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

Reportable
Case no: 2024-142384

In the matter between:
EXEO KHOKELA CIVIL ENGINEERING
CONSTRUCTION (PTY) LTD
(Registration No: 2004/012859/07) APPLICANT


and

SCHOONSPRUIT DEVELOPMENT (PTY) LTD
(Registration No: 2015/242162/07) RESPONDENT


Coram: HIGGINS, AJ
Heard: 1 August 2025
Delivered: 17 September 2025


JUDGMENT

Introduction
[1] This matter concerns an application for the provisional winding -up
of the respondent company. The applicant contends that the respondent is
commercially insolvent and seeks relief under the provisions of the
Companies Act 71 of 2008 (“the Companies Act”) and its transitional
arrangements. The respondent opposes the application on the grounds of
jurisdiction, liability, and insolvency.

[2] In its determination of whether or not to grant such an order, this
Court must consider whether the applicant has establis hed a prima facie
case of indebtedness and insolvency, and whether the respondent’s
opposition is founded on a bona fide defence or amounts to an attempt to
delay liquidation.
Facts

[3] On 30 January 2024, the applicant and the respondent concluded a
written agreement for the provision of construction services. The
applicant duly performed in terms of the agreement and thereafter issued
an invoice for payment.

[4] Despite numerous demands, the respondent failed to make
payment. In email correspondence, the respondent acknowledged the debt
and indicated that payment was dependent on obtaining external funding.
During the proceedings, the respondent denied indebtedness for the work
performed.

[5] The applicant launched this application in December 2024. It was
heard on 6 August 2025, with supplementary submissions filed thereafter.

[6] On the 5 th of August 2025, the day before the hearing, a business
rescue application was lodged electronically in the KwaZulu -Natal
Division of the High Court, Pietermaritzburg. Notably at the hearing,
counsel for the respondent also appeared for the business rescue
applicant.

[7] The respondent submits that an unissued copy of the business
rescue application was served on all stakeholders on the same day it was
lodged. A physical copy was submitted in chambers the following
morning. The issued copy of the notice of mo tion was attached to the
supplementary submissions filed after the hearing.

[8] The applicant states that the respondent’s principal place of
business is in Cape Town, where its directors reside and conduct
business. The respondent, however, raises a jurisd ictional objection on
the basis that its registered office is in Pietermaritzburg.
Issues

[9] The issues for determination are as follows:
a. Whether this Court has jurisdiction to hear the winding up
application.
b. Whether the business rescue application lodged in the
KwaZulu-Natal Division of the High Court was properly

“made” in terms of section 131(6) of the Companies Act 1 so
as to suspend these proceedings.

c. Whether the applicant has established a prima facie case of
the respondent’s commercial insolvency warranting the grant
of a provisional winding-up order
Law Applicable
[10] Section 224(3) of the Companies Act provides that the repeal of the
old Companies Act 61 of 1973 (“the old Companies Act”) does not affect
the transitional arrangements in Schedule 5. 2 Item 9 of that Schedule
preserves the continued application of Chapter 14 of the old Companies
Act to the winding-up of insolvent companies.

[11] In terms of section 344 of the old Companies Act 3 ), read with
section 12, a company may be wound up by the court within whose
jurisdiction either its registered office or its principal place of business is
situated.4 This dual jurisdiction in respect of the winding -up of insolvent
companies was confir med by this Court in Van der Merwe v Duraline
(Pty) Ltd.5

[12] Section 344(f) of the old Companies Act provides that a company
may be wound up by the court if it is unable to pay its debts as described
in section 345. In terms of section 345(1), a company is deemed unable to
pay its debts if, inter alia, it fails to satisfy a creditor’s demand within 21

1 Companies Act 71 of 2008
2 iIbid section 224(3)
3 Act 61 of 1973
4 Ibid section 344 and section 12.
5 [2013] ZAWCHC 213 see paras 19-31.

days or if it is otherwise proved to the satisfaction of the court that the
company cannot meet its obligations.6

[13] It is trite that winding-up proceedings should not be employed as a
mechanism to enforce payment of a debt that is disputed on bona fide and
reasonable grounds. 7 In principle, an unpaid creditor is, ex debito
justitiae, entitled to a winding -up order, and the discretion of the court t o
refuse such relief is a narrow one. 8 Once a creditor has established a
prima facie case of indebtedness, the onus rests on the company to show
that such indebtedness is bone fide.9

