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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
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
Case Number: 2024/126810
(1) REPORTABLE: Yes
(2) OF INTEREST TO OTHER JUDGES: No
(3) REVISED: Yes
DATE 26/02/2026
SIGNATURE
In the matter between:
URBAN MOUNTAIN (PTY) LTD Applicant
(Registration Number 2021/564981/07)
and
THAMI NDLALA HOLDINGS (PTY) LTD Respondent
(Registration Number 2018/26347/07)
JUDGMENT
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Summary:
Is a damages claim for “holding over” and related charges after lease termination
considered a debt payable under section 345(1)(a) of the Companies Act 61 of
1973?
The standing of a creditor in terms of section 346(1)(b) read with section 344(f) and
section 345(1)(a) is not dependent on a finding of contractual privity between the
creditor and debtor. An extensive array of circumstances may result in one or more
unpaid obligations, depending on the particular facts and applicable legal principles,
whether those obligations arise from the application of the recognised obligations at
common law (i.e., contract, delict or enrichment), statute, or constitutional provisions.
While a contingent or prospective creditor has standing to file an application for
winding-up, a claim originating from unliquidated damages is not a debt then due
and payable and does not fall within the ambit of section 345(1)(a).
A claim for holding over is not for rental under the former lease agreement but one
for damages based on the market rental value of the premise s which is typically
illiquid, save for those instances where the market related rental value is assumed to
be the rental stipulated in the lease agreemen t and no countervailing evidence is
presented to the contrary.
A claim for payment of holding over damages is generally unlikely to fall within the
ambit of section 345(1)(a) given its illiquid character, particularly when the
respondent provides evidence that contests the creditor’s pleaded case to equate
the market rental value with the rent stipulated in the lease agreement . W here the
liquidity of the claim is established, there is no reason in law why a creditor is not
entitled to rely on section 345(1)(a) in the face of an unpaid debt for holding over
damages then due.
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Introduction
1. This application raises a relatively novel question: whether a claim for
damages resulting from “holding over” and certain ancillary charges following
the termination of a lease agreement constitute s a debt due and payable in
terms of section 345(1)(a) of the Companies Act 61 of 1973. I have not been
referred to case law, nor has my own research revealed judgments where the
issue has come up for judicial consideration.
2. The question arises in the context of an application for the winding-up of the
respondent on the grounds that the respondent is unable to pay its debts, as
contemplated by section 345 (1)(a). The respondent disputes its winding -up
by raising several arguments, identified as points in limine, which are further
elaborated upon below.
The Facts
3. The applicant is the registered owner of the immovable property situated at
no. 1[...], H[...] Avenue, Northcliff, Johannesburg. On 17 August 2021, the
applicant concluded a written lease agreement with the respondent for a
period of three years from 1 September 2021 to 31 August 2024 and that
governed the respondent’s occupation of the property.
4. The respondent was required to pay a monthly rent of R28 000.00 in
advance, before the first day of each month. Along with the rent which
increased by seven percent per annum , the respondent had to cover
additional service charges at the same time, which included electricity, basic
services, network fees, water, meter charges, alarm and satellite TV costs, as
well as gas, sewerage, refuse removal, and any other utility expenses.
5. Overdue amounts incurred monthly interest at two percent . C lause 10.5
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barred the respondent from reducing the rental for any reason . The non -
payment of any sums owed to the applicant or to service providers for
services rendered constituted a material breach of the lease agreement,
thereby entitling the applicant to terminate the lease. In terms of clause 23.2
of the lease agreement, the respondent was obliged to restore the applicant’s
possession upon its termination, failing which the applicant would be entitled
to approach court for the recovery of possession and compensation for the
respondent’s use and occupation of the property after the date of termination.
6. The respondent assumed possession of the property on 1 September 2021,
when its sole director, Mr. Thamsanqa Lucas Ndlala, received the keys to the
property. The respondent is the owner of the neighbouring property situated
at no. 1[...], H[...] Avenue, Northcliff from where it conducts business as a
luxury boutique hotel. The respondent first planned to lease the property
from the applicant, aiming eventually to merge the two erven to expand the
boutique hotel. The transaction was not completed for reasons unrelated to
this application and the respondent continues to occupy the property.
7. The relationship between the parties was not a happy one from inception . By
December 2021 t he respondent was in material breach of the lease
agreement in various respects . It failed to pay monthly rent and service
charges amounting to R93 826.32 and constructed several unlawful
structures that violated the National Building Regulations and Building
Standards Act 103 of 1977. These structures were built without the
applicant’s knowledge and without obtaining approval from the local authority.
8. The applicant terminated the lease agreement on 17 December 2021 and by
May 2022, the respondent was indebted to the applicant in the sum of
R266 318.54 in respect of outstanding rental, holding -over damages and
service charges.
R266 318.54 in respect of outstanding rental, holding -over damages and
service charges.
9. The applicant sent a section 345 demand to the respondent on 27 May 2022
and applied for the respondent’s winding -up on 25 November 2022 . T he
respondent opposed the application. The application was enrolled for
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hearing on 5 February 2024 when the parties entered into a written
settlement agreement that was made an order of court and in terms of which
the respondent was ordered to pay the full capital sum due and owing from
September 2021 to October 2022 in the amount of R488 469.04 and costs on
the attorney and client scale. Payment was made on 8 February 2024.
