IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION , PRETORIA
Case No: 2025-031785
1) REPORTABLE: NO
2) OF INTEREST TO OTHER JUDGES:
NO
3) REVISED .
... . ~ 06 May 2026
S~ DATE
In the matter between:
HUI ZHUANG First Applicant
YULAN SHI Second Applicant
and
EMPIRE PURIFICATION (PTY) LTD Respondent
ALLAN HENDERSON Second Respondent
CINDY HENDERSON Third Respondent
PETRU HENDERSON Fourth Respondent
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JUDGMENT
MM MOJAPELO AJ:
Introduction
[1] This is an application for the winding-up of a private company, Empire
Purification (Pty) ltd, brought by a married couple, one of whom is its shareholder, on
the grounds of commercial insolvency and, principally, that it is just and equitable to
do so. The matter also involves a counter-application by the remaining shareholders,
who resist liquidation and seek instead a court ordered buy out of the applicants'
interest under section 163 of the Companies Act 71 of 2008. At its heart, this case is
about the breakdown of a business relationship between two groups of shareholders
who came together with different skills and resources to build a company, but who
have since found themselves in an irretrievable deadlock that neither side disputes.
The Parties
[2] The first applicant is Hui Zhuang, a Chinese national who, together with the
second applicant, provided the initial capital for the establishment of the company. The
second applicant is Yulan Shi, who holds 40 shares in the first respondent,
representing a 40% shareholding, and who is a director of the company.
[3] The first respondent is Empire Purification (Pty) Ltd, a private company duly
incorporated and registered in accordance with the laws of the Republic of South
Africa, with registration number 2019/041956/07. The second respondent is Allan
Henderson, who is a director of the company. He is married to the third
respondent, Cindy Henderson, who holds a 30% shareholding in the first respondent.
The fourth respondent is Petru Henderson, the sister-in-law of the second respondent,
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who holds the remaining 30% shareholding in the first respondent and is likewise a
director thereof.
[4] It is a matter of procedural record that when this application was initially
launched, the first respondent was cited as the sole party to the proceedings. The
second, third, and fourth respondents subsequently sought joinder to the main
application as respondents and simultaneously assumed the role of co-applicants in
the counter-application. The joinder application is not opposed and should as a matter
of course, be granted.
[5] This intervention by the individual respondents is telling. It signifies a
recognition by the parties that the true dispute lies not in the company's separate
corporate personality, but in the underlying rights and obligations existing between the
natural persons who comprise its membership. Their joinder confirms the
characterization of the first respondent as a domestic company and brings into sharp
focus the "quasi-partnership" nature of the entity.
The Formation of the Company
[6] Empire Purification (Pty) Ltd was incorporated and registered in the Republic
of South Africa during 2019, under registration number 2019/041956/07. The
company was established as a vehicle for a joint venture between the applicants, who
are Chinese nationals and who provided the financial capital necessary to establish
and grow the business, and the Henderson family, who brought with them the
operational expertise, local knowledge, and management capacity required to run the
enterprise on a day-to-day basis. The business of the company is the purification and
supply of water, a sector that requires both technical know-how and sustained
operational involvement.
[7] From its inception, the company was structured as a closely held entity with a
small number of shareholders who were personally known to one another and who
entered into the venture on the basis of a relationship of mutual trust and confidence.
entered into the venture on the basis of a relationship of mutual trust and confidence.
The shareholding was divided such that the second applicant, Ms Shi, held 40
shares representing a 40% interest, while Cindy Henderson and Petru Henderson
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each held 30 shares representing a 30% interest apiece, giving the Henderson family
a combined majority of 60% of the issued share capital. The first applicant, Mr Zhuang,
was not a registered shareholder but contends that he provided substantial financial
resources to the company by way of loans, and that he is accordingly a creditor of the
company in his own right.
[8] The arrangement, as it was understood by the applicants, was that Ms Shi and
Mr Zhuang would provide the capital and financial backing for the venture, while the
Hendersons would manage and operate the business. This division of roles, capital
on the one side and operational management on the other, is a common feature of
joint ventures of this kind, and it is precisely the kind of arrangement that the courts
have recognised as giving rise to a quasi-partnership, notwithstanding the formal
corporate structure through which it is conducted. For a period following its
incorporation, the company appears to have operated without significant incident, and
the business grew under the day-to-day management of the Henderson family.
