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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
Case Number: 2024-127825
In the matter between:
In the matter between:
S[...] L[...] R[...] Applicant
and
TEE JAY TRADING (PTY) LIMITED Respondent
(REGISTRATION NUMBER: 1981/009723/07)
Summary
Winding-up – bona dispute on reasonable grounds – discretion
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: YES
10 April 2026 _________________________
DATE SIGNATURE
JUDGMENT
DANIELS AJ
Introduction
[1] This an application for the winding up of the respondent in terms of section 345(1)(a)
and (c) of the Companies Act of 1973 on the basis that the respondent is unable to pay its
debts.
[2] The applicant relies on a debt in the amount of R1 635 207.00 together with interest
thereon, arising from a loan advanced to the respondent from on or about 1 October
2015.
[3] The respondent’s inability to pay the debt is not meaningfully disputed. Whether this
amount constitutes a debt, at all (and whether it is debt that was meant to be repaid), is.
[4] The applicant and Mrs. T[...] J[...] R[...] (the deponent to the respondent’s answering
affidavit) are married. The marriage relationship has broken down, and the R[...]s are in
the throes of a contested (and by all accounts, acrimonious) divorce.
[5] In happier times, the R[...]s were co-directors of the respondent, mari et femme. The
applicant resigned as a director of the respondent on 24 June 2024, and Mrs. R[...] is now
the sole director. The applicant’s resignation coincided, more or less, with the R[...]s’
separation.
[6] In October 2003 the respondent acquired the immovable property, situated at portion
364 (a portion of portion 161) of the Farm Hekpoort 504 with the
intention of a house and
cottages to be built on the property.
[7] The applicant obtained a loan, in his personal capacity, during 2009. This loan was
appropriated towards establishing infrastructure on the property, and to make the property
habitable. This loan was repaid partly by the respondent and partly by its shareholder.
During the period 2015 to 2021 the applicant again borrowed from Standard Bank. The
monies lent and advanced to the applicant by Standard Bank were advanced to the
respondent for purposes of renovations and refurbishments to the property, and new
buildings were erected in the process. This loan is secured by a deed of suretyship by the
respondent in favour of Standard Bank, who also registered a covering bond over the
property.
[8] On receipt of the loan from Standard Bank, the applicant advanced funds to the
respondent, by way of loan, which funds were used by the respondent to improve the
property.
Overview of the disputes and issues
[9] The applicant’s case is, relatively speaking, uncomplicated. The applicant relies on the
debt in the amount of in the sum of R1 635 207.00, which is made up of advances over
the period August 2015 to March 2021. It was made clear in argument (and this is the
case made by the applicant in the affidavits) that the relief sought in this application is
based on, and confined to this (effectively, the second) loan. This debt has not been
repaid and it is reflected as such in the respondent’s annual financial statements which,
up to a point, were co-signed by Mrs. R[...] and the applicant.
[10] The respondent opposes the application on two broad grounds.
[11] First, the respondent contends that the application ought to be refused, because, if it
were to be granted, the Court will in effect sanction and condone fictitious or simulated
claims by the applicant in the financial statements of the respondent, which constitute a
fraud on the respondent, the shareholder (the Lee Jane Trust), Mrs. R[...] and possibly the
fiscus, which financial statements (so the respondent argues) were compiled by the
applicant in breach of his duties as a director of the respondent.
[12] Second, the respondent contends that the application has been brought for the
[12] Second, the respondent contends that the application has been brought for the
ulterior motive of forcing a settlement of the pending divorce action, thwarting the Rule 43
order that was made in the pending divorce action, and undermining the ability of the
divorce Court to make an equitable redistribution of the asset of the respondent. The
asset is the property of which the respondent is the registered owner, and the shares in
the respondent are wholly owned by the Trust.
The disputed debt
[13] Whilst the respondent contends that the application is one that has been launched for
an improper purpose, the main thrust of the respondent’s case is that the debt that forms
the basis of the application, is the subject of a bona fide dispute. Against this background,
the applicable principles ought to be considered.
[14] Liquidation proceedings ought not to be resorted to as a means to “enforce” the
payment of a debt, the existence of which is bona fide disputed on reasonable grounds.