10. There is no dispute that the respondent continued to occupy the property
subsequent to the settlement of the indebtedness on 8 February 2024. The
relationship between the parties however did not improve. By 1 September
2024, the respondent owed the applicant the sum of R1 311 517. The total
amount included R718 587.60 in holding over damages, based on the
monthly rent and escalation per the lease agreement from November 2022 to
September 2024, plus service charges for the same period totalling R592
929.57.
11. The applicant’s attorneys addressed a further section 345 demand to the
respondent on 5 September 2024 for payment of the outstanding amount ,
alleging that the respondent is unable to pay its debts in the ordinary course
of business as and when they arise. The letter of demand was served by the
Sheriff at the respondent’s registered address on 9 September 2024.
12. The attorneys for the respondent r eplied in writing on 30 September 2024 .
They recorded that their client disputed the electricity account on 20
September 2023, and that the property had no water or electricity supply
following the disconnection of supply in December 2022. The respondent
recorded its continued intention to purchase the property and stated that a
formal offer would be submitted in the near future. However, except for an
unsubstantiated denial, the remaining indebtedness was not disputed.
13. The applicant’s attorneys responded on 15 October 202 4. They noted that
the applicant provided the respondent with the monthly statements from the
City of Johannesburg showing the real water and electricity usage charges
City of Johannesburg showing the real water and electricity usage charges
and explained that if the services had been cut off, these costs would not
have applied to the property. The respondent did not reply to this letter.
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Discussion
14. Section 345(1)(a) provides inter alia that a company is 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 R100 then due , has served on the company,
by leaving it at the company's registered office, a demand (usually referred to
as the “statutory demand”) requiring the company to pay the sum due and the
company has for three weeks thereafter neglected to pay the sum, or to
secure or compound for it to the reasonable satisfaction of the creditor.
15. A failure to pay the debt due as demanded triggers a statutory presumption in
terms of which the company is deemed to be unable to pay its debts and
constitutes a jurisdiction al ground to place the company into winding -up
(section 344(4) of the 1973 Companies Act).
16. The objective of the statutory presumption is to facilitate and expedite proof
of insolvency where the debt demanded is more than the amount set by the
legislature and remains unpaid. It does not require a creditor to produce
positive proof of the precise amount due and owing (see Blackman I
Commentary on the Companies Act 1973, Revision Service 9 at ch14 -146
with reference to the judgment of Kirby P in FAI Insurances Ltd v Goldleaf
Interior Decorators Pty Ltd (1988) 14 ACLR 285 293 SC(NSW); see also
Body Corporate of Fish Eagle v Group Twelve Investments (Pty) Ltd
2003 (5) SA 414 (W) at 428B – C).
17. To fall within the scope of the sub-section, a creditor must establish three
requirements:
17.1. it is a creditor of the respondent for an amount not less than R100;
17.2. the amount must be due and payable (the debt must be liquid);
17.3. there must be proof that despite demand, the debtor has neither paid
the amount claimed nor secured or compounded it to the reasonable
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satisfaction of the creditor ( Lamprecht v Klipeiland (Pty) Limited
2014 4 All SA 279 (SCA) at paragraph 15).
18. The respondent contests the applicant's compliance with these requirements
and although formulated as points in limine, it is appropriate to address them
as substantive defences presented on behalf of the respondent.
19. The main issues therefore involve the applicant’s locus standi as a creditor;
whether there is a bona fide dispute about the debt based on reasonable
grounds; if the application represents an abuse of process; and the solvency
of the respondent.
The Applicant’s Locus Standi
20. The applicant’s standing is a discrete question that does not concern whether
the indebtedness is bona fide disputed on reasonable grounds (Absa Bank
Ltd v Erf 1251 Marine Drive (Pty) Ltd & Another [2012] ZAWCHC 42 at
paragraph 15; Gap Merchant Recycling CC v Goal Reach Trading 55 CC
2016 (1) SA 261 at para graph 28). The latter involves the application of a
broader principle that prevents the misuse of the court's process to compel
payment of a debt that is bona fide disputed on reasonable grounds (“the
Badenhorst rule ”). The underlying principle holds that liquidation
proceedings are not intended to serve as a means of enforcing payment of
contested debts (Badenhorst v Northern Construction Enterprises (Pty)
Ltd 1956 (2) SA 346 (T) at 347H – 348C; Gap Merchant at paragraph 20).
21. The genesis of the relationship between the parties is the lease agreement ,
but as I show below, the absence of a continued lease agreement after 17
December 2021 does not deprive the applicant of locus standi to bring these
proceedings.
22. Subsequent to the termination of the lease agreement on 17 December
2021, the respondent continued to occupy the property except for a short
interval in December 2022 but without making any payment for its occupancy
or for service charges incurred from November 202 2 to September 2024. It
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challenged the validity of the lease termination and continued to hold this
position in its answering affidavit which described the termination as
“irregular.”
23. It adopted a similar refrain in its plea in response to a damages action
brought on behalf of the applicant in 2024 for payment of holding over
damages and service charges. The respondent modified its stance in its
heads of argument and Mr Griesel, who represented the respondent during
the proceedings, confirmed that the respondent’s formal position was that the
lease agreement was validly terminated. The concession was properly made.