The Breakdown of the Relationship
[9] The relationship between the shareholders began to deteriorate over time, and
by the latter part of 2024, it had broken down to the point where the parties were no
longer able to work together or to agree on the future direction of the company. The
precise causes of the breakdown are disputed, and the papers reveal a number of
contested factual issues which are addressed in greater detail below. What is not in
dispute, however, is that by December 2024, the relationship had deteriorated to such
an extent that the respondents' own attorneys wrote to the applicants' attorneys stating
that it appeared just and equitable that the company be liquidated. A second letter to
a similar effect followed in March 2025. Notwithstanding those concessions, the
parties were unable to reach an agreement on the terms of a separation, and the
parties were unable to reach an agreement on the terms of a separation, and the
applicants ultimately launched the present application.
The Issues for Determination
[1 0] The issues which this court is called upon to determine are the following:
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10.1. Whether the respondents have established the jurisdictional
requirements for relief under section 163 of the Companies Act 71 of
2008, and if so, whether the court should exercise its discretion to
order a buy-out of the applicants' interest at the price proposed by the
respondents or at a fair value to be determined by an independent
accountant.
10.2. Whether, in the event that the section 163 counter-application fails,
the applicants have established that it is just and equitable to wind up
Empire Purification (Pty) ltd under section 81 (1 )(d)(iii) of the
Companies Act 71 of 2008.
10.3. Whether the applicants have established the commercial insolvency
ground for winding-up, having regard to the disputed loan accounts
claimed by Mr Zhuang and Ms Shi.
10.4. What order, if any, should be made in respect of the costs of both the
main application and the counter-application.
[11] Before turning to the merits, it is appropriate to observe that this matter was
argued on the papers as they stand, without the resolution of any disputes of fact by
way of oral evidence. Where disputes of fact arise on the affidavits, the court has
applied the well-known approach in Plascon-Evans Paints Ltd v Van Riebeeck Paints
(Ply) Ltd 1984 (3) SA 623 (A), namely that where there is a genuine dispute of fact
which cannot be resolved on the papers, the matter must generally be decided on the
respondents' version, unless that version is so far-fetched or clearly untenable that it
falls to be rejected on the papers alone. However; as will become apparent from the
analysis that follows, the resolution of the principal issues in this matter does not
ultimately turn on the disputed factual questions, but rather on the legal framework
applicable to quasi-partnerships and the undisputed fact of the irretrievable breakdown
of the relationship between the shareholders
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Chronology of Correspondence: Liquidation, and Proposed Sale of Shares
[12] During February 2024, the first material step on the papers appears to have
been an approach by Allan Henderson to Shane, the second applicant's brother,
enquiring whether Yulan Shi would be prepared to sell her shares in the company. On
the respondents' version, this approach was accompanied by a valuation and an
indication that Henderson was prepared to purchase Shi's interest for
approximately R1 million. This is significant because it shows that the dispute initially
manifested itself not as an immediate liquidation dispute, but as an attempt to engineer
a separation by means of a share sale.
[13] That proposal then moved into attorney correspondence. In a letter dated 24
May 2024 (referred to in the papers as annexure AH3), the applicants'
attorney recorded that the possible purchase and sale of Shi's shareholding had
already been discussed and that specific offers had been made by Henderson. The
applicants' attorney stated that he had been instructed to assist in negotiating the
purchase price and the possible sale of the shares in order to finalise matters between
the parties and proposed that a meeting be convened to facilitate the calculation and
documentation necessary for a sale. At that stage, therefore, the correspondence
reflects that the parties were still exploring a consensual exit.
[14] The negotiations continued in June 2024. On 16 June 2024, the respondents
communicated further regarding valuation, and on the same date, the applicants'
attorney responded that Shi would consider an offer of R1 403 194.00, provided that
it could be confirmed to be a valid and market-related offer. Shortly thereafter, on 20
June 2024, the respondents provided further clarification as to how the figure was said
to have been made up, including reference to the value attributed to the shares and
the loan account. Then, on 24 June 2024, the applicants' attorney requested ba.nk
the loan account. Then, on 24 June 2024, the applicants' attorney requested ba.nk
statements and further figures. This part of the correspondence shows that the
negotiations were already becoming contentious because valuation and financial
disclosure had become disputed.
