SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
in compliance with the law and SAFLII Policy
REPUBLIC OF SOUTH AFRICA
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NR: 053561/2024
(1) REPORTABLE: YES/NO
(2) OF INTEREST TO THE JUDGES: YES/NO
(3) REVISED.
DATE: 13 FEBRUARY 2025
SIGNATURE:
In the matter between:
GERTRUIDA HENDRIKA COETZEE N.O APPLICANT
and
SOLAR AFRICA ENERGY (PTY) LTD RESPONDENT
Delivered: This judgment was prepared and authored by the Acting Judge whose
name is reflected and is handed down electronically by circulation to
the Parties / their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLine s. The date of the
judgment is deemed to be 27 August 2025
___________________________________________________________________
JUDGMENT
___________________________________________________________________
MARUMOAGAE AJ
A INTRODUCTION
1. This is an application wherein the Applicant seeks the compulsory winding -up of
the Respondent on the basis that the Respondent is unable to pay its debts and
that it is just and equitable to grant such an order . The Respondent is opposing
the application. The court is required to determine whether there is a prima facie
case for the winding up of the Respondent or whether the Respondent
successfully raised a bona fide and reasonable dispute regarding the alleged
indebtedness of the Respondent to the Trust, which the Applicant represents.
2. The following subsidiary issue also requires determination:
2.1. Should condonation be granted for the late filing of the Applicant’s
Replying Affidavit and heads of argument?
B BACKGROUND FACTS
i) Common Cause Facts
3. The Applicant is Gertruida Hendrika Coetzee, the sole trustee of the Blue Horison
Investment 63 Trust t/a Blue Horison Power ( I[...]) (hereafter ‘the Trust’). The
Respondent is Solar Africa Energy (Pty) Ltd, a private company duly incorporated
in terms of the South African company laws. On 2 7 March 2023, the Trust,
represented by the Applicant , concluded several written Engineer, Procure,
Construct Agreements with the Respondent . In terms of th ese agreements, the
Respondent appointed the Trust to supply, construct, install, test, commission,
and maintain, where so appointed, solar facilit ies with specifications agreed to
between the parties at different sites.
4. Among others, the material terms of the parties’ agreements were that:
4.1. the Trust is appointed as an independent contractor and will provide all
personnel, goods, consumables, services, facilities, supervision and
administration, and other things, whether of a temporary or permanent
nature, required by the design, execution, construction, completion of the
works and remedying of de fects, necessary for the property and complete
performance and acceptance of the works;
4.2. the Trust was responsible for obtaining all approvals for connection of the
facilities to the grid and to ensure that all works were carried out in terms
of the planning permission, building permits, and relevant approvals;
4.3. the Trust was required to submit applications for payment to the
Respondent’s representative in line with the milestones set out in the
payment schedules, wherein the works to which the application relates are
specified and the sum that the Trust considers to be due and the basis
upon which the sum is calculated are provided;
4.4. the due date for payment shall be the date on which an application for
payment is received by the Respondent in respect of it, along with all
supporting documentation , and the final date for payment shall be 30
working days thereafter;
4.5. the Trust is responsible for the design of the facilities. If errors, omissions,
ambiguities, inconsistencies, inadequacies , or oth er defects are found in
the facilities’ design or the contractors’ documents, they shall be corrected
at the Trust’s costs;
4.6. if any of the work or workmanship is found to be defective or otherwise not
in accordance with the agreement, the Respondent may is sue a written
instruction to have the work remedied;
4.7. if the works are shown to be incomplete or fail to meet the standard for
completion, the Respondent shall issue a list for practical completion to the
Trust, specifying the defects to be rectified and further works to be
completed to reach practical completion;
4.8. the Trust warranted that the facilities will be free from defects for a period
stated in specific conditions following practical completion day;
4.9. the Trust shall complete all works outstanding and listed in the list for
completion within 14 days from the Respondent’s instruction, unless the
Trust can reasonably show that an extended period is required;
4.10. if the Trust fails to remedy a defect or damage caused by the Trust within
14 days or such other extended period agreed with the Respondent, the
Respondent may notify the Trust that it shall carry out the work , and the
Respondent shall be entitled to recover all costs reasonably incurred by it
in remedying the defect or damage from the Trust;
4.11. the parties agreed that they will attempt to settle disputes amicably, failing
which disputes shall be considered expert disputes and may be referred to
an expert for determination;
4.12. if an expert fails to assist the parties in resolving their d ispute, such a
dispute may be referred to arbitration.
5. The parties agreed that the contract sum payable to the Trust will be payable in
interval milestone payments. Payment will be made in line with the work carried
out by the Respondent as an independent contractor at the sites known as : C &
R Boerdery situated at Farm Gibralter in Mokopane Limpopo; Willie Becker
situated at Farm Kraaifontein in Molemole Limpopo; Nooitgedacht s ituated at
Nooitgedacht Farm in Vredenburg Western Cape and LC Spitskop situated at
Parklane.
ii) Applicant’s Case
6. According to th e Applicant, she has the authority to institute this application on
behalf of the Trust through a resolution ‘by the Trust’. The Respondent is the sole
trustee of the Trust. The Trust and the Respondent entered into t he Engineer,
Procure, Construct Agreement s during t he so-called ‘kick-off’ meetings for the
construction of the various structures and solar power plants in several sites
referred to above in accordance with the designs and quotations as approved by
the parties.
7. The Applicant alleges that the Trust completed the works at the abovementioned
sites between August and November 2023. Thereafter, the Trust received a
countersigned quality, testing , and inspection report in respect of Willie Bekker
Boerdery, where the Respondent acknowledged and accepted the control of
monitoring and measuring devices; civil, mechanical, electrical, and grounding
works; control cable testing; installation resistance test; energy meter
installations; as well as certificates of compliance.
8. However, the Trust did not receive the counter-signed reports in respect of C & R
Boerdery, Nooitgedacht and LC Spitskopp. The Applicants contend that these
projects ran concurrently, and the Respondent agreed to the reports, albeit not in
writing. However, in terms of the Society of Automotive Engineers Standards
(‘SAES’), the signature of the Construction Manager in the employ of the Trust is
sufficient confirmation that the sites adhered to these standards.
9. The Applicant contends that the Respondent failed to comply with its obligations
in terms of the Engineer, Procure, Construct Agreement s concluded by the
parties. The Respondent failed to effect payment s to the Trust for the work done
at various sites where the Trust constructed solar plants and reached practical
completion. In particular, the Respondent failed to pay: R 167 635.50 in respect
completion. In particular, the Respondent failed to pay: R 167 635.50 in respect
of Willie Becker site; R 927 141.50 in respect of Nooitgedacht site; R 1 341
661.25 in respect of C & R Boerdery site ; and R 357 006.00 in respect of LC
Spitskop site. The Respondent owes the Trust an amount that exceeds R 100.00,
which entitles the Applicant to apply to court for the Respondent’s liquidation. It
was argued on behalf of the Applicant that , despite the Re spondent claiming to
have paid all milestones except the final payment in respect to the C & R
Boerdery site, no proof of payment was provided to this effect.
10. The Trust demanded payment of these amounts, which were due and owing, and
the Respondent neglected to make payment . The Respondent also failed to
secure or compound the amount to the Applicant’s reasonable satisfaction.