I deal with the true import of this change in position more fully below.
24. Because no valid lease agreement existed after 17 December 2021 , the
respondent argued that there is no evidence of a creditor -debtor relationship
to support the applicant's locus standi . In the absence of a contractual
substratum, it argues that the applicant cannot establish a debt for holding
over and unpaid service charges from November 2022 to September 2024.
25. The argument does not stand up to scrutiny.
26. Section 346(1)(b) of the 1973 Companies Act entitles a creditor to bring
proceedings for the winding-up of a company. It may rely on an y exi sting
vinculum juris (i.e. a legal obligation which creates a right enforceable in a
court of law ; see Holzman v Knights Engineering and Precision Works
(Pty) Ltd 1979 (2) SA 784 (W) 787).
27. The breadth of this sub -section is clear as it includes contingent and future
creditors, being anyone who, by virtue of an existing vinculum juris ,
possesses a claim against the company that may become an enforceable
debt upon the occurrence of a specified future event or at a future date (see
Blackman I Commentary on the Companies Act 1973 , Revision Service 9
at ch14-151 and the authorities at footnote 1042).
28. The standing of a creditor in terms of section 346(1)(b) read with section
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344(f) and section 345(1) (a) is not dependent on a finding of contractual
privity between the creditor and debtor. There is nothing to suggest that the
statute lends itself to such a restrictive interpretation, and it would exclude
creditors with claims arising outside a contractual context from invoking the
statutory presumption created by section 345(1)(a) when it is clear that a
debtor is unable to pay its debts then due and owing.
29. As Moseneke J (as he then was) observed in Kyle and Others v Maritz &
Pieterse Inc 2002 3 All SA 223 (T) at paragraph 11, within the context of the
confirmation of a provisional winding-up order granted because of an inability
to pay debts as provided in section 344(f) read with section 345: “…the
obligation may arise ex contractu, ex delicto or ex variis causa inclusive of
any constitutional remedy which creates an obligation which may be validly
enforced in a court of law.”
30. It is unnecessary to enumerate every conceivable type of claim that could
designate someone as a creditor . An extensive array of circumstances may
result in one or more unpaid obligations , depending on the particular facts
and applicable legal principles, whether those obligations arise from the
application of the recognised obligations at common law (i.e., contract, delict
or enrichment), statute, or constitutional provisions.
31. The precise classification of the applicant’s claims in the present context is
equally of no moment for purposes of assessing its locus standi to bring
winding-up proceedings. They are not designed to enforce a debt but to set
the machinery of the law in motion to have the debtor declared insolvent
(Collet v Prie st 1931 AD 290 at 299; also see Investec Bank Ltd and
Another v Mutemeri and Another 2010 (1) SA 265 (GSJ) at 276G -J where
Trengove AJ in the context of sequestration proceedings found that they are
not intended to enforce a debt but to bring about a convergence of claims in
not intended to enforce a debt but to bring about a convergence of claims in
an insolvent estate to ensure an orderly winding -up process where all
creditors are treated equally).
32. Accordingly, the formulation of a carefully pleaded cause of action that makes
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out a case for payment of the debt is of secondary significance with a
founding affidavit not to be scrutinised with the same exactitude as a pleading
in High Court action proceedings.
33. This does not imply, however, that an applicant is entirely relieved of the
obligation to set out a legally cognisable foundation for its claim. It is possible
that the Badenhorst rule may apply more narrowly when, although the facts
are undisputed, a legitimate legal issue arises as to whether those facts
establish grounds for a claim in law (see Orestisolve (Pty) Ltd t/a Essa
Investments v NDFT Investments Holdings (Pty) Ltd and Another 2015
(4) SA 449 (WCC) at paragraph 12).
34. It suffices to cloth the applicant with locus standi if the facts that emerge from
the founding affidavit reveal the existence of a debt. This includes an
unliquidated claim for damages for breach of contract (see the judgment of
Trengove J (as he then was) in Gillis-Mason Construction Co (Pty) Ltd v
Overvaal Crushers (Pty) Ltd 1971 (1) SA 524 (T) at 528G where section
113 of the Companies Act 46 of 1926 which was worded in language not
dissimilar to section 346(1)(b), was interpreted to mean that an applicant with
a valid claim for damages for breach of contract is a contingent or
prospective creditor and has locus standi to present a petition for the winding-
up of a company).
35. The broad standing given to creditors to bring winding-up proceedings in
terms of section 346(1)(b) is however qualified by the wording of section
345(1)(a).
36. Although contingent and prospective creditors are permitted to apply for the
winding-up of a company per se, this right does not automatically extend to
applications based on non -compliance with a demand made in terms of
section 345(1)(a) (see GATX-Fuller v Shepherd and Shepherd Inc 1984 (3)
SA 48 (W) at 52G).
37. The sub-section requires a creditor to show that the debt is “then due” in the
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sense of being immediately due and payable. This level of precision is a
function of the fact that for a creditor to benefit from the presumption of an
inability to pay as a basis to justify a winding -up order, the debt must be
liquid.