[15] By 11 September 2024, the tenor of the correspondence had changed
materially. Instead of proceeding with Shi's exit, the applicants' side advanced a
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different proposal, namely that the Henderson side's interest be acquired. On the
papers, this was framed as an offer involving R2 million for the relevant Henderson
shareholding. Thus, by September 2024, the parties were no longer aligned on who
should exit the company; each side was effectively positioning for control of the
business, which is an important marker of the developing deadlock.
[16] The respondents' attorneys rejected that proposal in correspondence
dated 17/18 September 2024 (annexure AH9). That rejection was short and
unequivocal. The significance of this exchange is that, once the applicants ceased
being willing sellers and instead sought to acquire the respondents' interests, the
prospect of a negotiated buy-out became more remote. The correspondence from this
point onward reflects not a cooperative valuation process, but adversarial positioning.
[17] The next phase of correspondence concerned what may fairly be described as
the skirmishes about the company's financial affairs and management. On 21 October
2024, and again more forcefully on 11 December 2024, the applicants' attorney sought
financial documentation and explanations regarding the affairs of the company. In the
applicants' later papers, these requests are linked to complaints about unexplained
expenses, Takealot payments, directors' remuneration, and, in particular, transactions
involving funds allegedly paid to Petru Henderson. Those letters are relevant because
they show that the dispute had by then escalated beyond a mere disagreement about
price and had become a broader challenge to the propriety of the company's
management and financial dealings.
[18] The respondents' attorneys replied on 13 December 2024, and this is one of
the most important pieces of correspondence in the matter. In that letter, the
respondents' attorneys stated, first, that Ms Shi had . ·never been involved in
management, secondly, that their clients again extended; an offer to purchase her
management, secondly, that their clients again extended; an offer to purchase her
shares, and, critically, thirdly, that "having regard to the correspondence and contents
thereof, it appears that it would be just and equitable that the company be
liquidated." The same letter added, as an alternative, that Shi could consider
purchasing the shares of the other two shareholders, in which event she would
become the 100% shareholder. This letter is plainly important because it contains an
express statement by the respondents' attorneys that liquidation appeared to be the
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appropriate just and equitable outcome, while at the same time still leaving open the
possibility of a buy-out either way.
[19] The applicants' attorney responded on 20 January 2025. In that letter, he
recorded that instructions had been taken regarding paragraphs 10 and 11 of the
respondents' letter and requested a clear indication of the amount offered for Shi's
shares, as well as the amount the respondents would accept for the sale of their own
shares. This letter is important because it demonstrates that the applicants did not
immediately accept liquidation as the only path but still attempted to ascertain whether
a clean commercial separation by means of a buy-out remained possible.
[20] Matters escalated further in the correspondence dated 27 February 2025. In
that letter, the applicants' attorney stated expressly that it was clear that the parties
were "unwilling and/or unable to continue the business relationship." He recorded that
an offer had been made by the respondents to purchase Shi's shares and loan account
for R2 250 000.00, formally declined that offer, and then made a counterproposal that
the applicants would purchase the shares and loan accounts of Cindy Henderson and
Petru Henderson for the same amount of R2 250 000.00. This is a highly material letter
because it contains an express acknowledgement, from the applicants' side, that the
relationship had broken down and that a continuing business relationship was no
longer viable.
[21] According to the papers, that counter-offer was required to be accepted by 28
February 2025, failing which it would lapse, and no acceptance was received in time.
The failure of this proposed buy-out is significant because it appears to be the last
serious attempt to resolve the deadlock by means of a negotiated sale of shares.
[22] On 4 March 2025, the respondents' attorneys sent a further important letter,
annexed in the replying papers as XR4. In that letter, they rejected the applicants' offer
annexed in the replying papers as XR4. In that letter, they rejected the applicants' offer
to purchase their shareholding. More importantly, they stated that they held
instructions "to proceed with the liquidation of the Company' and asked the applicants'
attorneys to confirm an address at which the application for liquidation could be
served. This is the second crucial letter from the respondents' attorneys expressly
indicating that the company should be liquidated. Read together with the letter of 13
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December 2024, it strongly supports the contention that, at least before the litigation
positions hardened, the respondents themselves regarded liquidation as the proper
course.
