground was that no allegation was made that the company is in
winding up, as. not being solvent, which is a requirement in terms of
Section 424 of the 1973 Act;
1 My emphasis
39063/22 6 JUDGMENT
5.2 the second ground was that Section 424 does not create liability for juristic
persons but only for natural persons;
5.3 the third ground was that the particulars of claim lacked the necessary
allegations that the first defendant had, through its directing mind,
knowledge of the facts from which a conclusion can be drawn that the
business of the company was being carried on recklessly, with the intent to
defraud creditors or for any fraudulent purpose. The plaintiff was therefore
required to plead facts to substantiate that the directing mind of the first
defendant had knowledge; that the first defendant was knowingly a party to
the carrying on of the company's business or that the first defendant
knowingly particip~ted in t~e carrying .on the company's busiress.
•' jl
The first ground of. exception
,; :
[6] This ground of exception is premised on the argument that no allegation was
made that the company was in winding up as not being solvent. • It was further
contended that the allegation that "the company is unable to pay its debts" within
the meaning of Section 339 of the 1973 Act was inappropriate ..
[7] In paragraphs 6.4 and 6.5 of the particulars of claim, the following was pleaded:
"6. The company: .
6. 4 was placed under creditors' voluntary winding up on 11. May 2020;
and
6. 5 is unable to pay its debts within the meaning of Sectio."" 139 of the
Companies Act."
39063/22 7 JUDGMENT
[8] This dispute was centered on the respective jurisdictional provisions of the two
pieces of legislation, namely the 1973 Act and the 2008 Act. It is common cause
that Section 424 is part of Chapter 14 of the 1973 Act which has been repealed.
Item 9 of Schedule 5 of the 2008 Act regulates the continued application of the
1973 Act in respect of the winding up of insolvent companies.
[9] Simply put, the provisions of the 1973 Act apply to the winding up of insolvent
companies particularly Sections 343 to 353 of Chapter 14 whereas Sections 79 to
83 (Part G of Chapter 2 of .the 2008 Act) relates to the winding up of solvent
companies. . The 2.008 Act therefore does not ~ontain provisions relating to the
winding up of insolvent c.ompanies.
[1 0] It ·appears that the legislature intends to incorp.orate the provisions relating to the
winding up of insolvent companies in the 2008 Act. For the time being, the
provisions of Chapter 14 of the 1973 Act applies in respect of the winding up of
insolvent companies. 2
[11] The said transitional provision, Section 9, regulates the continued ·application of
t_he winding up provisions in the 1973 Act stipulates:
"Continued application of previous act of winding up in liquicjatio_n:
(1) Despite the repeal of the previous Act, until the date determined in
terms of Item (4), chapter 14 of that Act continues to apply with respect
2 Standard Bank of SA v R-Bay Logistics 2013(2) SA 293 K2(1) at para 22
39063/22 8 JUDGMENT
to the winding up and liquidation of companies under this Act as if the
Act had not been repealed subject 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
necessary to give full effect to the provisions of Part G of Chapter 2.
(3) If there is a conflict between the provision of a 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."
[12] The excipient reasoned that for the plaintiff to rely on the provisions of the 1973
Act, more particu,arly Section 424, it had, to plead that "th~ company is in
winding up as. not beir,g solver:,f'. It also .had to b.e pleaded that the company
adopted a resolution in terms of Section 351 of the 1973 Act to· liquidate the
company. By merely alleging that the compa.ny is unable to pay its debts within
the meaning of Section 339 is of no consequence .
[13] The plaintiffs contended that this ground of objection cannot be sustained. They
submitted that a sensible interpretation must be, given for the purpose of Section 9
in the 2008 Act. The jurisdictional facts that are pivotal in respe,ct of winding up of
insolvent companies in terms of the 197~ Act are that:
(i) the company is in the process of winding up; and
(ii) it is unable to pay its debts.
39063/22 9 JUDGMENT
[14] In support of their proposition, reference was made to the matter of Standard
Bank3 where the court expressed in order to determine whether a company is
insolvent, an applicant would have to establish one of the grounds to.r winding up
as contemplated in Section 345, namely that the company was unal:lr-to pay its
debts. At paragraph 29, the court reasoned:
"I accordingly conclude that in determining whether a respondent company is or
may be 'insolvent' as contemplated in Section 79(3), the court would be entitled to
have regard to evidence that the respondent company was unable to pay its debts
as co.ntemplated in Section 345 of the Old Companies Act .... In other words, the
word insolvent in Section 79(3) is intended to. refer to a respondent company
which is or r,nay be commercially insolvent.
t : • \ •
[15] s,ection. 344(f) stipulates tha~. a. company .is unable to pay its debts as described in
Section 345. ~ection. 345(1 )(c) of the 1973 Act, inter a/ia, stipulates that a
company will be deemed to be unable to pay its debts if it is proved to the
satisfaction of the court that the company is unable to pay its debts.