According to the Applicant, the Respondent raised unfounded disputes to avoid
its obligation and liability to m ake payment to the Trust. The Respondent and its
attorneys raised a fabricated and mala fide dispute. The Applicant alleges that
even if a debt has been partially paid or disputed, a creditor retains the legal
standing to bring a Liquidation application if the unpaid part of the liquidated debt
exceeds R 100.00.
11. The dispute raised by the Respondent is not made in good faith and upon
reasonable grounds. The Respondent must show that the entire indebtedness is
disputed in good faith and on reasonable grounds. It was argued on behalf of the
Applicant that if the Respondent genuinely and on bona fide and reasonable
grounds disputed the indebtedness towards t he Trust, the Respondent should
have secured the outstanding amount by paying it into the Trust Account of its
Attorneys, pending any arbitration proceedings to demonstrate its ability to pay.
12. On 26 October 2023, the Trust received a notice from the Respondent regarding
the C & R Boerdery site, where it was stated that the Respondent identified
certain design defects. This notice was followed by the Respondent’s attorneys’
letter, which alleged that the Trust was in contractual default because various
letter, which alleged that the Trust was in contractual default because various
design defects existed at the facility. I n this notice, it was further alleged that the
Trust failed to reach the practical completion deadline for the C & R Boerdery
site. The Trust was informed that the Respondent invoked its step -in rights to
assume and complete the work of the Trust at the site. There was a demand that
the Trust should immediately end all works and transfer control thereof to the
Respondent. The Applicant disputes thes e allegations and claims that
Respondent's sites are all fully operational and functioning. It was argued on
behalf of the Applicant that the Respondent continues to draw income from the se
sites. Further, if there were defects as alleged, the Respondent would not be able
to draw income from these sites.
13. The A pplicant alleged that there were no defects in any of the works that the
Trust did. The so-called ‘defects’ constitute additional work which were never part
of any design specifications. These are the additional bracing that fell outside the
Applicant’s approved design specifications. All the Applicant’s installations of the
panels were done in accordance with the user manual. It was argued on behalf of
the Applicant that while the Respondent claimed there were defects that it
identified, it failed to demonstrate the nature of the defect s and the cost of
repairing the alleged damage. Even though the Respondent asserts that the
works are defective, it continued to receive monthly payments from the clients for
the completed solar power stations that the Trust constructed.
14. Had the works been defective as alleged, the Applicant would have remedied the
works. The Respondent failed to provide proof that quotations were obtained for
repairing or finalising the work undertaken by the Trust. This illustrates the lack of
good faith in the dispute raised by the Respondent. The re is no dispute about the
indebtedness, and the allegation of defective works is a clear fabrication to
attempt to create a dispute that does not exist.
15. The Respondent sent further notices of defects to the Trust concerning the Willie
Bekker, LC Spitskop , and Nooitgedacht sites, followed by letters from the
Respondent’s attorneys alleging that the Tru st was in contractual default due to
various defects that existed in these sites and that the Trust failed to reach the
practical completion deadlines. Concerning all these sites , it was alleged that a
practical completion deadlines. Concerning all these sites , it was alleged that a
1.6mm thick steel was used as opposed to a 3mm thick steel, which ought to
have been used on the se sites , and that the solar panel was not installed in
accordance with the Original Equipment Manufacturer Installation Manual.
Concerning the LC Spitskop, it was also alleged that the installed plant controller
was a deviation from the original submitted engineer pack . The Applicant
disputes these allegations.
16. Regarding the Respondent’s allegations, t he Applicant contended that the
intentions of the parties were at all material times to make use of 1.6mm thick
bracing. The Respondent cannot use the fact that the Trust used a 1.6mm thick
steel to show that the Trust breached its contractual obligations. Further, the
Respondent’s allegation that the monitoring system deviated from the original
engineering pack is not relevant . This is because the monitoring system
materially complies with the agreed -upon terms between the parties . The
Respondent appointed a person to change the format in which information was
displayed on the monitoring system to its satisfaction. Further, there is no merit in
the allegation that the solar panels were installed in a manner that is inconsistent
with the user manual.
17. It is further c ontended by the Applicant that the parties did not agree to the
installation of the cross -bracing during any of the kick -off meetings. The designs
of various projects, as agreed to by the parties, did not indicate that cross-bracing
should be used as part of any structure to be er ected by the Trust. The Trust is
willing to install cross-bracing at the various sites upon acceptance of a quotation,
which will be provided to the Respondent upon request. The solar panels
installed were constructed in accordance with the specifications and relevant
engineering standards. The Respondent requested a change in the format of the
date produced by the system, which is for the Respondent’s account.
18. On 19 January 2024, the Trust attorneys sent a ‘section 345 ’ demand to the
Respondent’s attorneys, where it was stated that despite the work having been
completed and final certificates of completion having been issued , the
Respondent failed or refused to make payments to the Trust. It was pointed out
Respondent failed or refused to make payments to the Trust. It was pointed out
that the Respondent is indebted to the Trust for R 2 793 444.25 and that there
could be no dispute over the amounts because they were agreed to in writing. It
was argued o n behalf of the Applicant that the court is not asked to make a
finding that the Respondent is indebted to the Trust in this amount but to make a
finding that the Respondent is unable to pay its debts. According to the Applicant,
the Respondent’s grievance about the mounting structure does not hold water
because the work done by the Trust was done in accordance with the design
agreed to by the parties before the Trust undertook the building work.
19. The Applicant contended that the Respondent’s allegations and threats do not
detract from the fact that the amount demanded by the Trust remains due, owing,
and payable. The allegations constitute nothing but an effort to create a dispute
of fact to avoid payment of monies due to the Trust. The Respondent failed to set
out the alleged dispute in full terms and did not identify payments that are
specifically disputed. The Trust informed the Respondent’s attorneys that there is
no dispute regarding Willie Becker, C & R Boer dery, Nooitgedacht Safaris, and
LC Spitskop CONTRACTS . As such, the Respondent is indebted to the Trust.
The persistent failure to pay the amounts claimed constitutes a confirmation of
the Respondent’s insolvency. According to the Applicant, the Respondent is
commercially and factually insolvent.
20. The Applicant contends that the Trust is entitled to investigate how the
Respondent continues to trade while it is unable to pay its creditors. Liquidation
proceedings will enable a liquidator to investigate the Respondent’s affairs and
collect any of the Respondent’s outstanding debts. The liquidator will als o locate
assets belonging to the Respondent , which must be liquidated for the benefit of
creditors. A bond of security will be given to the Master of this court , and notice
will be given to the employees and unions operating within the Respondent’s
workplace (if any).
21. The Applicant denies that the Trust committed fraud and made fraudulent
misrepresentations concerning the solar panels installed at the LC Spitsko p and
Boerdery sites as alleged by the Respondent. According to the Applicant, these
allegations are unfounded, speculative, and amount to conjecture at best. The
allegations are unfounded, speculative, and amount to conjecture at best. The
Applicant alleges that there has never been any form of fraudulent rebranding.
Most important ly, there was no attempt by the Applicant to conceal the serial
number of Longi Solar, which at all times remained clearly visible.
22. It was argued on behalf of the Applicant that t he Respondent submitted financial
statements which were outdated by more than two years . No efforts have been
made to provide the court with updated statements for the years ending 2024 and
2025. If the latest financial statements are not available, it is not clear why
management statements were not provided to the court.
23. The Applicant argued further that, on the Respondent’s version, the Respondent
is indebted to the Applicant for R 42 368.25 in respect of the C & R Boerdery site.