[23] The applicants' papers also refer to a further without prejudice letter dated 5
March 2025, in which a final offer was made to purchase the respondents' entire 60%
shareholding for R3 million, said to be an attempt to recover a company allegedly
created and funded by the applicants. Whether that proposal remained open and
capable of acceptance is disputed on the papers, but for present purposes, it is another
indication that, right up to the eve of litigation, the parties were still oscillating between
two possible exits: either a sale of shares or liquidation.
[24] The liquidation application was then launched on 7 March 2025. On the
applicants' version, the application followed after repeated unsuccessful attempts to
achieve a buy-out and in circumstances where the respondents' own attorneys had
twice stated, in writing, that liquidation was the appropriate course. Thereafter,
however, the respondents changed their stance in the litigation and resisted
liquidation, contending instead for relief under section 163 and for an order compelling
Shi to sell her shares.
[25] In summary, the correspondence reveals a clear progression: first, an
attempted purchase of Shi's shares by the Henderson side; second, disputes over
valuation and disclosure; third, increasingly hostile exchanges concerning the
company's financial affairs and alleged irregularities; fourth, express written
statements by the respondents' attorneys on 13 December 2024 and 4 March
2025 that the company ought to be liquidated or that they held instructions to proceed
with liquidation; and finally, the collapse of all buy-out proposals, followed by the
institution of liquidation proceedings and the respondents' later volte-face in seeking
to compel a ·sale by way of section 163 relief.
to compel a ·sale by way of section 163 relief.
The Respective Cases of the Parties on the Mode of Separation
[26] It is common cause, and indeed apparent from the correspondence traversed
above, that both sides accept that the relationship between the shareholders has
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broken down irretrievably and that a separation of interests is inevitable. The dispute
before this court is therefore not whether the parties should part ways, but
rather how that separation should be effected. The applicants contend that the
appropriate mechanism is a final order of liquidation under section 81 (1 )(d)(iii) of the
Companies Act 71 of 2008, on the grounds that it is just and equitable to wind up the
company. The respondents, by contrast, resist liquidation and seek relief
under section 163 of the Act, contending that the appropriate remedy is a court
ordered buy-out of the applicants' interest at a price to be determined.
The Applicants' Case
[27] The applicants press for liquidation on two grounds, namely commercial
insolvency and the just and equitable ground. In practice, the weight of their case rests
on just and equitable grounds. They submit that Empire Purification (Pty) Ltd is a
quasi-partnership, being a small, closely held company founded on a relationship of
mutual trust and confidence between the shareholders, and that the trust which
underpinned that relationship has been irretrievably destroyed. They rely on the well
established principle, affirmed in Knipe and Others v Kameelhoek (Pty) Ltd and
Another 2014 (1) SA 52 (FB), that where a domestic company of this nature has been
reduced to a state of deadlock and the personal relationship between its shareholders
has collapsed beyond repair, the court is entitled and in appropriate cases obliged to
wind it up on just and equitable grounds, even where the company remains technically
solvent.
[28] The applicants further submit that the respondents' own conduct and
correspondence fortify this conclusion. They point, in particular, to the two letters from
the respondents' attorneys, dated 13 December 2024 and 4 March 2025, in which the
respondents' attorneys expressly stated that it appeared just and equitable that the
respondents' attorneys expressly stated that it appeared just and equitable that the
company be liquidated and that they held instructions to proceed with liquidation. The
applicants contend that these admissions are not merely relevant to the factual
question of breakdown; they go further and constitute a concession by the
respondents themselves that the jurisdictional requirements for a just and equitable
winding-up are satisfied. On this basis, the applicants argue that the respondents'
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current resistance to liquidation is opportunistic and inconsistent with the position they
adopted before the litigation commenced.
[29] In addition, the applicants rely on what they describe as a pattern of financial
irregularities and exclusion from the affairs of the company. They contend that the
second applicant, Ms Shi, was excluded from management, denied access to financial
information, and that unexplained transactions, including payments of
approximately R440 000 to Petru Henderson, were effected without her knowledge or
consent. These allegations, they submit, reinforce the conclusion that the relationship
has broken down and that no meaningful participation in the company's affairs remains
possible for the applicants.