[16] It was illustrated that the relevant facts were pleaded. In paragraph 6.4 it was
alleged that the company was placed under a creditors winding up and in
paragrap~ 66, it was pleaded that-this occur~ed . on 11 May 2020 when the
special resolution was registered with the Companies and Intellectual Property
Commission pursuant to where the company was placed in liquidation via a
creditors' voluntary winding up as contemplated in Section 349 and 351 of the
3 Standard Bank of SA v R-Bay Logistics 2013 (2) SA 295 KZD at par 29
39063/22 10 JUDGMENT
Companies Act (paragraph 66).4 The winding up in terms of Section 351 could
only be invoked if the company is insolvent.
[17] The court in Boschpoort5 agreed with the reasoning set out in Standard Bank
and confirmed:
" ... The deeming provisions concerning the inability to pay its debts,
contained in Section 345 of the old Act may be used to establish the
insolvency of the company.
"21. This conclusion is .significant in determining what is meant by a solvent
company. The retention by the legislature in the context of a winding up of
a solvent company in the new Act of a deeming provisions a:s co when a
. , po_mpany is unable to pay its debts as contained in Section 345 of the old
Act, is clear indication of what is meant by an insolvent company in the
new Act. It can only mean a company that is commercially insolv~nt. 6
"22. Consequently, an order for a solvent company to be wound up in terms of
Sections 80 or 81 of the new Act, it must be commercially solvent. If it is
commercially solvent it may be wound up in accordance with Chapter 14 of
the Old Act, as is provided in subitem 9( 1) of Section 5 of the new Act."
[18] I am of the view that on a sensible reading of the particulars, the m:..:~rial facts
were pleaded, namely that the company was left as an empty shell with
4 Section 351 stiulates: "A winding up ofa company shall be a creditors winding up of the resolution
contemplated in Section 349 so states, but such a resolution shall be of no force and effect unless it has been
registered in terms of Section 200."
5 Boschpoort Ondernemings Pty Ltd v ABSA Bank 2014 (2) SA 518 SCA para 15-22
6 My underlining
39063/22 11 JUDGMENT
substantial liabilities which it could not pay, the company was unable to pay its
debts and it was placed in winding up in terms of Chapter 14 of the 1973 Act. 7
[19] Therefore there is no merit on this ground of exception and it is hereby dismissed.
The second ground of exception
[20] The second ground of exception was premised on the argument that section 424,
properly interpreted, does not establish any liability in respect of a juristic entity. It
only creates liability for natural persons.
f21] The e?(cipiert reaso,11ed as follqws:
21.1 A juristic person was not contemplated in the term "person"· in the 1973
Act. Hence a company could not be held liable in terms of Section 424. It
was only in the 2008 Act where the word "person" was extended to include
a juristic person;
21.2 the intention of the legislature in invoking of Section 424 was to specifically
impose personal liability against natural persons who carried out their
obligations recklessly, grossly negligently, or fraudulently · on behalf a
company. This provision was aimed to hold directors and others such as
managers, company secretaries, and employees who are instrumental in
mismanaging a company's affairs to be held personally accountable . They
could no longer hide behind the company.8
7 Paragraphs 6, 49,50 and 66 of the particulars of claim
8 Henochsberg Volume 2 APPI-290
39063/22 12 JUDGMENT
[22] It further relied on Roux J's finding in SA Mutual Life Insurance Society and
Others v Cooper and Others N.N.O. 9 The said judgment was referred to by the
Supreme Court of Appeal in Cooper and Others N.N.O. v SA Mutual Life
Insurance Society and Others.10 Therein the Supreme Court of Appeal noted
Roux J's finding namely that Section 424 does not create liability for juristic
persons but only for natural persons mainly due to the wording "personally liable"
contained therein. It however noted that the court in Anderson11 held a contrary
view.
[23] On my reading of Cooper in context, it is evident that the Supreme Court of
Appeal made no finding on the said issue. Hence the obiter remarks of the court
cannot bind this court.