In terms of the invoice dated 19 June 2023 , the amount due on milestone 2.2 is
R 324 823.25. The Respondent failed to pay the f ull amount in respect to this
invoice. Only R 282 455.00 was paid. The difference between what was invoiced
and paid remains unpaid and owing. On this version, the Respondent is the
Trust’s creditor in an amount exceeding R 100.00. It was argued that on this
basis alone, the Applicant is entitled to a winding -up order as a matter of right.
Once a milestone was achieved, payment became due. The Applicant alleged
that failure to pay is demonstrative of the fact that the Respondent is unable to
pay its debts t imeously or at all. It is argued further that this demonstrates
commercial insolvency.
24. With respect to factual insolvency, the Applicant alleged that the Respondent
does not have a financially strong position . Although the Respondent states that
its liabilities amount to R 242 886 276.00, this narrative fails to consider the non-
current liabilities , which include asset appreciation right units, instalment sale
agreements, and loan accounts. If these are considered, the actual liabilit ies of
the Respondent amount to R 499 121 468.00. The Respondent suffered actual
loss of R 8 211 578.00 for the financial year and the further net loss from its
actual operating activities of R 110 458 181.00. The Responden t attempts to rely
on factual insolvency while the financial statement s actually portray a company
on factual insolvency while the financial statement s actually portray a company
operating at a severe loss . It was argued that the Respondent survives through
loans from its shareholders.
25. According to the Applicant, the Court’s discretion to refuse a winding-up order is
very narrow where an unpaid creditor is seeking a winding -up order. It would
cause commercial chaos to allow a Respondent to continue trading, where it
operates at a loss an d has an unpaid creditor, solely because it has employees
and future projects.
26. Finally, the Applicant s ought condonation for the late filing of the Replying
Affidavit. The basis of th is application is that , despite being served with the
answering affidavit on 1 July 2024, the Applicant was outside the country at the
time the answering affidavit was served, attending to the education -related
obligations of her daughter in the United States of Americ a. She on ly consulted
with her attorneys on 1 August 2024 after her return on 30 July 2024 . Given the
extensive documentation that had to be considered, the Replying Affidavit could
only be finalized on 16 August 2024 . The delay has been explained, and the
Respondent has suffered no prejudice . It is in the interest of justice to grant
condonation and for the Applicant’s Replying Affidavit to be admitted. The
Applicant also requested the court to condone her late filing of the Heads of
Argument.
27. It was argued on behalf of the Applicant that the Respondent’s contention that the
arbitration clause in the underlying agreements precludes the Court’s jurisdiction
over the liquidation application is ill -founded. An arbitration agreement does not
deprive a Court of its ordinary jurisdiction over the disputes which it
encompasses. If the Respondent desires to utilise or to insist upon the usage of
arbitration proceedings instead of Court proceedings, it should have lodged a
substantive application for the requisite stay , or file a special ple a asking for a
stay in terms of the common law. The Respondent has not filed a substantive
application but has taken a further step in these proceedings by delivering its
answering affidavit. The arbitration clause is not applicable.
iii) Respondent’s Case
28. The Respondent denies th at the Applicant has the authority to institute this
liquidation application. The Respondent further alleges that the parties are
liquidation application. The Respondent further alleges that the parties are
mandated to first attempt to settle any dispute through amicable negotiations,
failing which their dispute should be referred to expert determination. If the latter
fails, the matter may be referred to arbitration. The parties were bound to refer
their dispute to arbitration unless all the parties mutually consented to an
alternative c ause of action. The parties did not agree to forgo the arbitration
proceedings. Nonetheless, the Respondent conceded in its supplementary heads
of argument that, notwithstanding the arbitration clause, the court has jurisdiction
to entertain this matter.
29. According to the Respondent, t he parties signed different agreements for each
site outlining the scope of the work, contract sums, and project timelines. Central
to the agreements was the requirement that the Trust adhere to stringent design
and construction standards, ensuring the safety, functionality, and dura bility of
the installations. In addition to the sites that the Applicant mentioned, the parties
also signed a separate contract in respect of Nesmarien site worth R 20 850
031.90. The Respondent alleges that the Applicant abandoned this site , leading
the Respondent to exercise its step-in right.
30. The Respondent alleged that t hroughout the contracted projects, several
significant issues arose that led to the deterioration of the parties' working
relationship. The Respondent consistently raised concerns regarding the Trust’s
quality of work, adherence to design specifications , and the use of appropriate
materials. According to the Respondent, once the design plans were accepted
and approved, the Trust was obliged to commence with the works on several
sites in accordance with the design specifications submitted. However, the Trust
failed to do so, and it was alerted to the defects in 2023.
31. The Respondent further alleged that t he Trust was also engaged in fraudulent
activities, particularly at the LC Spitskop site . The fraud involved the rebranding
of solar modules , where the Trust falsely misrepresented the supplier for the
solar modules. The investigation initiated by the Respondent established that the
serial numbers on the modules had been tampered with . The serial numbers
serial numbers on the modules had been tampered with . The serial numbers
affixed on the modules differed from those that were engraved on the glass
surface.
32. It was also alleged that t he Trust used substandard materials that did not meet
the specifications outlin ed in the various Engineer, Procure, Construct
Agreements concluded by the parties. This included using incorrect structural
materials and significant deviations from the approved design, leading to safety
and performance concerns. This compromised the structural integrity and
performance of the installations, particularly at the Nooitgedacht site.
33. According to the Respondent, the workmanship quality on all the sites was
substandard with improper installations and connections that did not comply with
the agreed standards, which led to various defects that remained unaddressed
despite the Respondent’s repeated requests for reme diation. The Trust failed to
achieve practical completion on any of the sites, leaving many concerns raised by
the Respondent unresolved. The Respondent informed the Trust of all these
concerns, and the Trust failed to take corrective measures.
34. In particular, it is contended further that the Respondent’s inspection highlighted
concerns about the thickness of the Cold -Formed Lipped Channels and the need
for bracing. It was further pointed out that the contractor ought to have adhered to
the original design work unless any changes were approved by the engineer. The
Trust was also informed of the need for further bracing to meet the necessary
standards for professional sign -off and immediate discussion to address the
required modifications. The Trust failed to address these concerns. This led to
the Respondent informing the Trust that the structural sign -off could not be
provided because the design specifications were not followed.
35. The Respondent alleged further that o n 28 October 2023, it issued formal defect
notices regarding the Trust’s work on the four sites mentioned in the Trust’s
application. In these notices, the Trust was notified that although the design
specifications required a 3mm structure to be installed, the Trust utilised a
structure between 0.6 to 1.8mm on -site. The deviation compromised the
structure between 0.6 to 1.8mm on -site. The deviation compromised the
structural integrity of the installation and could lead to performance issues and
safety concerns over time.
36. Further, the Trust installed modules that did not comply with the specifications of
the Original Equipment Manufacturer . The poor installation practice jeopardized
the warranty of the modules and raised concerns about the reliability and
efficiency of the entire system. The plant controllers installed at the LC Spitskop,
C & R Boedery, and Noooitgedacht sites did not match the specifications outlined
in the accepted engineering pack.
37. At the Noooitgedacht site , the Respondent’s inspection of the overhead line
revealed the following concerns: skewed poles; absent pole compaction;
inadequate line tensioning; lack of grounding on both the line and transformer
structures; and an unbonded transformer . According to the Respondent, these
deficiencies posed significant safety risks and necessitated immediate corrective
action, including line rebuilding, stays to reinforce pole align ment and bonding
wire installation to mitigate electric hazards.