[30] The applicants further contend that the commercial insolvency ground is
established by reason of the loan account owed to the first applicant, Mr Zhuang, which
they place at approximately R4.1 million, and the outstanding loan account of Ms Shi,
which they contend exceeds R3.3 million. On their version, the company is unable to
pay its debts as they fall due, and liquidation is warranted on that ground as well. This
version of the applicant's case is highly disputed and the applicants' counsel readily
abandoned it as a ground for the current liquidation application. The court will therefore
not consider this ground.
The Respondents' Case
[31] The respondents do not dispute that a separation is necessary. Their case,
however, is that liquidation is a disproportionate and oppressive remedy in the
circumstances, and that the court should instead exercise its discretion under section
163 of the Companies Act to order a buy-out of the applicants' interest. They contend
that the bringing of the liquidation application itself constitutes conduct that is
oppressive and unfairly prejudicial to the respondents and to the company, within the
meaning of section 163(1), because it threatens to destroy a viable and solvent
meaning of section 163(1), because it threatens to destroy a viable and solvent
business that the Henderson family has built up and managed since 2019.
[32] The respondents submit that the company is financially healthy, pointing to
cash reserves of approximately R1 .4 million and ongoing trading operations. They
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contend that Mr Zhuang is not a creditor of the company and that the commercial
insolvency ground accordingly falls away entirely. On their version, the loan accounts
claimed by the applicants are either non-existent or substantially overstated, and the
financial records of the company do not support the figures advanced by the
applicants. They further submit that Ms Shi was never operationally involved in the
company and that her role was, at best, that of a passive investor, such that her
exclusion from management cannot be characterised as oppressive conduct.
[33] On the question of remedy, the respondents propose that the court order Ms
Shi to sell her 40% shareholding and her loan account to Allan Henderson and Petru
Henderson for R2 million, or alternatively for such fair value as may be determined by
an independent accountant appointed by the court. They contend that this remedy is
less drastic than liquidation, that it preserves the business as a going concern, and
that it is consistent with the approach endorsed in De Wit NO and Another v Smit and
Others 2026 (2) SA 130 (WCC), where the court recognised that a buy-out may in
appropriate circumstances, be a more equitable remedy than winding up. The
respondents further argue that the applicants' true motive in seeking liquidation is not
to vindicate a legitimate grievance but to extract value from a business they did not
build, and that the court should be slow to grant a remedy that would effectively destroy
the livelihoods of those who have managed and grown the company.
The Jurisdictional Requirements of Section 163
[34] What emerges from the respective cases is a fundamental tension between two
competing principles. On the one hand, the applicants invoke the court's jurisdiction to
wind up a quasi-partnership whose foundations have collapsed, relying on the
respondents' own prior concessions as evidence that the jurisdictional threshold is
respondents' own prior concessions as evidence that the jurisdictional threshold is
met. On the other hand, the respondents invoke the court's equitable discretion under
section 163 to fashion a less drastic remedy that: preserves the business, while
contending that the applicants' resort to liquidation is itself an act of oppression. The
resolution of this tension requires the court to determine, first, whether the jurisdictional
requirements for section 163 relief are established on the papers, and secondly,
whether, if they are not, a just and equitable winding-up is the appropriate and
proportionate response to the breakdown that both parties acknowledge has occurred.
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[35] The starting point is the proper construction of section 163 of the Companies
Act 71 of 2008. Section 163(1) confers jurisdiction on the court to grant relief where a
shareholder or director of a company establishes that any act or omission of the
company, or a related person, or the business of the company, has been carried on
or conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly
disregards the interests of, the applicant. The section is a remedial provision of wide
scope, but it is not without limits. As was made clear in De Wit NO and Another v Smit
and Others 2026 (2) SA 130 (WCC), the section requires the establishment of
jurisdictional facts before the court's discretion to grant relief is engaged. Those
jurisdictional facts are substantive in nature: the applicant for section 163 relief must
demonstrate that there has been conduct in the affairs of the company, or in the
exercise of the powers of a director or prescribed officer, that meets the statutory
threshold of oppression, unfair prejudice, or unfair disregard of interests. It is not
sufficient to point to a commercial dispute or a breakdown of relations in the abstract;
the conduct complained of must be identifiable, must relate to the affairs of the
company, and must cross the threshold of unfairness or oppression as those concepts
have been developed in the case law.