38. In summary, while a contingent or prospective creditor has standing to file an
application for winding -up, a claim originating from unliquidated damages is
not a debt then due and payable and does not fall within the ambit of section
345(1)(a) (see Alton Coach Africa CC v Dat acentre Motors (Pty) Ltd t/a
CMH Commercial 2007 (6) SA 154 (D) at 164 F in the context of section
69(1)(a) of the Close Corporations Act 69 of 1984 which is virtually identical
to section 345(1)(a)).
39. Central to the applicant’s locus standi is the liquidity of the claim for holding
over damages.
40. Mr Pullinger, who appeared with Ms Mamoepa, addressed the issue directly
by arguing that the holding over claim was, in fact, a claim for liquidated
damages. Before I consider these submissions, a word about damages
claims for holding over is necessary.
41. The legal position concerning the nature of holding over damages is a settled
one. It is therefore useful to summarise the key principles established by the
Full Bench in Hyprop Investments Ltd and Another v NCS Carriers and
Forwarding CC and Another 2013 (4) SA 607 (GSJ) to which Mr Pullinger
and Ms Mamoepa drew my attention. The decision comprehensively outlines
the relevant legal framewor k following an exhaustive analysis of the
applicable authorities and it is not necessary for me to revisit those cases:
41.1. a landlord is entitled to free and undisturbed possession on
termination of a lease agreement, unless the occupier can justify his
continued occupation on legal grounds;
41.2. a claim for holding over arises from a breach of the contractual
obligation to deliver vacant possession upon termination, as
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stipulated by the applicable clause in the lease agreement or as
required under common law principles (the court acknowledged that
a claim can also arise in delict and enrichment as appears from
paragraphs 43 to 45);
41.3. since the lease has come to an end, the amount claimable is not the
rental that would be payable under the erstwhile lease agreement
but is more appropriately characterised as damages which is the
market rental value of the premises;
41.4. where reliance is placed on the rental payable under the erstwhile
lease agreement, this is not a substantive law requirement but an
evidential measure to determine the market related rental;
41.5. a damages claim for a market -related rental is typically considered
illiquid; however, this principle is subject to the following important
qualification:
41.5.1. in the absence of evidence to the contrary, the market
related rental value is assumed to be the rental stipulated
in the lease agreement;
41.5.2. the assumption that the two are the same is only valid if
the pleaded response reveals no challenge to the
landlord’s allegations that the rental provided for in the
lease is the market related value;
41.6. in the face of countervailing evidence that present an effective legal
challenge to the landlord’s attempt to equate the rental under the
lease with the market rental value, the claim is illiquid;
41.7. where the assumption that the rental in the lease agreement is
market related remains undisturbed, the claim can be properly
characterised as a liquidated claim (Hyprops at paragraphs 33, 41,
42 and 59 and paragraphs 64 to 69; see also in this regard the more
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recent decision in Sharma v Hirschowitz and Another 2020 (3) SA
285 (GJ) at paragraphs 19 to 21 and 27).
42. When these principles are reconciled with the requirements of section
345(1)(a), it becomes evident that a claim for payment of holding over
damages is generally unlikely to fall within the ambit of section 345(1)(a)
given their illiquid character, particularly when the respondent provides
evidence that contests the creditor’s pleaded case of equivalence between
market rental value and the rent stipulated in the lease agreement.
43. The instances w here a debt based on holding over damages falls within the
scope of the sub -section are likely to be few . They will be fact specific and
largely dependent on the extent to which the answering affidavit in each case
disturbs the creditor’s attempt to equate the market related rental with the
rental under the lease agreement . Where no such disturbance takes place,
the underlying deb t is liquid in character and meets the threshold of a debt
“then due” as employed in the sub -section. I can think of no reason why a
creditor saddled with an unpaid debt for holding over damages is precluded
in these circumstances from invoking section 345(1)(a).
44. The key allegations in support of the applicant’s argument in favour of
liquidity appear from paragraphs 55 to 58 of the founding affidavit and can be
summarised as follows:
44.1. despite the termination of the lease agreement in December 2021,
the respondent refuse d to vacate the property and restore
possession thereof to the applicant;
44.2. the respondent is liable to the applicant for holding-over damages for
each and every month in which it unlawfully retains possession of
the property, such an amount equivalent to the monthly rentals
payable under the lease agreement;
44.3. the respondent is thus indebted to the applicant as at 1 September
2024 in the sum of R1 311 517.17 which despite demand, remains
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due, owing and payable , the computation of which is set out in a
schedule annexed to the founding affidavit marked “FA12”.
45. The contractual obligation that underpins the claim is clause 23.2 which
obliges the tenant to restore the landlord’s possession upon its termination of
the lease agreement, failing which the landlord is entitled to approach court
for the recovery of possession and compensation for the tenant’s use and
occupation of the property after the date of termination.
46. The applicant correctly identified the measure of its damages to be based on
the market related rental as a matter of substantive law . T he evidential
footing to support the calculation of the market related rental rests on the
assumption that it corresponds with the rental specified in the lease
agreement. T he computation of the damages amount in the schedule
proceeds on this basis.
47. The corresponding paragraphs of the answering affidavit (paragraphs 39 to
41) went no further than to challenge the applicant’s right to terminate the
lease agreemen t and to dispute that the debt is readily ascertainable and
thus a debt presently due and owing for purposes of section 345(1)(a). Other
than to make legal argument, the respondent did not deal with the facts
issuably by showing that the rental stipulated in the lease agreement is not
market related but instead based on some other figure because of reasons
such as market conditions , other economic considerations or features
specific to the property itself.