38. Most significantly, the identified defects at all sites posed significant risks to the
system infrastructure’s functionality, safety, and longevity, which required
extensive remedial actions to rectify the issues and ensure compliance with
design specifica tions and industry standards. On 31 October 2023, the
Respondent issued a formal delay damage notice for the LC Spitskop and C & R
Boerdery sites . The Respondent contends that the delay had financial
repercussions and disrupted the overall project schedule , impacting the ultimate
delivery to the customer.
39. According to the Respondent, t he Trust’s ongoing misconduct and its refusal to
address the defects show a massive factual and genuine dispute between the
parties on the amounts claimed by the Trust. The Trust was aware of the
disputes and issues raised by the Respondent long before it institu ted this
liquidation application. The Trust has not performed in terms of the agreements
between the parties and there are no payments due.
40. The Respondent denies that all the works were completed in accordance with
the terms of the agreement s. The Respondent did not acknowledge and accept
any of the activities as complete. Due to these unfinished projects, the Trust is
any of the activities as complete. Due to these unfinished projects, the Trust is
not entitled to demand payment ; hence, it launched this liquidation application to
avoid an a ction procedure. It was argued on behalf of the Respondent that t he
issue before the court is deeply rooted in the factual disputes between the
parties. Further, the Trust should have anticipated these factual disputes, and the
matter should have been resolved through arbitration rather than liquidation
proceedings.
41. The Respondent alleged that it does not know the Society of Automotive
Engineers or its alleged standards. These standards are irrelevant to this matter.
According to the Respondent, eac h component of the installation ought to have
been inspected and signed off by a subject matter expert. The certificate of
compliance relied upon by the Trust certifies that the electrical installations were
carried out in accordance with the law. They do not offer proof of practical
completion or verification of the whole project.
42. According to the Respondent, concerning the Willie Becker site, all milestones,
except for the retention, were paid. The retention amount only becomes due and
payable at the end of the Defects Liability Period, which is 12 months from
commissioning. Concerning Nooitgedacht site , milestone four was not paid
because the defects were brought to the Applicant’s attention, which failed to
remedy them. Concerning C & R Boerdery site , all milestones were paid except
the final payment because of the unresolved defects like those identified at other
sites. Further, t he Applican t’s misrepresentation s concerning module quality,
structural compliance, and project completion have significantly impacted the
Respondent’s operations. Instead of addressing the concerns identified by the
Respondent, the Applicant decided to institute liquidation proceedings.
43. The Respondent provided the court with its Audited Annual Financial Statement
for the year-end 2023. It was argued on behalf of the Respondent that these were
statements that were available at the time the Application was brought. It
contended that the 202 4 Annual Financial Statement had not yet been finalised
on the date of the filing of its answering affidavit. In terms of the 2023 statement,
on the date of the filing of its answering affidavit. In terms of the 2023 statement,
it reported its assets to be R 443 000 000.28 while its liabilities at the time were
R 242 000 000.89. The Respond ent contended that the resultant asset -to-debt
ratio was approximately 1.82, which indicates a healthy liquidity position. It
argued that this indicates that it can comfortably meet its short -term obligations
with its current assets. It also alleged that i t had an operating profit of R 42 000
000.36.
44. It was contended that the Respondent’s liabilities grew due to financing new
projects and operational expansions, which is indicative of a thriving company
that is expanding its business. It was further argue d that the Respondent’s
shareholders have confidence in its business operation, and they continue to loan
it money as part of their investment. According to the Respondent, the liabilities
remain manageable within its current asset base, which indicates th at it can
handle its debt load without immediate financial distress. The Respondent has a
positive cashflow of R 27 000 000.71 from investing activities. The financial year -
end for 2024 will show a similar growth and a healthy asset -to-debt ratio. It was
argued on behalf of the Respondent that the Applicant’s predominant motive is
not the bona fide liquidation of the Respondent, but rather an attempt to enforce
payment of its claim and obtain an advantage by avoiding having to prove its
claim by way of evidence.
45. According to the Respondent, this dispute should be resolved through arbitration
or action proceedings. Liquidation proceedings are not suitable because the
Respondent is factually solvent and has approximately 120 employees, whose
salaries it cont inues to pay. It would not be just and equitable to liquidate a
company that is poised for significant contribution to the renewable energy
industry and is dedicated to its employees’ well -being. Employees are integral to
the success of the company, and continuous investment in their development and
well-being is the Respondent’s priority.
46. Finally, it was submitted on behalf of the Respondent that the Trust initially
claimed an amount close to R 10 0000 000.00. However, in its application , it only
claimed an amount of R 2 793 444.25. The substantially revised amount was not
explained, which shows a significant uncertainty in the amount claimed. It was
explained, which shows a significant uncertainty in the amount claimed. It was
argued on behalf of the Respondent that t he revised amount indicates that the
claimed amount was never due and payable , which demonstrates that the
Respondent’s non -payment was not a neglect but a principled rejection of an
inflated and erroneous demand. The existence of a bona fide dispute precludes
the presumption of neglect. The Trust’s demand for payment is inherently flawed,
and any failure to make payment cannot be construed as the Respondent
neglecting to make payment. Respondent alleges that the Applicant only
becomes entitled to full payment upon receipt of certificates of completion.
C LEGAL FRAMEWORK AND EVALUATION
i) Late filing of Heads of Argument
47. Despite a joint practice note where the parties’ respective legal teams agreed on
the timelines for the submission of their heads of arguments, the Applicant’s legal
team failed to submit the same as agreed. In their application for condonation,
blame is placed at the door of their erstwhile counsel, who, despite regular follow-
ups, did not provide the heads of argument as instructed. In the affidavit
supporting this application, it is submitted that the erstwhile counsel was
instructed to draft the heads of argument on 4 November 2024. The last follow-up
was made on 5 May 2025, and a new counsel was briefed to draft the heads on 6
May 2025.
48. The delay in the drafting and service of heads is difficult to understand. It is not
clear why the attorneys, who should be well -versed with the matter, did not
proceed to prepare the initial draft of the heads of argument when it became clear
in the first or second month that the counsel on brief was ‘struggling’ to deliver
these heads of argument, so that s/he could merely settle them. Failing which, to
enable the ‘new’ counsel to settle. Unfortunately, the issue was not raised with
the Applicant’s legal representative, and it would be unfair to comment further o n
it because they were not granted an opportunity to respond to the court's
concerns regarding the delays in submitting their heads of argument.
49. I am of the view that it is in the interest of justice to grant the Applicant
condonation to file the heads of argument prepared on her behalf , simply
because, at the very least, they were submitted before the matter was heard and
because, at the very least, they were submitted before the matter was heard and
the Respondent was able t o file supplementary heads in response thereto.