[36] Applying those principles to the present matter, the respondents' section 163
case faces a fundamental difficulty. The conduct which the respondents identify as
oppressive or unfairly prejudicial is, in substance, the bringing of the liquidation
application itself. They contend that the institution of proceedings to wind up a solvent
and viable company, in circumstances where the applicants were passive investors
who contributed little to the operational success of the business, constitutes conduct
that unfairly prejudices the respondents and the company. That contention, however,
that unfairly prejudices the respondents and the company. That contention, however,
conflates the exercise of a ,legal right with oppressive conduct in the affairs of the
company. The bringing of a liquidation application is a legitimate invocation of a
statutory remedy. It is not, without more, an act or omission in the conduct of the
company's business or affairs within the meaning of section 163(1 ). To hold otherwise
would be to use section 163 as a shield against the exercise of rights that the
legislature has expressly conferred on shareholders, which is not the purpose for
which the section was designed. The authority in De Wit supports this approach: the
court in that matter was careful to distinguish between conduct that genuinely
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oppresses a shareholder in the context of the company's affairs and conduct that is
merely commercially inconvenient or strategically unwelcome to the opposing party.
[37) Furthermore, the respondents' section 163 case is materially undermined by
their own prior conduct and correspondence. As set out in the chronology above, the
respondents' attorneys stated expressly on 13 December 2024 that it appeared just
and equitable that the company be liquidated, and again on 4 March 2025 that they
held instructions to proceed with liquidation. A party that has itself identified liquidation
as the appropriate remedy, and that has communicated that position in writing to the
opposing party, is in a poor position to contend thereafter that the institution of
liquidation proceedings by the other side constitutes oppressive or unfairly prejudicial
conduct. The respondents' volte-face in this regard is not merely a matter of credibility;
it goes to the heart of whether the jurisdictional threshold for section 163 has been
crossed. If the respondents themselves regarded liquidation as just and equitable at
the time of those letters, it is difficult to see how the applicants' decision to pursue that
very remedy can be characterised as oppressive. The respondents' change of
position, coming as it did only after the litigation commenced and after the applicants
declined to sell their shares at the price offered, has the appearance of a tactical
manoeuvre rather than a genuine grievance rooted in the affairs of the company.
[38) It follows that the jurisdictional requirements of section 163 have not been
established on the papers. The respondents have not identified conduct in the affairs
of the company that meets the statutory threshold of oppression or unfair prejudice.
Their counter-application accordingly falls to be dismissed.
Whether It Is Just and Equitable to Wind Up the Company
[39] The dismissal of the section 163 counter-application does not, of itself,
[39] The dismissal of the section 163 counter-application does not, of itself,
determine the main application. The court must still consider whether the applicants
have established the jurisdictional requirements for a just and equitable winding-up
under section 81 ( 1 )( d)(iii) of the Act. The applicable principles are well settled.
[40) In Apco Africa (Ply) Ltd v Apco Worldwide Incorporated 2008 (5) SA 615 (SCA)
the Supreme Court of Appeal affirmed that, in the case of a quasi-partnership
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company, equitable considerations may justify liquidation even absent proof of actual
operational deadlock. The court emphasised that where the relationship between the
members is rooted in personal confidence, mutual trust and a legitimate expectation
of participation in management, an irretrievable breakdown of that relationship may
itself render it just and equitable that the company is wound up. The enquiry is
accordingly not limited to whether the company can continue to function mechanically
or formally, but extends to whether the substratum of trust and confidence upon which
the association was founded has been destroyed beyond repair. In such
circumstances, the inability to restore the requisite relationship between the parties
may constitute sufficient grounds for liquidation.
[41] The decision in Thunder Cats Investments 92 (Pty) Ltd v Nkonjane Economic
Prospecting & Investment (Pty) Ltd 2014 (5) SA 1 (SCA) is instructive on the ambit of
the "just and equitable" ground for winding-up in terms of s 81 (1 )(d)(iii) of the
Companies Act 71 of 2008. The Supreme Court of Appeal emphasised that the enquiry
is not confined to a numerus clausus of categories but entails a flexible evaluation of
a "cluster of considerations", grounded in equity and fairness.