48. It must be remembered that the applicant does not have to prove an
entitlement to the full amount of R718 587.60 representing the sum due for
the respondent’s unlawful holding over. The reason is that the applicant is not
seeking payment in these proceedings which would require proof of a specific
amount.
49. These proceedings have a different objective: to bring about a concursus
creditorum based on the respondent’s deemed inability to pay an amount no
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less than R100 which was due and payable. The dispute concerning the
precise computation of the applicant’s claim will be settled by the liquidators
following the lodgement of a claim or by a court if the applicant and the
liquidators do not reach consensus on the issue ( Klipeiland at paragraph
10).
50. Not having disturbed the assumption that the market related rental is the
same as the rental stipulated in the lease agreement , I find that the debt for
holding over damages is liquid with the result that the applicant has brought
itself within the purview of section 345(1)(a) to establish locus standi . The
same conclusion is true for the service charges.
51. Hyprop is also authority for the proposition that ancillary charges are
recoverable as damages on motion , provided they are liquidated and have
been actually incurred (at paragraph 104). The City of Johannesburg
rendered invoices setting out actual meter readings which is indicative of the
consumption of these services from November 2022 to September 2024.
52. The respondent tabled no evidence to show that the amounts were
incorrectly calculated, nor did it adduce evidence to support the conclusion
that the water and electricity to the property was terminated. It was (and
remains) in possession of the property over this period and in the absence of
concrete evidence to the contrary, it is fair to conclude that the respondent
had the benefit of water and electricity over this period.
Is the Debt Bona Fide Disputed on Reasonable Grounds?
53. As winding -up proceedings are not intended to enforce payment of a
disputed debt which is bona fide disputed on reasonable grounds, court
should decline to place companies into winding -up when the claims are
genuinely and reasonably disputed ( Gap Merchant at para graph 20 with
reference to Badenhorst at 347H -384C). Bona fides and reasonableness
mean different things though (Standard Bank of SA Ltd v El -Naddaf and
Another 1999 (4) SA 779 (W) at 748G-895B).
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54. To determine if the indebtedness is bona fide disputed, a dispute does not
meet this threshold because of the respondent’s mere say-so. Something
more is required by showing that the dispute is genuine and based on
reasonable and substantial grounds ( Kalil v Decotex (Pty) Ltd 1988 (1) SA
943 (A) 980; Hülse-Reutter v HEG Consulting Enterprises (Pty) Ltd 1998
(2) SA 208 (C) 218 -219; Payslip Investment Holdings CC v Y2K Tec
Ltd 2001 (4) SA 781 (CPD).
55. Bald allegations that lack particularity are not likely to persuade a court that
the respondent is bona fide (Bravura Capital (Pty) Limited v Drive Path
Trade & Invest (Pty) Limited 2021 JDR 0267 (GJ) at para graph 27.4). A
respondent typically satisfies the threshold by demonstrating that there exists
a substantial question regarding whether the dispute is genuinely contested,
based on a bona fide belief that the debt is not owed (see Blackman I
Commentary on the Companies Act 1973 , Revision Service 9 at ch14 -87).
It is not necessary to adduce evidence that will be relied on at trial, but only
that the dispute is not unreasonable (Hülse-Reutter at 219H).
56. The existence of a bona fide dispute on reasonable grounds can be disposed
of in summary fashion.
57. Although the respondent acknowledges that the lease agreement was
properly terminated on 17 December 2021, the answering affidavit fails to
plead a justification for the respondent’s ongoing occupation of the property
without payment of rent thereafter. It has therefore not discharged the onus
to show that the indebtedness is disputed on bona fide and reasonable
grounds (Kalil at 980C; Exploitatie-en Beleggingsmaatschappij
Argonauten 11 BV & another v Honig 2012 (1) SA 247 (SCA) at paragraph
11).
58. The high watermark of its case is to argue that its occupation of the property
after 17 December 2021 is lawful ( paragraph 52 of the answering affidavit ),
but this is at best a legal conclusion unsupported by facts and does not
but this is at best a legal conclusion unsupported by facts and does not
address its failure to pay . The right to lawful occupation carries with it the
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corresponding obligation to pay rental , unless there are specific facts which
excuses the tenant from the obligation to pay rental. The respondent did not
meet this case.
59. In the absence of these facts, the respondent has not provided the court with
an explanation to justify the failure to make payments for its occupation from
November 2022 to September 2024. The lack of a forthright explanation
militates against a finding that the indebtedness is bona fide disputed.
60. Mr Griesel argued that his client's occupation derived from a prior oral
agreement; however, this arrangement ceased to govern the contractual
relationship between the parties upon the execution of the lease agreement
and does not explain the basis upon which the respondent is entitled to
withhold rental. To the extent that the answering affidavit hints at a defence
founded on the exceptio non adimpleti contractus, the allegations are so thin
that they are incapable of raising a cognisable dispute of fact.
61. Mr Griesel’s concession from the bar that the respondent accepts that the
lease agreement was validly terminated therefore does not assist the
respondent. It called for an explanation from his client to justify its failure to
make payment for its occupation in the absence of a contractual right that
entitled the respondent to remain in occupation. Because of this deficiency,
the respondent has failed to adequately demonstrate that the dispute is
genuine and based on substantial grounds. On the contrary, it undermines
the very concept of a dispute altogether.