However, it is important to caution the Applicant’s attorneys , and attorneys in
general, who decide to brief advocates who fail to deliver on their mandate , that
they cannot hide behind what such advocates did or failed to do. The ultimate
responsibility of ensuring that the court cases run smoothly without any
hindrances rests with attorneys , who are also legally qualified. There is nothing
that prevents attorneys from drafting heads of argument, and if need be, to
request advocates to settle them. Court cases cannot be delayed merely
because an advocate failed to deliver the heads of argument.
ii) Authority to Act
50. It is trite that the powers and duties of trustees are articulated in the trust deed.
This is where the power to institute legal proceedings on behalf of the Trust
should be located. In Shepstone and Wylie Attorneys v Abraham Johannes de
Witt N O and Others, held that
‘[t]rustees are legally bound to comply with the terms of the trust deed. In line
with their fiduciary duties, trustees must be legally authorised to act through
competent resolutions’.1
51. The Applicant provided what appears to be a resolution to institute these
proceedings on behalf of the Trust. She is the sole Trustee of the Trust. She is
legally entitled to make decisions on behalf of the Trust, including the decision to
litigate. The Ap plicant clearly has authority by virtue of her office to litigate on
behalf of the Trust. Any insinuation that she does not have such authority is
without merit.
iii) Arbitration Clause
52. The Supreme Court of Appeal in VJ v VJ and Another, held that:
‘… it is well established that arbitration does not oust the jurisdiction of
courts’.2
1 2023 (6) SA 419 (SCA) para 20.
53. In a persuasive judgment delivered by the Kwa Zulu Natal Division, Durban of
Aveng (Africa) Ltd formerly Grinaker -LTA Ltd t/a Grinaker -LTA Building East v
Midros Investments (Pty) Ltd, it was held that:
‘… [i]t is now well -established that an arbitration agreement does not oust
the jurisdiction of the courts. Where a party to an arbitration agreement
commences legal proceedings against the other party to that agreement, the
defendant is entitled either to apply for a stay of the proceedings pursuant to
s 6 of the Arbitration Act 42 of 1965 or to deliver a special plea relying upon
the arbitration clause’.3
54. It is trite that a clause in an arbitration agre ement where the parties agreed to
refer their dispute to arbitration does not prevent the court from hearing such a
dispute where one of the parties decided to approach the court instead of utilizing
the arbitration proceedings. In other words, such a clau se does not constitute an
automatic bar to the institution of legal proceedings in the civil courts. After the
institution of a civil case in a court concerning a dispute that the parties have
agreed to refer to arbitration, the other party can do one of t wo things. First, a
substantive application can be lodged in terms of section 6(1) of the Arbitration
Act, which provides that
‘[i]f any party to an arbitration agreement commences any legal proceedings
in any court (including any inferior court) against any other party to the
agreement in respect of any matter agreed to be referred to arbitration, any
party to such legal proceedings may at any time after entering appearance
but before delivering any pleadings or taking any other steps in the
proceedings, apply to that court for a stay of such proceedings’.4
55. The other party to the agreement retains its right to enforce the arbitration clause
by applying to the court to stay civil court proceedings to allow the parties to
2 2024 (6) SA 400 (SCA) para 10.
2 2024 (6) SA 400 (SCA) para 10.
3 2011 (3) SA 631 (KZD); [2011] 3 All SA 204 (KZD) para 17.
4 42 of 1962
arbitrate their dispute in terms of the arbitration clause of their agreement. Where
such an application has not been made after service of the notice of intention to
defend or oppose the case before the court, the court cannot entertain any
argument relating to arbitration proceedings. The court must proceed to
adjudicate the application before it.
56. Secondly, the other party to the contract that contains the arbitration clause can
raise a special plea in terms of the common law for the stay of the instituted civil
court proceedings. This was confirmed in PCL Consulting (Pty) Ltd t/a Phillips
Consulting SA v Tresso Trading 119 , where the Supreme Court of Appeal held
that:
‘The mere fact that parties have agreed that disputes between them shall be
decided by arbitration does not mean that court proceedings are
incompetent. If a party institutes proceedings in a court despite such an
agreement, the other party has two options: (i) It may apply for a stay of the
proceedings in terms of section 6 of theArbitration Act 42 of 1965 or (ii) it
may in a special plea (which is in the nature of dilatory pl ea) pray for a stay
of the proceedings pending the final determination of the dispute by
arbitration’.5
57. The Respondent neither brought a substantive application nor raised a special
plea (or at best a point in limine since these are motion proceedings) to stay
these proceedings pending arbitration proceedings. In any event, the Applicant
conceded that the jurisdiction of this court has not been ousted. There is nothing
that prevents this court from adjudicating this matter.
iv) Demand and Delivery
58. It terms of section 345(1)(a)(i) of the (1973) Companies Act,6
5 2009 (4) SA 68 (SCA) para 7.
6 61 of 1973. Despite the 1973 Companies Act having been repealed by the 2008 Act, its Chapter 14
remain operational. See Botha N O and Others v Jonker and Others [2024] 3 All SA 365 (SCA); 2025
(1) SA 345 (SCA) para 20, where it was stated that ‘Item 9 of Schedule 5 of the Companies Act 71 of
‘[a] company or body corporate shall be deemed to be unable to pay its
debts if a creditor, by cession or otherwise, to whom the company is
indebted in a sum not less than one hundred rand then due has served on
the company, by leaving the same at its reg istered office , a demand
requiring the company to pay the sum so due’.
59. There are two schools of thought on how the issue of delivery should be
understood. The first school of thought was recently articulated in Bank of Baroda
v Annex Distribution (Pty) Ltd, as follows:
‘the view is held that the provisions of section 345(1)(a)(i) of the Companies Act
are peremptory, requiring service of the demand by delivering at the registered
office of the respondent. If the legislature intended other forms of service, it would
have been provided for. Strict compliance with the provisions regarding service,
are a prerequisite for the deeming of the respondent as being unable to pay its
debts’.7
60. The second school of thought was captured in Nathaniel & Efthymarkis
Properties v Hartbeesspruit Landgoed CC , where the court, in explaining the
absurdity of the demand received but not delivered by being left at the registered
office not being effective, held that
‘the requirement that the demand must be served on the corporation is
peremptory but that the requirement that it be done at the registered office is
not and that substantial compliance will in that respect suffice. It is not
unusual that a statutory provision is in part peremptory and in part directory’.8
2008 (the 2008 Companies Act) provides that Chapter 14 of the 1973 Companies Act shall apply to
the liquidation of companies’.
7 (38591/2019) [2020] ZAGPPHC 158 (14 May 2020) para 13. In justifying this view, the court relied ,
among others, on the following cases: BP and JP Investments (Pty) Ltd v Hardroad (Pty) Ltd 1977 (3)
753 (W) and Phase Electric Co (Pty) Ltd v Zinman Electrical Sales [Pty) Ltd 1973 (3) SA 914 (W).
8 1996 (2) B All SA 317 (T)
61. It is concerning that the debate relating to the delivery of the demand in
liquidation matters before the courts is usually entertained without regard to what
the Supreme Court of Appeal stated in Natal Joint Municipal Pension Fund v
Endumeni Municipality, where it was made clear that when interpreting
legislation:
‘[w]here more than one meaning is possible each possibility must be
weighed in the light of all these factors. The process is objective not
subjective. A sensible meaning is to be preferred to one that leads to
insensible or unbusinesslike results or under mines the apparent purpose of
the document’.9
62. It appears to me that section 345(1)(a)(i) of the 1973 Companies Act cannot be
interpreted in line with the material conditions that prevailed when this Act was
promulgated, but rather how business is conduc ted in modern times. What the
legislature said is not as important as what it desired to achieve. It is clear from
the wording used in this section that a person who wishes to liquidate a company
must demand payment from the company and take active measure s to ensure
that such a company is notified of the demand for payment. At the time this Act
was promulgated, the most effective way of achieving this was attending at the
premises of the debtor and submitting the demand directly to the persons found
in the premises or at the very least, indicating through the messenger of the court
that such people were not present at the time of service but service was effected
nonetheless.