[42] The Supreme Court of Appeal in Thunder Cats clarified the expansive nature
of the court's discretion under the "just and equitable" ground. At paragraph 14, the
Court held that the specific instances of deadlock enumerated in s 81 (1 )(d)(i) and (ii)
of the Companies Act are merely illustrative and not exhaustive, noting that the
inclusion of the word "otherwise" in s 81 (1 )(d)(iii) serves to extend rather than limit the
grounds for winding-up to include any other species of deadlock. This principle was
further bolstered at paragraph 15, where the Court, drawing on the heritage of section
344(h) of the 1973 Act, affirmed that a winding-up on this basis "postulates not facts
344(h) of the 1973 Act, affirmed that a winding-up on this basis "postulates not facts
but only a broad conclusion of law, justice and equity." Consequently, the "just and
equitable" provision is not confined to.cases analogous to other statutory grounds, nor
is it restricted to a fixed category of circumstances; instead, it provides a flexible
mandate to ensure a just result where the foundational trust of a corporate entity has
vanished.
[43] In Knipe and Others v Kamee/hoek (Pty) Ltd and Another 2014 (1) SA 52 (FB),
the court confirmed that a just and equitable winding-up of a solvent company is
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competent where the company is a quasi-partnership, being a small, closely held
company founded on a relationship of mutual trust and confidence, and where that
relationship has broken down irretrievably.
[44] Turning to the present matter, it is clear that Empire Purification (Pty) Ltd is a
quasi-partnership. It is a small, closely held company with only three shareholders, all
of whom were known to one another personally and who came together on the basis
of a relationship of trust and mutual confidence. The company was not incorporated
as a vehicle for arm's length investment; it was established as a collaborative venture
between the applicants, who provided the capital, and the Hendersons, who provided
the operational expertise and management. That personal dimension to the
relationship is the hallmark of a quasi-partnership, and neither party seriously disputes
that the company has that character.
[45] It is equally clear that the relationship of trust and confidence which
underpinned the quasi-partnership has broken down irretrievably. The breakdown is
not merely asserted by the applicants; it is confirmed by the respondents' own
correspondence. The letters of 13 December 2024 and 4 March 2025 from the
respondents' attorneys, in which they stated that liquidation appeared just and
equitable and that they held instructions to proceed with liquidation, are admissions of
the most direct kind. A party that instructs its attorneys to state, in writing, that the
company ought to be wound up on just and equitable grounds cannot thereafter be
heard to say that the relationship has not broken down to the point where winding-up
is warranted. Those letters, read together with the history of failed negotiations, the
'
disputes over financial disclosure, the allegations of irregular transactions, and the
complete absence of any functioning relationship between the shareholders, paint a
picture of a quasi-partnership that has been reduced to a state of irretrievable
deadlock.
picture of a quasi-partnership that has been reduced to a state of irretrievable
deadlock.
[46] The respondents' contention that a buy-out under section 163 is a less drastic
and more proportionate remedy does not assist them once the section 163 counter
application has been dismissed. The question then becomes whether, in the absence
of a viable alternative remedy, a winding-up order is appropriate. The authority
in Knipe is instructive in this regard. The court in that matter held that where the parties
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cannot agree on a fair price for the shares, and where the offer made by one side is
not accompanied by proper financial disclosure or is not genuinely reflective of the
value of the business, the court will not decline to grant a winding-up order on the
basis that a buy-out remains theoretically available.
[47] In the present matter, the respondents' offer of R2 million for the applicants'
interest has been disputed from the outset. The applicants contend that the offer does
not reflect the true value of the business and does not account for the loan accounts
they claim are outstanding. The respondents have not provided full financial disclosure
in support of their valuation, and the history of the negotiations reveals that the parties
have been unable to agree on a price despite extended correspondence. In those
circumstances, the court cannot be satisfied that a buy-out at the price proposed by
the respondents would be fair or that it would constitute a genuine and adequate
remedy for the applicants.
[48] It is also relevant that the applicants have raised allegations of financial
irregularities in the management of the company, including unexplained payments to
Petru Henderson and disputes about the accuracy of the financial records. Those
allegations have not been adequately answered in the papers. While the court is not
in a position to make final findings of fact on disputed affidavit evidence, the existence
of unanswered allegations of this nature is a further factor that weighs in favour of
winding-up, since it suggests that the affairs of the company may not have been
conducted with the transparency and propriety that the applicants were entitled to
expect as shareholders.