This is known as the Badenhorst rule.1 This was explained in Gap Merchant Recycling
CC v. Goal Reach Trading 55 CC2 by Rogers J (as he then was) as follows:
The rule that winding -up proceedings should not be
resorted to as a means of enforcing payment of a debt,
the existence of which is bona fide disputed on
reasonable grounds, is part of the broader principle that
the court's processes should not be abused. Liquidation
proceedings are not intended as a means of deciding
claims which are genuinely and reasonably disputed …A
distinction is thus drawn between factual disputes relating
to the respondent's liability to the applicant and disputes
relating to the other requirements for liquidation. At the
provisional stage the other requirements must be satisfied
on a balance of probabilities with reference to the
affidavits. In relation to the respondent's liability, on the
other hand, the question is whether the applicant's claim
1 Badenhorst v. Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T) at 347 - 348
2 2016 (1) SA 261 (WCC) at [20]
is disputed on reasonable and bona f ide grounds; a court
may reach this conclusion, even though on a balance of
probabilities (based on the papers) the applicant's claim
has I been made out (Payslip Investment Holdings CC v
Y2K Tec Ltd 2001 (4) SA 781 (C) at 783G – I). However,
where the a pplicant at the provisional stage shows that
the debt prima facie exists, the onus is on the company to
show that it is bona fide disputed on reasonable grounds.
[15] Consequently, where a provisional order is sought and prima facie the indebtedness
exists, the respondent bears the onus to show on a balance of probability that its
indebtedness to an applicant is disputed on bona fide and reasonable grounds.3
[16] Bona fides relate to the respondent’s subjective state of mind, while reasonableness
has to do with whether, objectively speaking, the facts alleged by the respondent
constitute in law a defence.4
[17] The Court in Room Hire5 explained what is required of a respondent, as follows:
…a bare denial of applicant's material averments cannot be
regarded as sufficient to defeat applicant's right to secure
relief by motion proceedings in appropriate cases. Enough
must be stated by respondent to enable the Court…to
conduct a preliminary examination of the position and
ascertain whether the denials a re not fictitious, intended
merely to delay the hearing. The respondent's affidavits must
at least disclose that there are material issues in which there
is a bona fide dispute of fact capable of being decided only
after viva voce evidence has been heard.
3 Kalil v. Decotex (Pty) Ltd 1988 (1) SA 943 (A) at 980B - D
4 Gap Merchant Recycling supra at [26]; see also, Orestisolve (Pty) Ltd t/a Essa Investments v. NDFT Investment Holdings
(Pty) Ltd and Another 2015 (4) SA 449 (WCC) at [9] to [12]
5 Room Hire Co (Pty) Ltd v. Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1165
[18] In Reynolds N.O v. Mecklenberg (Pty) Ltd6 the Court held as follows:
In motion proceedings for relief other than a provisional
sequestration order or a provisional winding -up order, a Court
does not easily reach the conclusion that one or other party to
a dispute of fact has no honest belief in his own allegations
and accor dingly lacks bona fides. In such a case it is not
merely a matter of weighing the probabilities. It has rightly
been observed that a disputed proposition of fact which may
appear relatively probable or improbable in affidavit evidence,
when the words have often been chosen with great care by an
experienced legal draftsman, may assume a dramatically
different aspect when the deponent himself seeks to defend
the proposition in the witness -box. Therefore it is only when
the absence of bona fides of one of the parties in relation to
every relevant dispute of fact is abundantly clear, and
altogether manifest, and substantially beyond question, that a
court is justified in disbelieving the affidavit evidence of one of
the parties and in granting or refusing relief accordingly.
[19] The dispute of a debt must not only be bona fide or genuine but must be on good,
reasonable or substantial grounds. “Genuine” in this context means, not fabricated for the
purposes of the proceedings or not just thought up or advanced without genuine belief.
There can be no genuine dispute if there are not substantial grounds for disputing the
debt.7
[20] Where the other requirements for liquidation (other than the indebtedness) are
opposed and factual disputes are raised, the question is whether on the evidence there is
a prima facie case for the grant of such order which has been established on a balance of
probabilities.8 Where on the affidavits there is a prima facie case (i.e. a balance of
6 1996 (1) SA 75 (W) at 81H
7 Joubert, LAWSA, Vol. 4, Part 3, paragraph 113
8 Henochsberg at pg. 727 - 728
probabilities) in favour of an applicant, then a provisional order of winding up should
normally be granted and save in exceptional circumstances, the Court should not accede
to an application by the respondent that the matter be referred to the hearing of viva voce
evidence.9
[21] Much of the respondent’s case was aimed at the financial statements of the
respondent, and understandably so. The applicant’s position is, simply, that Mrs. R[...]’s
signature on the financial statements is confirmation by Mrs. R[...] (and by implication, of
the respondent) of the debt that is owed to the applicant.