63. The times have changed , and this legislative intention can be achieved through
other means. For instance, I doubt that where a creditor emails (or use any other
electronic means) a demand to the entity sought to be liquidated and receives a
reply from its relevant official confi rming receipt and admitting or disputing the
debt, the court should insist that the creditor ought to have gone to the entity’s
debt, the court should insist that the creditor ought to have gone to the entity’s
registered address to serve the demand physically. This will not only be absurd in
that it would be placing form over substance, but it will lead to insensible or
9 [2012] 2 All SA 262 (SCA); 2012 (4) SA 593 (SCA) para 18.
unbusinesslike results. This also amounts to a total disregard of how business is
conducted in modern times. The 1973 legislators did not have the benefit of the
experience of how business is conducted in 2025 and beyond.
64. It is even worse where the alleged debtors have received the demand and
proceeded to actively participate in the litigation to demonstrate why they ought
not to be liquidated. It is unsound to use the issue of non -compliance with the
literal wording of the statute to create a technical objection where it is clear that
the alleged debtor received the demand. In my view, in 2025 and beyond, there is
little sense in strictly requiring that the notice where payment is demanded must
be left at the alleged debtor’s registered office, where it is clear that the alleged
debtor received such notice by other means. In this case, the Respondent
received the section 345 notice ; it is irrelevant that this notice was not left at its
registered office as stated in 345(1)(a)(i) of the 1973 Companies Act . In any
event, the Applicant proved that there was service by the sheriff. Even if the
Applicant did not prove this but illustrated that the Respondent received the
notice by alternative means, that would have been sufficient.
v) Inability to pay
65. In terms of section 344(f) of the 1973 Companies Act,
‘[a] company may be wound up by the Court if the company is unable to pay
its debts as described in section 345’.
66. The Respondent will be deemed to be unable to pay its debts if it is indebted to
the Applicant in a sum not less than one hundred rand and fails to make payment
after being requested by the Applicant to do so.10 The Respondent must, for three
weeks after being requested to make payment by the Applicant, neglected to pay
the requested amount, or to secure or compound that amount to the reasonable
satisfaction of the Applicant.11 The evidence provided illustrates t hat on 19
10 Section 345(1) of the 1973 Companies Act.
10 Section 345(1) of the 1973 Companies Act.
11 Section 345(1)(a)(i) of the 1973 Companies Act.
January 2024, the Applicant sent a letter of demand in terms of section 345 of the
Companies Act requesting payment of R 9 883 062.54 from the Applicant. This
means that the Respondent had about three weeks to make payment, failing
which it ran a risk of being deemed unable to pay its debts.
67. The Applicant referred the court to the Western Cape Division’s judgment of
Electrolux South Africa (Pty) Ltd v Rentek Consulting (Pty) Ltd , where it was held
that the court exercises a narrow discretion in liquidation applications because:
‘an unpaid creditor has a right, ex debito justitiae, to a winding -up order
against a company that has not discharged its debts’.12
68. Based on this case, the Applicant’s argument is simply that once it demonstrates
that the Respondent owes it an amount above R 100.00, which it has claimed but
the Respondent failed to pay, it is entitled as a matter of right to a liquidation
order. In other words, the main ground upon which the Applicant is seeking a
liquidation order is that the Respondent is commercially insolvent.
69. The test for commercial insolvency is relatively settled. The Supreme Court of
Appeal in Murray and Others NNO v African Global Holdings (Pty) Ltd and
Others, held that the test for commercial insolvency is:
‘… whether the company “is able to meet its current liabilities, including
contingent and prospective liabilities as they come due”. Put slightly
differently, it is whether the company “has liquid assets or readily realisable
assets available to meet its liabilities as they fall due to be met in the
ordinary course of business and thereafter to be in a position to carry on
normal trading – in other words, can the company meet current demands on
it and remain buoyant?” Determining commercial insolvency re quires 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
12 2023 (6) SA 452 (WCC) para 24.
to pay its debts, existing as well as contingent and prospective, and continue
trading’.13
70. In ABSA Bank Ltd v Rhebokskloof (Pty) Ltd and Others, it was held that:
‘[t]he concept of commercial insolvency as a ground for winding up a company is
eminently practical and commercially sensible. The primary question which a
Court is called upon to answer in deciding whether or not a company carrying on
business should be wound up as commercially insolvent is whether or not it has
liquid assets or readily realisable assets available to meet its liabilities as they fall
due to be met in the ordinary course of business and thereafter to be in a position
to carry on normal trading - in other words, can the company meet current
demands on it and remain buoyant? It matters not that the company's assets,
fairly valued, far exceed its liabilities: once the C ourt finds that it cannot do this, it
follows that it is entitled to, and should, hold that the company is unable to pay its
debts within the meaning of s 345(1)(c) as read with s 344(f) of the Companies
Act 61 of 1973 and is accordingly liable to be wound up’.14
71. In simple terms, the inquiry meant to assess commercial insolvency is based on
the readily available financial means to make immediate payment when the
creditor demands payment based on what the debtor owes. The debtor’s failure
to make payment cr eates a legal perception of the debtor’s inability to pay in the
mind of the creditor, which entitles the creditor to approach the court for a
liquidation order. The creditor does not have to acquire or rely on any objective
proof of the debtor’s inability to pay. In other words, the debtor will be in a state of
commercial insolvency when an impression is created based on its failure to
settle the debt that is due upon demand, that it is unable to meet its day-to-day
liabilities in the ordinary course of business.15
13 [2020] 1 All SA 64 (SCA); 2020 (2) SA 93 (SCA) para 31.
13 [2020] 1 All SA 64 (SCA); 2020 (2) SA 93 (SCA) para 31.
14 1993 (4) SA 436 (C) at 440. See also Pretoria seat of this division in Topfix (Pty) Ltd v Go Business
(Pty) Ltd and Another (020590/2024) [2025] ZAGPPHC 115 (30 January 2025) para 29.
15 See Rosenbach & Co (Pty) Ltd v Singh's Bazaars (Pty) Ltd 1962 (4) SA 593 (D) at 597.
72. In this case, it is not easy to establish whether the Applicant could formulate a
view that the Respondent is unable to pay its debts because, before the section
345 demand was sent to the Respondent, the Respondent had already
communicated its concerns wi th the Trust’s work at its various sites. On 26
October and December 2023, the Respondent sent four notices relating to
alleged defects that were identified in C & R Boerdery, Willie Becker, LC
Spitskop, and Nooitgedacht Safaris sites. These notices were f ollowed up by
letters dated 7 December 2023, where the Respondent’s attorneys not only
detailed alleged defects but also claimed that the Trust was in contractual default.
They demanded that the Trust cease working at the sites and transfer control of
the sites to the Respondent.
73. The evidence illustrates that a contractual dispute between the parties arose as
early as 26 October 2023. Instead of addressing the concerns raised in the
Respondent’s notices and letters, the Applicant decided to send a section 345
demand in January 2024 . In this demand, the Applicant claimed that the works
have been completed at various sites , and that the final certificates of completion
have been issued , and that the Respondent has failed to make payment on the
invoices sent to it. This demand was immediately followed by another letter on
the same day, which sought to respond to the Respondent’s notices and letters.
In this letter, among others, the Appli cant accused the Respondent of frustrating
its efforts to complete its work and basically denied the existence of any defects
on the sites.