[14] Section 131(6) of the Companies Act suspends liquidation
proceedings only upon a properly “made” business res cue application.10
The Supreme Court of Appeal ("the SCA ") has affirmed that the
‘liquidation proceeding’ refers only to those actions performed by a
liquidator in dealing with the affairs of a company in liquidation in order
to bring about its dissolution.11

[15] A business rescue application tainted by abuse does not attract the
protection afforded by section 131(6) of the Companies Act and therefore
cannot suspend or delay liquidation proceedings. 12 A business rescue
application launched for tactical delay o r without prospects may
constitute an abuse of process and should not be permitted.13

6 Act 61 of 1973 section 345(1).
7 Electrolux South Africa (Pty) Ltd v Rentek Consulting (Pty) Ltd [2023] ZAWCHC 202 para 23.
8 Ibid para 24; Afgri Operations Limited v Hamba Fleet (Pty) Limited [2017] ZASCA 24 para 12;
9Afgri Operations Limited v Hamba Fleet (Pty) Limited [2017] ZASCA 24 para 13.
10 Act 71 of 2008 section 131(6).
11 GCC Engineering (Pty) Ltd v Maroos [2018] ZASCA 178 para 19.
12 PFC Properties (Pty) Ltd v Commissioner for the South African Revenue Services and Others [2023]
ZASCA 111 para 38.
13 ibid para 27.

Application of Law to Facts
Jurisdiction
[16] The respondent contended that, following this court’s judgment in
Sibakhulu,14 jurisdiction in winding -up proceedings is confined to the
court closest or nearest to a company’s registered office.

[17] That approach has not been followed in subsequent judgments of
this Court insofar as it purported to apply to insolvent liquidations. In
Duraline,15this Court held that the liquidation of insolvent companies is
still governed by Chapter 14 of the old Companies Act, read with section
12. These provisions confer jurisdiction on the court where the company
either has its registered office or its principal place of business. Similarly,
in Mfwethu Investments,16 it was observed that Binns-Ward J's statements
in Sibakhulu concerning liquidation were, at most, obiter.

[18] I agree with the reasoning in these authorities. In the case of the
winding-up of an insolvent company, the dual jurisdiction under the old
Companies Act remains applicable. On the evidence, the respondent’s
principal place of business is in Cape Town, where its directors reside
and operate. This Court therefore has jurisdiction, and the respondent’s
objection in this regard must fail.

14 Sibakhulu Construction (Pty) Ltd v Wedgewood Village Golf Estate (Pty) Ltd 2013 (1) SA 191
(WCC) para 23.
15 Van der Merwe v Duraline (Pty) Ltd [2013] ZAWCHC 213 paras 19-31; see also Wild & Marr (Pty)
Ltd v Intratek [2019] ZAGPPHC 613 para 13.
16 Mfwethu Investments CC v Citiq Meter Solutions (Pty) Ltd 2020 JDR 0851 (WCC) para 21-22.

Business Rescue Application
[19] As the SCA held in Lutchman, a business rescue application cannot
be considered “made” under section 131(6) of the Companies Act unless
it has been formally issued.17

[20] It is common cause that a business rescue application was lodged
in the KwaZulu -Natal Division of the High Court on the eve of t his
hearing and formally issued minutes before it commenced. Counsel for
the respondent contends that this step had the effect of suspending the
present proceedings in terms of section 131(6) of the Companies Act. The
application was opposed by the applica nts, who alleged both abuse of
process and procedural defects in its service. However, upon reviewing
the supplementary submissions and relevant case law, I find that it is
unnecessary to consider the effect of the business rescue application on
these proceedings.

[21] In Kalil, the then Appellate Division (now “the SCA”) held that the
phrase “winding-up of a company” refers to the liquidation process itself,
and not the preliminary steps taken to obtain a winding -up order. 18
Subsequently, in Absa Bank Ltd v Summer Lodge (Pty) Ltd,19 the Gauteng
Division of the High Court confirmed that liquidation proceedings
commence only once a provisional or final order has been granted and
that the proceedings suspended under section 131(6) do not include the
legal proceedings taken by a creditor for purposes of obtaining an order
that a company be wound-up.

17 Lutchman No and Others v African Global Holdings and Others 2022 (4) SA 529 (SCA) para 31.
18 Kalil v Decotex (Pty) Ltd 1988 (1) SA 932 (A) at pp 5.
19 [2013] ZAGPPHC 544 para 16.

[22] Moreover, the SCA in Richter v Absa Bank Ltd 20 referred to the
authority of Kalil and Summer Lodge, noting that courts have held that
the deeming provision under section 131(6) of the Companies Act comes
into effect only after a liquidation order has been granted. This position
was further developed in GCC Engineering (Pty) Ltd v Maroos ,21 where
it was held that it is the actions performed by a liquidator in administering
the company’s affairs that is suspended, not the legal consequences of a
winding-up order.