[22] To meet this issue, the respondent has devoted considerable effort towards
illustrating that the financial statements are not what they purport to be, and that the
applicant was solely responsible for the preparation of the financial statements of the
respondent. The case goes further, in an endeavour to show that the debt in question is
fictional, and it is contended that the applicant manipulated the financial statements to the
prejudice of the respondent, the shareholder of the respondent (the Trust), the fiscus and
Mrs. R[...]. This, the applicant is said to have done for his own benefit and the applicant, in
this manner (according to the respondent) knowingly breached his fiduciary duty to the
respondent to act in its best interests.
[23] Mrs. R[...] (now the sole director of the respondent) disavows knowledge of the
financial statements, or how the financial statements were prepared. This, according to
the respondent, was entrusted to the applicant, as an experienced businessman, and it
was accordingly only the applicant who was responsible for the compilation of the
financial statements.
[24] It is the respondent’s position that, to the extent that Mrs. R[...] signed the financial
statements, she did so without knowledge of the loan in question because she trusted the
applicant, as her husband, to compile the financial statements in a proper manner. When
applicant, as her husband, to compile the financial statements in a proper manner. When
Mrs. R[...] was asked to sign the financial statements, she was rushed and hurried by the
applicant, and she never had the opportunity to consider them properly. Whilst Mrs. R[...]
signed the financial statements, historically, she explains that when the applicant
9 Kalil v. Decotex supra at 979 E
requested her to sign the 2022 financial statements, she no longer trusted him and after
taking the financial statements to a chartered accountant she realised that the loans in
question were never authorised and were fictitious. This prompted Mrs. R[...]’s refusal to
sign them, because the annual financial statements incorrectly reflected the loans which
were never agreed to. It is the respondent’s case that Mrs. R[...] never, as a director, had
(or would have) consented to the loan(s) as she herself had made a substantial financial
contributions to the initial purchase of the property from the proceeds of the sale of the
former matrimonial home.
[25] The respondent’s case, at least on this issue, to a large de gree turns on the
contention to the effect that Mrs. R[...] was unaware of the liabilities recorded as such in
the respondent’s financial statements and obviously, the related contentions to the effect
that the applicant had taken sole responsibility for the financial statements, to ultimately
support the point that the financial statements are unreliable and that the applicant had
committed fraud in the compilation of the financial statements.
[26] The respondent’s case is that, in truth, the applicant contributed to family expenses in
terms of his common law duty of support which were administered by the respondent, on
his behalf, and that the respondent was never intended to be (nor was it used as) a
trading entity, and was never expected to make a profit or be a business venture where
the shareholder or the R[...]s would invest funds in the expectation of a return.
[27] The respondent has gone to great lengths to illustrate inter alia how funds paid to the
respondent were for the maintenance and sustenance of the applicant and his family, and
thus, that these were family expenses, and that no income was earned other than that
which was contributed by the applicant.
[28] In Moraitis Investments (Pty) Ltd and Others v . Montic Dairy (Pty) Ltd 10
[28] In Moraitis Investments (Pty) Ltd and Others v . Montic Dairy (Pty) Ltd 10
the Court was confronted by a party denying that a trustee had been authorised by a trust
to conclude a transaction, despite previously – when the transaction was being concluded
– saying that it had been authorised. Wallis JA said this:
10 2017 (5) SA 508 (SCA)
[33] The issue can be summed up in a single, stark question. In executing the
settlement agreement Mr Moraitis said expressly that he was authorised to
represent 'his' trust. In his affidavit he said that he was not so authorised. Why
should we believe that he was lying when he signed the settlement agreement,
but telling the truth in his affidavit?
[29] I accept that the facts in Moraitis are not on all fours with the facts of this application,
but the same principle is applicable, and I am of the view that the respondent is faced with
the same dilemma.
[30] Directors of companies are saddled with certain responsibilities. This includes
responsibility for ensuring that annual financial statements are prepared, and whilst
directors are not expected to carry out the duties and functions of auditors, they
nevertheless take responsibility for providing information, and for the accuracy of the
information that is ultimately relied upon in the process of preparing and compiling annual
financial statements. Directors sign off the annual financial statements, and in doing so,
they give assurances as to the reliability and accuracy of what is recorded in the financial
statements.
[31] Annual financial statements must be prepared, and third parties rely on annual
financial statements. This includes the fiscus and it appears from the respondent’s
affidavits that Mrs. R[...] was alive to the fact that the annual financial statements would be
provided to, inter alia, SARS. If the respondent’s version on this issue is accepted, it
means that the likes of SARS would have been provided with financial statements that
had no bearing in reality. Expenses and liabilities that appeared to be those of a trading
entity, were not legitimate expenses and in fact, expenses were claimed (presumably, as
permissible deductions) despite the respondent, so it is suggested, not being a trading
entity at all.