74. These correspondences demonstrate the existence of serious factual disputes
emanating from the parties’ various contracts that cannot be resolved by a motion
court on the papers. Since the cause of action is insolvency as opposed to
contract, it will be improper for the insolvency court to attempt to resolve disputes
contract, it will be improper for the insolvency court to attempt to resolve disputes
that arise purely from contract by relying on the so -called Plascon-Evans Rule .
This is because the issue before the court relates to liquidation and not whether
any of the parties complied with the various terms of the contract.
75. Nonetheless, it is beneficial to assess some of the terms of the contract to
evaluate whether the Applicant, after receipt of the Respondent’s four notices and
letters in 2023, could legitimately formulate a view that the Respondent is unable
to pay its debt after serving its section 345 demand in 2024. There are five
different contracts for each site. During oral argument, it was clear that the legal
representatives of both parties agreed that the substance of these a greements is
the same. In each agreement, the parties agreed that payment of the contract
sum by the Respondent will be made in accordance with different milestones.
These contracts also provided that ‘[t]he works will have met Practical
Completion if found to be free of Defects and shown to have met the Standards
for Completion’.16
76. This raises an interesting question: was the Respondent obliged in terms of these
agreements to make payment after the achievement of any milestone, or was th e
Respondent entitled to withhold payment where it identified defects on the
works? This is a purely contractual matter that should not be resolved by this
court sitting as an insolvency court faced with liquidation as a cause of action.
The Respondent’s n otices and letters were served on the Applicant in 2023,
where defects were identified. This means that the Respondent decided to
withhold payments that would otherwise be due under the various contracts
because of the identified defects. The inquiry of wh ether the Respondent is
entitled to do so cannot be undertaken by this court. What is clear is that a
contractual dispute arose before the Applicant could serve its section 345
demand.
77. In other words, at the time the Applicant formally demanded payment in terms of
section 345, it was clear that the Respondent formulated a view that, based on
the alleged defects, it was not obliged to make payment before those defects had
been remedied. Its entitlement to do so requires a trial and cannot adequate ly be
addressed by an Insolvency Court sitting as a motion court. In my view, there
was no basis for the Applicant to serve a section 345 demand in light of dispute s
was no basis for the Applicant to serve a section 345 demand in light of dispute s
that were also articulated in its second 19 January 2024 letter. It was clear at that
time that the Respondent ‘possibly’ ha d a bona fide defence on reasonable
grounds to the Applicant’s claim. At that time, the Applicant could not properly
16 Clause 5 contained in all the agreements.
formulate a view that the Respondent is unable to pay its debts when they
become due. A reasonable view t o formulate at the time should have been that
the Respondent is refusing to make payment based on the alleged defects. This
view ought to have been tested by way of contractual trial proceedings, or at the
very least, arbitration proceedings provided for i n the parties’ various contracts.
This would have allowed all the parties to deal with various material disputes of
fact between them adequately.
78. It is not for this court to nitpick non-payments following various payments to
establish whether the Respondent is indebted to the Applicant for an amount
above R 100.00. To do so would be to disregard the fact that the Respondent’s
2023 notices and letters generally identified the alleged defects to th e Trust
works at all the sites, and that was the basis for the non -payment. There was a
clear refusal to pay in 2023 based on the alleged defects, followed by a section
345 demand in 2024. This does not demonstrate an inability to pay but a
contractual dispute that must be adequately resolved before a proper forum.
79. In support of her case, the Applicant referred the court to the case of Aerontec
(Pty) Limited v South Harbour Tankfarm CC .17 This case is totally distinguishable
in that the was no dispute th at the debtor was indebted to the liquidating creditor
but sought to resist the liquidation based on the existence of an unliquidated
counterclaim. Most importantly, the amount due was undisputed. In the current
case, the Respondent clearly disputes the am ount claimed and has not raised
any counterclaim. This case does not assist the Applicant.
80. The Applicant also relied on Francis and Others v Southern Sky Hotel and
Leisure (Pty) Ltd trading as Hans Merensky Hotel & Spa .18 In this case, upon
receipt of a section 345 demand, the debtor did not deny that it was indebted to
the liquidating creditors. It was common cause between the parties that the
the liquidating creditors. It was common cause between the parties that the
debtor was unable to pay its debts. The parties even had a formal discussion
relating to the debt. Still, they failed to resolve their disputes, leading to the debtor
17 (18712/2019) [2021] ZAWCHC 21 (9 February 2021).
18 (2013/2016) [2020] ZALMPPHC 8 (21 January 2020).
placing itself under business rescue, which proceedings were later set aside. The
debtor’s case was not that it was able but unwilling to pay the creditors’ debts.
Most importantly, the debtor formulated its defence beyond the principle that
winding-up proceedings should not be used to enforce payment of a debt the
existence of which is bona fide disputed on reasonable grounds, but attacked the
actual terms of the agreements on the basis that they were contrary to
Constitutional values, the Bill of Rights and public policy. 19 This case is
distinguishable on the facts and does not take the Applicant’s case any further.
81. Lastly, the Applicant relied on an unreported case of Third Dimension
Development (Pty) Ltd v Pacebene (Pty) Ltd .20 In this case, the creditor’s section
345 letter demanded payment of R 475 665.69 . The debtor denied owing R 36
882.61 of the demanded amount. The creditor argued that , to oppose the
liquidation application successfully , the debtor must dispute the entire
indebtedness and not only the portion of the debt. 21 The court did not make any
finding based on this argument. The court held that the debtor did not place any
evidence of its solvency before the court . The fact that the debtor’s shareholder
placed security confirms that the debtor does not possess sufficie nt funds to pay
its debts. 22 This case is totally distinguishable because the Respondent in the
current case has not admitted any part of the Applicant’s case, be it the amount
claimed in the section 345 demand or the revised amount in the founding
affidavit.
82. In any event, the approach taken in Third Dimension Development (Pty) Ltd v
Pacebene (Pty) Ltd calls for comment. I am not convinced that the court ought to
have dismissed the so-called ‘security’ by the shareholder that was deposited into
the debtor’s attorney’s trust account without ascertaining its true status . The
inquiry should have been to establish the nature of this ‘s ecurity’. Was it equity
inquiry should have been to establish the nature of this ‘s ecurity’. Was it equity
financing or a shareholder loan , notwithstanding being phra sed as ‘security for
19 Francis and Others v Southern Sky Hotel and Leisure (Pty) Ltd trading as Hans Merensky Hotel &
Spa para 40.
20 Case No: 073382/2023
21 Ibid para 9.
22 Ibid para 23.
any possible claim’ . Why did the shareholder choose to pay the money into the
attorney’s trust account as opposed to the debtor's bank account? Was the
‘security’ a disguised transaction meant to prevent liquidation and later to be
returned to the shareholder once the court has dismissed the liquidation
application? If yes, then the court would have been justified in granting th e
liquidation order. But if this was a genuine shareholder loan meant to protect the
shareholder’s investment by saving the company, then more weight ought to
have been accorded to this ‘security’. It is not unheard of for shareholders in
South Africa to capitalise their companies. 23 If this was a shareholder loan that
made it possible for the debtor to pay its immediate debts, the source of the
money was totally irrelevant. It appears from the judgment that once the disputed
portion had been resolved, payment would have been effected. It is also not clear
whether the debtor had employees, whose interests ought to have been
considered. In my view, there was no basis for liquidating the debtor, having
regard to the ‘security’ placed by the shareholder in this case.