[24] The court in Anderson held the contrary view that a company may be held liable
under Section 424. At 1091 to 11 OB it expressed that:
"It is of course correct that Section 424 may not be invoked against a company
merely on the basis that it is vicariously liable on account of the conduct or fault of
its servants or agents ... it does not follow, however, that a companv cannot be
held liable under Section 424." It is equally clear one has to distinguish between a
s{tuation in which it is sought to invoke Section 424 to hold a company liable on
9 This judgment could not be located by counsel for both parties. The court was informed that the legal
representatives had undertook all possible searches, but it was to no avail. The excipient requested the court to
consider Roux J's view as it constitutes a decision from this Division. I must express that without a copy of
this judgment I cannot blindly follow Roux J's finding. It is necessary for me to have regard to the said
judgment and consider the context in which such a finding was made. •
10 2001 (1) SA 967 (SCA) at paras 15 and 16 (Cooper Judgment)
11 Anderson and Others v Dickson and Another N.N.O. 1985 (1) SA 93N at l lOA-B
39063/22 13 JUDGMENT
account of its own conduct or fault and a situation in which it is souf/:~ to hold a
company liable on account of its own conduct or fault and a situation in which it is
sought to hold the company vicariously liable on account of the conduct or fault of
its servants or agents.
[25] The court in Simon N.N.O and Others v Mitsui12 again confirmed that for a
company to be held liable under Section 424, the identity of the
individual/directing mind is pivotal, hence acknowledging the liability of a
company.
[26] The first defendant's reasoning is flawed. It surely could never have C'"'Pn that the
inclusion of liability on the part of a juristic person would exclude personal liability
on the part of individuals responsible for managing the affairs of the company.
Such, individuals fall within the ambit of Section 424 and would be liabl~ if they are
found to conduct themselves fraudulently or recklessly and/or being parties in
carrying on of the business of the company.
[27] Both texts, namely Blackman and Henochsberg13 referred to various authorities
that confirmed that the word "person" in the context of Section ~24 js defined to
include a natural person or any other legal personality, a corporation as an entity
with legal personality falls within the category of "any person",. When a
12 Simon N.N.O. and Others v Mutsui Company Limited and Others 1997 (2) SA 475 WLD at 529 the court
expressed "Henochsberg (opcit at 393), after setting out the English approach, submits that it is not
incompatible with our law and indeed has been followed, referring to start with the Levy v Central Mining
and Investment Corporation 1955 (1) SA 141A where, he says Centliveres CJ (at 149 to 150) refer to the
passage from Viscount Haldane Speech in Lennard Case supra at 713 "in the case ofa'ficticious person like a
company" one must endevour as best one can to ascertain who is or are is directing mind or minds.·
13 Blackman 1973 Act, Chapter 14 -543 and Henochsberg 2008 Act, APPl-291
See Frame Textiles Corporation Ltd v Ciskei Peoples Development Bank Ltd 1995 (2) SA 177 (KGD)
39063/22 14 JUDGMENT
corporation acts in this capacity, it does not act as a corporation qua corporation,
but as "any person" and therefore the provisions of Section 424(1) apply to as a
corporation in the context of any person.
[28] In light of the said authorities supporting the proposition in law that a company
may be held personally liable, the second ground of exception cannot be
sustained and is hereby dismissed .
The third ground of exception
[29] This grqund of exception was premised on two objections. Firstly, it was
contended that the allegation in the particulars that the first defendant exercised
de 1 fc4r;;to control over. the company is bad in law since the management and
control of the company vested in its board of directors and not in its shareholder,
the first defendant.
[30] Secondly, it had to be alleged that the first defendant acquired knowledge of the
business of the company through its directors and was knowingly a µarty to the
fraudulent and reckless carrying on of the business of the company.14 Since the
first defendant could only have acquired such knowledge through its directing
mind, it had to be specifically alleged that such directing minds had the requisite
knowledge and intent. And so it was argued that the plaintiffs failed to set out
14 On reading of Section 424, a court could declare that any person "was knowingly a party to or any person who
knowingly was carrying on the business in the aforesaid manner. Hence both allegations need not be proved.
39063/22 15 JUDGMENT
facts to sustain a conclusion that the first defendant's had the requisite knowledge
and intent through its director/s or board.
[31] On this point the plaintiffs firstly, took issue with the first defendant's contention
that it had to be pleaded that only the directors and/or Board had the requisite
knowledge. The plaintiffs' objection has merit. Although directors of a company
are likely to be regarded as its directing mind, there are circumstances when a
company's directing mind and will can be non-directors and individuals in
manag~rnent positions.
[32] It was pointed out that in the context of this matter the roles that the different
individuals (second to sixth defendants) played would be dealt with in evidence
led at the trial.
[33] I am not in agreement with the plaintiffs' reasoning. In my view the second
objection raised by the first defendant that material allegations were lacking,
namely that knowledge was imputed to the first defl.?ndant through the directing
minds, has merit. The allegation that the first defendant • had the imputed
knowledge through its alter ego, directors or others, had to be pleaded.