[32] Against this background, it is in the first instance not clear on what basis it can be said
that the applicant had committed fraud on Mrs. R[...]. I have some difficulty in seeing how
fraud can ever be said to have been committed, when the financial statements where
(according to the respondent) the very fraud is expressly documented, is presented to the
would-be victim of the fraud to sign. It should follow, for the same reasons, that fraud on
the respondent, or the shareholder (the Trust) is not a finding that can be sustained on the
facts of this application.
[33] As for fraud against third parties (the likes of SARS), if fraud has been committed, it
was committed by the directors, that is, by both the applicant and Mrs. R[...]. It would be
nothing short of extraordinary if a director, who had signed annual financial statements,
could seriously say that these were signed in ignorance and that, in fact, the financial
statements were signed without being familiar with the contents. This is not a case where
Mrs. R[...] can say that she was unaware of the fact that she was a director, or that she
was unaware of the need to prepare and sign annual financial statements, or the purpose
of financial statements. It is also not suggested that Mrs. R[...] was asked to sign the
annual financial statements in an incomplete form, and it would not assist Mrs. R[...],
should the respondent ever be taken to task over what is recorded in the financial
statements, to say that she was unaware of what it said.
[34] Much is made of the fact that the latest financial statements were not signed by Mrs.
R[...]. Her refusal to do so, as I understand it, coincided with the breakdown of her
marriage to the applicant, but the more important consideration, is the fact that earlier
financial statements were signed by her, and in the earlier financial statements, the loan in
question was recorded.
[35] The loan in question did not surface in the financial statements, out of the blue. There
is evidence that Mrs. R[...] signed annual financial statements, reflecting the loan in
question, even in 2019 (at the time, putting her signature to the 2017 annual financial
statements of the respondent) and I am not persuaded by the suggestion that Mrs. R[...]
was ignorant and entirely uninvolved. If Mrs. R[...] was not meant to be involved in the
affairs of the respondent, it is not clear why she was appointed as a director to begin with,
affairs of the respondent, it is not clear why she was appointed as a director to begin with,
and it would then have been far simpler for the applicant, as the sole person responsible,
to also be the sole director.
[36] Mrs. R[...] is also the sole director of Hosgro Farm (Pty) Limited and she has been
involved in other businesses, and she is the trustee of another trust, the Rosebank Farm
Trust. Importantly, there is also evidence that Mrs. R[...], on occasion, dealt with the
bookkeeper/accountant of the respondent and it is said that Mrs. R[...] controlled the
respondent’s bank account. On the facts that I have been presented with, I am not
persuaded that Mrs. R[...] was ignorant, or, for that matter, a director of the respondent
only in name.
[37] I accordingly find it highly improbable that this debt, as recorded in the annual
financial statements, would have gone unnoticed, for years, and I am for these reasons
also unable to agree with the submission to the effect that, on the balance of probabilities,
the debt is disputed on bona fide and reasonable grounds, or that it appears to be highly
probable (in the respondent’s words) from the facts that the applicant manipulated the
financial statements to the prejudice of inter alia the respondent. The financial statements
also address a further issue, namely that debts owed to the respondent by the applicant
ought to be set off against the debt in question. The financial statements, however, do not
reflect this debt, and whilst there is some explanation on the papers as to how this debt
(the one owed by the applicant) has been settled, the fact that it does not appear in the
financial statements settles the question.
[38] The case for the fabricated nature of the financial statements turns on the say-so the
respondent (and Mrs. R[...]), which brings me back to what I perceive to the fundamental
shortcoming in the respondent’s case on this issue, namely that I am asked, now, to
disregard what the respondent said before, and I should accept what it says now. Stated
differently, all of what is said in the respondent’s answering affidavit is directly contradicted
by what the respondent and Mrs . R[...] had acknowledged and confirmed in annual
financial statements, more than once. The financial statements provide the clearest
possible evidence, in writing, of the understanding of the parties ( the applicant, the
respondent, and Mrs. R[...]) as to the nature, terms and quantum of the loan in question
and I am accordingly not persuaded that the respondent’s indebtedness to the applicant
and I am accordingly not persuaded that the respondent’s indebtedness to the applicant
is bona fide disputed, on reasonable grounds.
[39] I do not understand the question of commercial insolvency to be genuinely disputed,
and whilst the respondent’s position is that the loan in question is not the type of loan that
has to be repaid, the respondent does not say that, if it is wrong on this question, it is
nevertheless able to repay it. I am accordingly satisfied, in principle (and subject to the
second ground of opposition) that the applicant has made a proper case for at least a
provisional order.