[23] The Pretoria High Court’s interpretation of Maroos in STS Tyres
(Pty) Ltd v Bamboo Rock Plant (Pty) Ltd 22 concerned circumstances that
are closely aligned with the present matter. In STS, while recognising that
Maroos concerned a business rescue application launched after a
provisional winding-up order had already been granted, that Court held
that this did n ot detract from the underlying principle. 23 It reasoned that,
since the SCA confirmed that section 131(6) suspends only the process
undertaken by a liquidator and does not nullify the legal consequences of
a winding-up order, such an application does not p revent the granting of
the order itself.24

[24] This Court may consider the reasoning in STS for its persuasive
value. That said, I find that the approach adopted is both sound and
fortified by the other authorities mentioned.
[25] I am therefore satisfied that the business rescue application, even if
properly instituted, does not preclude this Court from granting a
provisional winding-up order.

20 [2015] ZASCA 100 para 10 fn 2 of judgement.
21 [2018] ZASCA 178 paras 17-19.
22 [2024] ZAGPPHC 490.
23 Ibid para 26.
24 Ibid para 27.

Provisional Winding-Up
[26] For the purposes of section 344(f) of the old Companies Act, it is
not necessary to prove actual insolvency, commercial insolvency is
established where the evidence shows that a company cannot meet its
debts as they fall due. 25

[27] At the provisional stage, the applicant is required to demonstrate its
entitlement to an order o n a prima facie basis. 26 That is to say, the court
must be satisfied on the affidavits that the balance of probabilities favours
the applicant. 27 Once a creditor has proved indebtedness, it is ordinarily
entitled to a winding -up order, and the court’s d iscretion to refuse such
relief is limited. 28

[28] In the present matter, the debt is substantiated by invoices as well
as the respondent’s written acknowledgements that payment was
contingent upon securing external funding. The respondent’s own
admissions of financial distress, both in correspondence and in its
business rescue application, further reinforce the probability of
commercial insolvency. I am therefore satisfied that the applicant has
established a prima facie case. The onus thus shift s to the respondent to
demonstrate that the debt is genuinely disputed on bona fide and
reasonable grounds.29
[29] The respondent has failed to discharge this onus. None of its
directors, who had previously admitted liability, deposed to an affidavit.
Instead, the answering affidavit was filed by the respondent’s attorney,
who denied indebtedness without providing supporting evidence. No

25 Electrolux South Africa (Pty) Ltd v Rentek Consulting (Pty) Ltd [2023] ZAWCHC 202 para 25.
26 Kalil v Decotex (Pty) Ltd 1988 (1) SA 932 (A) at pp 59-71.
27 Ibid.
28 Afgri Operations Limited v Hamba Fleet (Pty) Limited [2017] ZASCA 24 para 12.
29 ibid para 13.

credible financial records were furnished to demonstrate solvency, and
nothing was placed before the Court to rebut the respon dent’s prior
written acknowledgements of liability. As confirmed by the SCA in
Wightman t/a JW Construction v Headfour (Pty) Ltd ,30 bare denials do
not create a genuine dispute of fact.

[30] The evidence before me establishes a prima facie case in favour of
granting a provisional winding -up order. The respondent has failed to
show that the debt is genuinely disputed on bona fide and reasonable
grounds, or that it is in a position to discharge its obligations. I am further
satisfied that the requirements of just ice and equity, as envisaged in
section 344(h) of the old Companies Act, have been met.
Relief Sought
[31] The applicant seeks a provisional winding -up order with costs on
Scale B. Given the strength of its case and the respondent’s conduct, such
relief is warranted. There is no basis in law or equity to withhold the
order sought.
Order
[32] The following order is made:
a. The Respondent is placed under provisional winding -up in
the hands of the Master of the High Court.

b. A rule nisi is issued, calling upon the respondent and all
interested parties to show cause, if any, on a date to be
determined by the Registrar, why a final winding -up order
should not be granted.

30 [2008] ZASCA 6 para 13

c. Service of this order shall be affected in accordance wit h the
rules.

d. The Respondent shall pay the costs of this application
including the costs of counsel on scale B.


_____________________________
HIGGINS, AJ
ACTING JUDGE OF THE HIGH COURT













Appearances:

For Applicant: Mr S Van der Meer
Instructed by: Van der Meer and Partners Inc.

For Respondent: Adv. J De Vries

Instructed by: Padayachee and Partners Attorneys