62. As another string to its bow, t he respondent pins its hopes on a counterclaim
it wants to pursue in the pending action based on an alleged oral agreement .
It says the following in paragraph 9.4.2 of the answering affidavit:
"9.4.2 it is apparent that the alleged debt and the quantification thereof, as well as
that in the event of the alleged debt existing then it reasonably would be
that in the event of the alleged debt existing then it reasonably would be
extinguished by the Respondent's Counter -Claim, in toto , crisply
establishes such alleged debt is generally disputed on bona fide grounds."
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63. The claim is based on an oral agreement concluded in June or July 2021 that
required the applicant to pay all costs occasioned by the construction work
the respondent would undertake at the property except for a boundary wall.
The respondent alleges that the applicant failed to pay these costs
associated with the construction work undertaken at the property as a result
of which the respondent suffered damages in the amount of R1 318 562.69.
64. As Blackman notes, the existence of an unliquidated counterclaim does not
impact on the creditor’s standing to bring wind-up proceedings but may result
in a dismissal of the application if it is demonstrated that the claim is based
on genuine and substantial grounds (see Blackman I Commentary on the
Companies Act 1973, Revision Service 9 at ch14-93 and see the authorities
at footnote 613).
65. Blackman in the main relies on two Australian State Supreme Court decisions
from New South Wales and Western Australia respectively, in support of this
proposition (Re Jeff Reid Pty Ltd (1980) 5 ACLR 28 31 SC(NSW) and Mine
Exc Pty Ltd v Henderson Drilling Services Pty Ltd (1989) 1 ACSR 118
123 SC (WA)).
66. The Federal Court of Australia has subsequently endorsed Reid in
Lanepoint Enterprises Pty Ltd (Receivers and Managers Appointed) v
Australian Securities and Investments Commission [2010] FCAFC 49 .
North J and Siopis J, writing for the majority, held that a respondent’s inability
to pay in response to a statutory demand could not be satisfactorily
determined when the respondent proffers a counterclaim on substantial
grounds that remains unresolved (at paragraph 42).
67. There is an attractive logic to this reasoning, and it may be hard to see how
the presumption under section 345(1)(a) will apply when a debt that is due
and payable remains unpaid not due to an inability to pay, but because of a
substantial counterclaim that matches or exceeds the amount owed.
substantial counterclaim that matches or exceeds the amount owed.
68. The wholesale adoption of these principles must be guarded against in our
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domestic context.
69. The more appropriate approach is to treat the issue within the prism of the
court’s discretion on whether to grant a winding-up application.
70. The reason is as follows: a d efence advanced o n the strength of a
counterclaim admits the debt which excludes any room to argue that winding-
up proceedings are misplaced because the applicant seeks to enforce a
disputed debt; in the face of an undisputed indebtedness, the respondent is
then required to show why the court should not exercise its discretion in
favour of the grant of a winding-up order (see Ter Beek v United Resources
CC and Another 1997 (3) SA 315 (C) at 333H to 334C and the authorities
cited therein).
71. Unlike its Australian counterpart, the Supreme Court of Appeal does not treat
a counterclaim which, if established will lead to the discharge of the creditor’s
claim by set -off, as sufficient on its own to refuse the grant of a winding -up
order. It is but one of the factors the court will consider in the exercise of its
discretion as to whether to grant the winding -up order (Afgri Operations
Limited v Hamba Fleet (Pty) Limited 2022 (1) SA 91 (SCA) at paragraph 7
read with paragraph 18 where the court identified various factors including
the illiquidity of the claim, the failure to respond to the section 345 demand
and the lack of facts to suggest that the respondent is solvent ; see also
Grenco Projects and Construction CC v Hermanys Esplanade Dev Co
(Pty) Ltd 2024 (6) SA 500 (WCC) at paragraphs 95 to 98).
72. Since the court’s discretion to deny a final winding -up order is narrow when
an unpaid creditor seeks such relief (see Afgri at paragraph 16), it is
incumbent upon the respondent to address the pertinent factors that weigh
against the court exercising its discretion in the applicant’s favour.
73. As far as the counterclaim is concerned, the facts do not support the exercise
of my discretion in favour of the respondent. Not only is the claim illiquid, but
of my discretion in favour of the respondent. Not only is the claim illiquid, but
I am unable to find that the counterclaim is a genuine one prosecuted with
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the intention of vindicating matters of high principle . As I show below, there
are no facts to suggest that the respondent is solvent. To the extent that the
counterclaim is later found to be viable, it will be open to the appointed
liquidators to pursue the claim, and t his applies with equal force to the
respondent’s application for the winding -up of the applicant brought under
case number 2023/085604.
74. The reasons for my scepticism about the counterclaim are as follows.
75. By virtue of its illiquid nature, no set-off can be applied that would result in the
extinguishment of the debt owed to the applicant ( Capricorn Beach Home
Owners Association v Potgieter t/a Nilands and Another 2014 (1) SA 46
(SCA) at [13] citing Schierhout v Union Government (Minister of
Justice) 1926 AD 286 at 289).