The application for an improper ulterior motive
[40] Against this background, the second basis on which the application is opposed arises
for consideration, and it ought to be considered with reference to the principle that, while
the Court has a discretion to refuse liquidation, the discretion is narrow when dealing with
an unpaid creditor. On any basis, the discretion must be exercised with reference to facts
and circumstances that might justify it and the respondent contends, as I understand it,
that even if the requirements for a winding-up order have been satisfied, I should exercise
my discretion against it.
[41] The respondent contends that this application has been instituted in order to extort a
settlement in the pending divorce proceedings from Mrs. R[...]. According to the
respondent, the pressure point is the property and in the pending divorce, Mrs. R[...] filed
a counter claim for a redistribution of assets in terms of section 7(3) of the of the Divorce
Act 70 of 1979.
[42] One of the assets that Mrs. R[...] claims that ought to be considered for a possible
redistribution is the entire share capital in the respondent, that is held by the Trust. The
Trust is a discretionary inter vivos trust of which the R[...]s and their children are
beneficiaries, and the R[...]s are trustees. It is my understanding that an application has
been brought to join the respondent to the divorce action on the basis that it is the alter
ego of the applicant and Mrs. R[...], and the property ought to be regarded by the divorce
Court as an asset of the applicant and Mrs. R[...] for purposes of a possible redistribution.
The respondent’s concern is that an order that may be made in this application, will
undermine any order for redistribution that may be made, by the divorce Court.
[43] The respondent contends also that this application has been instituted to side-step
the order made in a Rule 43 application on 5 December 2024 inter alia directing the
the order made in a Rule 43 application on 5 December 2024 inter alia directing the
applicant to continue paying the monthly instalments for the personal loan for R1.9 million
that is secured by the respondent’s property, and that entitles Mrs. R[...] to reside on the
property pending the finalisation of the divorce. The concern, as I understand it, is that an
order that may be made in this application will leave Mrs. R[...] destitute.
[44] No order that can be made in this application, would preclude the joinder of the
respondent, or the liquidator of the respondent to the pending divorce. By the same token,
whilst the respondent’s concern is the applicant’s claim against the respondent, the
winding-up of the respondent does not mean that the applicant will help himself, and that
his claim will be settled, in full and without more. A liquidator will be appointed and
whatever payments are made to creditors (which may include more than only the
applicant) will occur in a structured, orderly fashion. The liquidator will have the task of
balancing the potentially competing interests of creditors and, contrary to what the
respondent believes, I am of the view that the divorce Court may in fact benefit from the
involvement of a liquidator in the process that might result in an order whereby assets are
redistributed as part of the ultimate order to be made in the divorce proceedings.
[45] As for the Rule 43 order of 5 December 2024, I do not see that this order permits
Mrs. R[...] to reside on the property, pending the outcome of the divorce. The order does
not say so, and the order was in any event amended on 1 September 2025. The
amended order provides for the property to be marketed and whilst the parties are not
obliged to sell the property, the fact that the parties would market it, suggests that it may
be sold and this is not reconcilable with the suggestion that Mrs. R[...] would have the right
to reside there, indefinitely, or even pending the outcome and finalisation of the divorce
action.
[46] I am, for these reasons, not persuaded that this a case where a residual discretion
should be exercised against the applicant.11
Order:
I accordingly make the following order:
1. The respondent is placed under provisional winding-up;
11 I mention for the sake of completes that on behalf of the applicant, an application was made to strike certain paragraphs
from the respondent’s answering affidavit. This included paragraphs 51 and 53, the words "fictious/simulated loan" in
paragraph 66 and paragraphs 141 to 144, in their entirety. Given the findings that I have made above, I do not consider it
necessary to further consider the application to strike out. The allegations, whilst they are perceived by the applicant as
defamatory, scandalous and vexatious are nevertheless relevant in the context of the respondent’s grounds of opposition
and whilst I have taken these al legations into account, the findings that I have made, above, illustrate that these allegations
have not placed the applicant at any sort of disadvantage.
2. The respondent (and any other person or party with an interest) is invited to show cause
on 25 May 2026 at 10:00 or so soon thereafter as the application may be heard, why the
respondent should not be placed in final winding-up; and
3. The costs of this application are costs in the winding-up.
J. DANIELS
Acting Judge of the High Court
GAUTENG DIVISION, JOHANNESBURG
HEARD ON: 19 March 2026
DELIVERED ON: 10 April 2026
For the applicant: Adv. L Acker
Instructed by: KWA Attorneys
For the respondent: Adv. W B Boonzaier
Instructed by: O’Donovan Attorney