[34] The court in Anderson15 held that:
"Section 424 cannot be invoked against a company in the absence of evidence
that, through its board or any of its directors, acquired knowledge of the business
of the company whose affairs are being investigated ... If it were shown however
15 Anderson at para} 10 D-E
39063/22 16 JUDGMENT
that the company through its directors had with ma/a tides or reckless(:1 '?erformed
acts to induce credit for another company knowing it to be insolvent and without
reasonable prospects of meeting its obligations, then such conduct would support
a finding that the first mentioned company through its directors was knowingly a
party to the reckless or fraudulent carrying on of the business or affairs of the
latter company. See Fisheries Development Corporation at 168 E-F. It then
properly be said to have knowingly been a party to the carrying on if the business
of the company recklessly or with intent to defraud creditors of the company within
the meaning of Section 424. "16
[35] Wunsch J in Simon v Mitsui extrapolated on the "directors mind and will
doctrine." It .was e~pl~ir,ed that a company ~a,n ,only gain knowledge through its
directing mind, be it a director or some. other person involved in the affairs of the
comp~ny .. Hence it was mat.erial to identify the person who had management and
control in relation to the relevant conduct complained of.
[36] The foundation for a company to have imputed knowledge was premised on the
directing mind and will doctrine which allows the law to attribute the mental state
of those who in fact control and manage the company itself as being its directing
mind and will. The question of whether the mental state of directors or other
~fficers can be attributed to the company as its own depends on various factors.
Such factors would include how the management of the compa_ny has been
conducted and determine who are the responsible persons involved.
16 Fisheries Development Corporation of SA Ltd v Jorgenson and Another; Fisheries Development Corporation
of SA Ltd v AW J Investments Pty Ltd and others 1980 ( 4) SA 156W.
See also Philotex (Pty) Ltd v Snyman 1998 (2) SA 138 (SCA) 143
39063/22 17 JUDGMENT
[37] The plaintiffs attempted to illustrate that the necessary allegations were made to
impute the necessary knowledge to the company through the relevant directors'
minds. Specific reference was made to the particulars of claim, namely:
37.1 at paragraphs 13.1 to 13.5, the particulars of the various individuals and
their particular capacities in the first defendant were identified;
37.2 at paragraph 15, it was alleged that second, third and fourth defendants in
their respective capacities in the first defendant exercised de f,,...to control
over the company in relation to the conduct of the company,( inter alia, the
arrest proceedings and the appeal to the Supreme Court of Appeal),
agreeing to the fraudulent scheme _and implementing the fraudulent
scheme; ,
37.3 at paragraph , 19,. it was alleged that in .exercising de facto control, the first
defendant was represented by the second, third, fifth, and later the fourth
defendant;
37.4 participation by the first defendant was also pleaded, namely that it was a
party to the sale of the business agreement.
Thus on a sensible reading of the particulars, the basis of attributin£1 knowledge
and intent to the first defendant was made.
[38] I find that the material allegations to sustain a cause of action were lacking. It had
to be pleaded that the first defendant was a party to the carrying on of the
business or gained knowledge of the fact that the business of the company was
carried on recklessly with the intent to defraud creditors or for any fraudulent
39063/22 18 · JUDGMENT
purposes and that the first defendant gained such knowledge and participated in
the affairs on the company, through its directing mind/minds.
[39] Our authorities have firmly established that Section 424 cannot be · invoked
against the first defendant in the absence of allegations or evidence mat the first
defendant had through its board or any of its directors acquired knowledge of the
business of company whose affairs are being investigated.
[40] Every fact which has to be proved must be alleged. The approach ·to exceptions
which claim that the impugned pleading does not sustain a cause of action is well
known. The court has to consider the allegations pleaded and assess whether
they disclose a cause of action.17 In this instance, the particulars lacked the
material allegations to sustain liabiliy on the part of the first defendant.
[41] In as far as costs are concerned, it is evident that each party VI.~.; partially
successful. In exercising my discretion, I therefore deem it appropriate ttiat costs
should be costs in the cause.
JUDGE OF THE HIGH COURT
GAUTENG DIVISION, PRETORIA
17 Mckenzie v Farmers Co-operative Meat Industries 1922 AD 16 at 23
Stols v Garlicke and Bousfield 2012 SA 415 KZP at 421 I

39063/22 19
Appearances:
Counsel for the excipient (first defendant) :
Instructed by:
Counsel for the plaintiffs:
Instructed by:
Date heard:
Date of Judgment:
,.,----._ JUDGMENT
Adv. FH Terblanche SC
Adv. AJ Wessels
Van Greunen & Associates Inc.
AdvJ Smit
Messrs JDK Reitz Attorneys
5 June 2025
17 June 2025