76. The oral agreement that underpins the counterclaim directly conflicts with
clause 1.32 of the lease agreement . It precludes the making of any structural
changes with any upgrades not permitted in the absence of the applicant’s
consent. When read with the non -variation clause found at clause 32 .1, it is
unlikely that the parties would have concluded an oral agreement that
conflicts with clause 1.32. Even if this had been the case, the oral agreement
was reached some months prior to the lease agreement and was superseded
by the lease agreement which subsequently became the exclusive record of
the parties' understanding regarding its subject matter (clause 32.2), thus
rendering it impossible for any oral agreement to coexist with the lease
agreement.
77. As for the service charges, the respondent has not showed that their
computation is incorrect, but even if one is charitable and prepared to accept
that there may have been some billing errors, there is no doubt that water
and electricity was consumed on the property from November 2022 to
September 2024 for which the respondent is liable . This is notwithstanding
September 2024 for which the respondent is liable . This is notwithstanding
periods of interruption (or disconnection) which were not particularised with
any degree of tolerable satisfaction.
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78. There is accordingly a debt that is due and owing to the applicant for holding-
over damages and service charges. The applicant is not required to prove
the full extent of the debt for purposes of placing reliance on section
345(1)(a). What matters is that the debt exceeds the statutory minimum,
which I am satisfied is the case.
79. The respondent has in the circumstances failed to discharge the onus of
demonstrating that its indebtedness to the applicant has indeed been
disputed on bona fide and reasonable grounds. My conclusion eliminates the
need to decide if the applicant engaged in abuse of process.
The Respondent’s Insolvency
80. There are various ways to prove a company's inability to pay its debts.
Evidence that a company has failed on demand to pay a debt which is due is
cogent prima facie proof of inability to pay its debts . The underlying rationale
stems from the fact that a concern without financial difficulties should be
capable of meeting its obligations using current revenue or readily available
resources (Rosenbach & Co (Pty) Ltd v Singh's Bazaars (Pty) Ltd 1962
(4) SA 593 (D) at 597).
81. Armed with the presumption that the respondent is unable to pay its debts
following a statutory demand which did not yield a positive result , the
respondent retains the right to assail the conclusion of law that flows from the
failure to properly respond to a statutory demand (Ter Beek at 332C; Body
Corporate of Fish Eagle v Group Twelve Investment 2003 (5) SA 414 (W)
at 428B -C). The question involves an analysis of the facts that either
establish or refute its solvency.
82. The SCA has traditionally accepted that the best barometer to determine an
inability to pay is commercial insolvency: the inability of a company to pay its
debts as they fall due ( Boschpoort Ondernemings (Pty) Ltd v Absa Bank
Ltd 2014 (2) SA 518 (SCA) at paragraphs 16 to 18). If a company is
commercially insolvent, it is liable to be wound -up in terms of the provisions
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of the 1973 Companies Act ( Murray and Others NNO v African Global
Holdings (Pty) Ltd and Others 2020 (2) SA 93 (SCA) at paragraph 23).
83. However, the SCA has more recently set its face against the employment of
commercial insolvency as the sole measure of a company’s inability to pay its
debts as appears from the majority judgment of Norman AJA (Mokgohloa
ADP and Mocumie JA concurring) in Selective Empowerment Investments
Ltd v Companies and Intellectual Property Commission 2025 (6) SA 496
(SCA) The majority held that in determining whether a company can pay its
debts, it demands an assessment of its assets and liabilities (i.e. factual
solvency) and not merely an interrogation of whether it is commercially
insolvent (at paragraphs 136 and 144).
84. The minority judgment delivered by Koen JA, with Unterhalter JA concurring,
found that commercial insolvency remains sufficient to justify a winding -up of
a company (see paragraph 35). It lies beyond my scope to decide the issue,
and it may be necessary for the SCA to revisit the question in time to come. It
will suffice for present purposes to consider the facts with both tests in mind.
85. Turning to commercial insolvency first, the primary question is whether the
respondent has assets that are readily realisable to meet its liabilities as they
fall due in the ordinary course of business ( Murray at paragraph 28). It
includes cash, banking facilities such as an overdraf t, book debts or readily
tradeable assets such as marketable securities that can be realised in quick
time to generate cash for purposes of settling debts. If a company lacks
access to these assets or does not own them, it is unable to pay its debts as
they fall due.
86. During the hearing Mr Griesel sought the court’s leave to file supplementary
heads of argument on the question of the respondent’s commercial solvency.
After granting the request, I allowed the applicant to submit additional heads
After granting the request, I allowed the applicant to submit additional heads
of argument in response. However, Mr Griesel's heads of argument
contained several submissions that amounted to evidence that would have
been more appropriately presented in a supplementary affidavit. No
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application for leave was made to file a supplementary affidavit, and I am not
prepared to have regard to these submissions to the extent that the y are
intended to place new facts before me not contained in the respondent’s
answering affidavit.
87. The answering affidavit presents no substantive evidence indicating the
respondent's commercial solvency, other than a brief and unsupported
assertion to that effect. It was necessary for the respondent to take the court
into its confidence by placing evidential material of a financial nature before
the court to show that it has cash in hand , or other assets that are readily
tradeable to generate cash for purposes of meeting its ongoing liabilities as
and when they fall due. While reference is made in paragraph 10.3 of the
answering affidavit to the applicant’s assets, they are not readily realisable
and do not support the respondent’s commercial solvency.