83. In the current case , the Respondent sought to neutralize the Applicant’s
allegation of commercial insolvency by providing its 2023 Audited Financial
Statements. This was an attempt to demonstrate the Respondent’s financial
strength and its prospects. It is clear from th ese statements that as at 28
February 2023, the Respondent had cash and cash equi valents of R 14 252
344.00 with the total assets of R 433 278 252 .00. The liabilities were calculated
at R 256 235 192 .00. This was the statement that could have reasonably be en
obtained at the time the Applicant served its notice of motion on the Respondent
for the preparation of the answering affidavit.
84. The Applicant argued that these statements do not assist the Respondent
because they only demonstrate factual [in]solvency. The Respondent proceeded
because they only demonstrate factual [in]solvency. The Respondent proceeded
to nitpick certain entries in the statement by illustrating the alleged Respondent’s
actual loss and a furt her loss for its operating activities. It is worth noting that the
Respondent did not rely on factual solvency to attempt to defeat the Applicant’s
23 Richman v FRM Property Investments (Pty) Ltd and Others (2022/972) [2024] ZAGPJHC 270 (14
March 2024) para 11.
claim. The Respondent was alive to the fact that should a court, in a case against
it based on s ection 345(1)(a)(i) read with section 344(f) of the 1973 Companies
Act, find that there is a prima facie claim against it which is due and owing and
which remains unpaid, the onus would shift to it to show that its indebtedness to
the Applicant is bona fide disputed and on reasonable grounds . These
statements were provided to meet this onus, and not necessarily demonstrate the
Respondent’s factual solvency. It may well be that the net effect of producing
them ultimately provides a case for its factual solvency.
85. I am not con vinced that there is a prima facie case established against the
Respondent. The Applicant’s claim was disputed even before it served its section
345 demand. In other words, I am not convinced that the Applicant successfully
demonstrated that the Respondent is unable to pay its debts when they become
due. When the liquidation application was lodged , an amount just under three
million was demanded. The statements that the Respondent provided to the court
demonstrate that it had just over fourteen -million-rand cash. Th e cash assets
reflected on the Respondent’s Audited Financial Statements creates an
impression that the Respondent had the capacity to pay its debts when they fell
due.
86. This essentially means that the Respondent refused to make payment because it
had the capacity to pay. The re is no evidence that supports the contention that
the Respondent was unable to pay the Trust’s debt in particular. The basis for the
refusal to pay was the alleged defects that were communicated through various
notices and letters.
vi) Bona Fide Defence
87. If I am wrong, and indeed the Applicant managed to establish a prima facie claim
for payment which is due and owing, but which remains unpaid, the onus will
naturally shift to the Respondent. In Topfix (Pty) Ltd v Go Business (Pty) Ltd and
Another, it was held that:
‘[i]n order to successfully oppose a winding -up, the Respondent must dispute the
existence of the debt’.24
88. The Supreme Court of Appeal in Imobrite (Pty) Ltd v DTL Boerdery CC ,
reminded us that:
‘[i]t is trite that, by their very nature, winding -up proceedings are not designed to
resolve disputes pertaining to the existence or non -existence of debts. Thus,
winding-up proceedings ought not to be resorted to enforce a debt that is bona
fide (genuinely) disputed on reasonable grounds. That approach is part of the
broader principle that the court’s processes should not be abused.25
89. The debt in the current case is clearly disputed. Counsel on behalf of the
Applicant stated expressly during argument that there is no part of the debt that is
conceded or admitted. While the notices and letters referred to above do not
expressly dispute the debts per se , their wording demonstrates that t he
Respondent is not happy with the work done by the Trust at various sites , and
thus is not prepared to make payment until the identified alleged defects are
remedied. This is a dispute, which in my view is made in good faith.
90. The fact that the parties have the action and arbitration proceedings to utilise to
determine whether the Respondent’s allegations , which are based on the
contracts signed by the parties , have me rit, makes the withholding of payment
reasonable under the circumstances. These proceedings will also lead to the
determination of whether the remedial actions that the Respondent seeks are
additional works as argued on behalf of the Applicant. In my view, the
Respondent has a valid defence to the Applicant’s liquidation application.
91. In Imobrite (Pty) Ltd, it was further held that
24 (020590/2024) [2025] ZAGPPHC 115 (30 January 2025)
25 (1007/2020) [2022] ZASCA 67 (13 May 2022) para 14. This is a principle that was crafted in
Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T).
‘[a] winding-up order will not be granted where the sole or predominant motive or
purpose of seeking the winding-up order is something other than the bona fide
bringing about of the company’s liquidation. It would also constitute an abuse of
process if there is an attempt to enforce payment of a debt which is bona fide
disputed, or where the motive is to oppr ess or defraud the company or frustrate
its rights.’26
92. The Applicant’s approach in these proceedings makes it difficult not to conclude
that it seeks to abuse liquidation proceedings . At the time the section 345
demand was served, the Applicant was already aware that the Respondent was
refusing to pay based on the alleged defects that it claimed it had identif ied. This
was already a contractual dispute that ought to have either been negotiated,
arbitrated, or resolved through court proceedings, with both parties being able to
lead their respective expert witnesses.
93. After receiving the Respondent’s letter dated 7 December 2023, the Applicant
formulated a view that the Respondent was attempting to ‘create’ a bona fide
defence based on reasonable ground s. In other words, the Applicant was
effectively accusing the Respondent of pre -empting liquidation proceedings,
because at the time the Respondent served its letter, there was no section 345
demand. There were other effective contractual remedies at the Applicant’s
disposal, but she chose to pursue liquidation proceedings where the dispu ted
contractual terms would not be thoroughly tested. The fact that there was already
a dispute which had been articulated before the demand was made, and certainly
when the liquidation application was brought, indicates that liquidation
proceedings were not the most suitable proceedings under these circumstances.
94. Most importantly, the Applicant should have been more cautious because the
Respondent has about 120 people under its employ. Employment of people is
Respondent has about 120 people under its employ. Employment of people is
neither a defen ce nor a bar to liquidation proceedings. However, to blindly deal
with liquidation applications without regard for the company's capacity to employ
people and contribute meaningfully to the country’s economy would be a judicially
26 1956 (2) SA 346 (T)
naïve approach , which is t otally ignorant of the socio -economic conditions of
South Africa. Judges are part of South Africa and should always take judicial
notice of the socio -economic conditions of South Africa raised by companies
sought to be liquidated , without unfairly prejudicing any of the parties before
them. Courts should never unnecessarily contribute toward increasing
unemployment in the Country, particularly where this can lawfully be avoided.
D CONCLUSION
95. It cannot be denied that this liquidation application was not a genuine attempt to
liquidate the Respondent because it is either commercially or factually insolvent ,
and its continued existence will be disadvantageous to the creditors. This was an
attempt to secure payment for the Applicant. I am of the view that even in terms
of section 344(h) of the 19 73 Companies Act, it is not just and equitable that the
Respondent should be wound up.
ORDER
96. In the result, I make the following order:
96.1. The late filing of the Applicant’s Replying Affidavit and Heads of Argument
is condoned.
96.2. The Applicant’s application to liquidate the Respondent is dismissed with
costs, including costs of counsel in scale B.
C MARUMOAGAE
ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION
PRETORIA
Counsel for the applicants : Adv Hershensohn SC with Adv Stroebel
Instructed by : Roodt & Co Attorneys Inc
Counsel for the respondent : Adv C Richard
Instructed by : Weavind & Weavind Inc
Date of the hearing : 29 May 2025
Date of judgment : 27 August 2025