88. Audited financial statements are typically helpful in proving commercial
solvency (Storti v Nugent and Others 2001 (3) SA 783 (W) at 808 H). They
will presumably reflect a balance sheet that records the company’s available
cash reserves and a cash statement that speaks directly to the issue. No
financial statements were presented. In the absence of financial statements,
management accounts may potentially shed light on the issue, but these
were not provided either. No explanation was given for why these records
were not made available. The inference is inescapable that their disclosure
would not have supported the respondent’s commercial solvency.
89. Because of this, and the absence of supporting evidence:
89.1. it is difficult to assign any weight to statements in the respondent’s
answering affidavit that assert commercial solvency;
89.2. the allegations in the respondent’s supplementary heads of
arguments denying that it is commercially insolvent and claiming that
its business operations are still "active and viable ” offer no
assistance to the respondent’s case.
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90. It does not assist the respondent either to argue that its payment of
R488 469.04 on 8 February 2024 in settlement of the historic indebtedness is
indicative of its commercial solvency. It does not shed light on the
respondent’s more recent or current financial position, but the amount is in
any event significantly less than the indebtedness the applicant alleges to be
outstanding. The respondent's offer to purchase the property does not, in
itself, demonstrate commercial solvency, as it does not necessarily indicate
the availability of sufficient cash resources to complete the transaction.
91. I am in the circumstances unable to find that the respondent is commercially
solvent with my conclusion making it unnecessary to consider the import of
the nulla bona return on these proceedings.
92. When one interrogates the respondent’s case on factual solvency, regard
must be had to the following allegations in the answering affidavit:
"10.2 Notwithstanding the afore -going, the Respondent has net assets which
significantly exceed the value of the Applicant's purported debt and it is able
to pay the disputed debt should same be proven to exist.
"10.3 The Respondent holds, inter alia, the following assets, namely:
10.3.1 Immovable property better known as No. 1[...] H[...] Avenue,
Northcliff with an approximate value of R35,000,000.00 with a
bond registered over the property in the approximate amount of
R10,000,000.00.
10.3.2 Mercedes G Class 63 with an approximate value of
R4,000,000.00, with an [sic] hire purchase agreement in respect
of the vehicle in the approximate amount of R2,800,000.00.
10.3.3 It is already established from the value of these assets listed
herein that the assets of the Respondent far exceed the value of
the Applicants [sic] alleged claim and in the premises the
Respondent is able to demonstrate its factual solvency ."
(emphasis added)
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93. No evidence has been presented to establish the respondent’s ownership of
the motor vehicle, nor is it possible to determine its current value given the
outstanding financing amount of two million rand. No facts are alleged to
show that the instalments are being paid on a monthly basis.
94. It is not in dispute that the respondent is the owner of the property located at
No. 1[...], H[...] Avenue. However, there is no evidence provided to support
that the actual market value of the property is R35 million.
95. One would have expected more cogent evidence on this score, particularly
since t he valuation of non -cash assets is difficult to determine and highly
subjective. Courts remain vigilant to the possibility that debtors may overstate
the value of such assets to create an appearance of solvency ( Boschpoort
Ondernemings, paragraph 7). Given these considerations, I give the figure
no weight.
96. The respondent ignores that the property is mortgaged to Standard Bank and
Standard Bank Guarantee Company for R16 million. Its answering affidavit
made no mention of the fact that Standard Bank Guarantee instituted
proceedings against the respondent claiming cancellation of the loan
agreement and payment of R8 262 726.64 as a result of the respondent’s
default of its monthly instalment payment obligations. The applicant brought
these facts to the attention of the court in reply to respond to the respondent’s
allegations that the property is mortgaged.
97. The respondent’s supplementary heads of argument sought to meet these
allegations in reply by stating that they constitute new matter with the result
that the replying affidavit should be struck out.
98. I see no basis to do so. The rule that a party is precluded from raising new
matter in reply is not immutable and the law reports are replete with cases
where the rule has been relaxed. It is not necessary to do so in this instance
since these allegations are not strictly speaking new matter.
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99. The respondent could also have requested leave to file a supplementary
answering affidavit to address these matters. It chose not to and the
inference is justified that it had no grounds to dispute these facts . In sum, I
find that the allegations in the answering affidavit do not show the
respondent’s assets are greater than its liabilities.
Conclusion
100. I am satisfied that on an assessment of the facts , there are no genuine
factual disputes concerning the existence of the applicant’s claim with the
result that the debt is not bona fide disputed on reasonable grounds.
101. For all the reasons stated, the applicant has made out a proper case for the
final winding-up of the respondent and I make an order in the following terms:
101.1. The respondent is placed under final winding -up in the hands of the
Master of the High Court.
101.2. The costs of the application are to be costs in the winding -up of the
respondent.
___________________________
C BESTER
ACTING JUDGE OF THE HIGH COURT
JOHANNESBURG
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Heard: 6 November 2025
Supplementary Submissions Received: 10 November and 13 November 2025
Delivered: 26 February 2026
For the Applicant:
AW Pullinger
S Mamoepa
Fairbridges Wertheim Becker
For the Respondent:
P Griesel
WADP Attorneys