[49] Taking all of these considerations together, the court is satisfied that it is just
and equitable to wind up Empire Purification (Pty) Ltd. The company is a quasi
partnership whose foundational relationship of trust has collapsed beyond repair. Both
partnership whose foundational relationship of trust has collapsed beyond repair. Both
parties have, at various points, acknowledged that liquidation is the appropriate
outcome. The respondents' section 163 counter-application has failed to establish the
jurisdictional requirements for that relief. No viable alternative remedy has been placed
before the court that would adequately protect the applicants' interests. In those
circumstances, a final order of winding-up is both warranted and proportionate.
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[50] For completeness, it is noted that the applicants also press for liquidation on
the ground of commercial insolvency, relying on the loan accounts allegedly owed to
Mr Zhuang and Ms Shi. That ground is contested on the papers, and the disputes of
fact regarding the existence and quantum of those loan accounts cannot be resolved
on motion proceedings. However, given that the just and equitable ground has been
established independently and without reference to the commercial insolvency
ground, it is not necessary for the court to resolve those factual disputes in order to
grant the relief sought. The winding-up order will accordingly be granted on the just
and equitable ground alone.
Conclusion
[51] It has been demonstrated above that both parties agree that the relationship
between the shareholders of Empire Purification (Pty) Ltd has broken down
irretrievably and that a separation of their respective interests is unavoidable. The
dispute before this court has accordingly been confined to the appropriate mode of
that separation. Having considered the papers, the authorities, and the submissions
of counsel, the court is satisfied that the respondents have failed to establish the
jurisdictional requirements for relief under section 163 of the Companies Act 71 of
2008, and that the applicants have, on the other hand, established that it is just and
equitable that the company be wound up.
[52] The section 163 counter-application falls to be dismissed for the reasons set
out above. In summary, the conduct identified by the respondents as oppressive or
unfairly prejudicial amounts, in substance, to nothing more than the exercise by the
applicants of a statutory right to seek the winding-up of a company in which they hold
a substantial interest.. That is not conduct in the affairs of the company that crosses
the threshold of oppression or unfair prejudice within the meaning of section 163(1 ).
The respondents' case is further fatally undermined by their own prior written
The respondents' case is further fatally undermined by their own prior written
concessions that liquidation was just and equitable, concessions which they have
sought to resile from only after the litigation commenced and after the negotiations
over a buy-out broke down. That conduct is inconsistent with the good faith that equity
demands of a party seeking relief under section 163, and it deprives the respondents'
counter-application of the moral foundation upon which such relief must rest.
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[53] The just and equitable ground for winding-up has been established clearly and
on multiple bases. The company is a quasi-partnership in the sense recognised
in Knipe and Others v Kameelhoek (Pty) Ltd and Another 2014 (1) SA 52 (FB). The
personal relationship of trust and confidence that underpinned that quasi-partnership
has collapsed beyond any prospect of repair. The respondents' own attorneys
confirmed as much in writing on two separate occasions. No fair and genuine offer of
a buy-out has been placed before the court that would constitute an adequate
alternative remedy. The allegations of financial irregularities in the management of the
company remain unanswered. In these circumstances, a winding-up order is not
merely available; it is the only remedy that will do justice between the parties.
Costs
[54] I turn to the question of costs. The ordinary rule is that costs follow the event.
That rule is subject to the court's discretion, which must be exercised judicially and in
accordance with the equities of the case. In contests of this kind involving a small,
domestic/quasi-partnership company and allegations that directors/shareholders have
acted in a manner prejudicial to a co-owner, courts routinely have regard to the parties'
conduct in the litigation when fixing costs. This approach is supported by the
authorities referred to herein above, Thunder Cats Investments, Knipe and Others
and De Wit NO. These decisions confirm that where the trust and confidence
underlying a quasi-partnership have evaporated, the court's equitable discretion
extending to costs must be exercised to prevent one party from unfairly burdening
another with the expense of unnecessary litigation.
[55] In exercising my discretion, I find the following features of the respondents'
conduct to be of particular concern:
55.1. The respondents, through their legal representatives, explicitly
conceded the necessity of liquidation on two occasions prior to the
conceded the necessity of liquidation on two occasions prior to the
launch of this application. In a letter dated 13 December 2024
(Annexure "X3" to the Founding Affidavit), the respondents' attorneys
stated at paragraph 11 that "it appears that it would be just and
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equitable that the company be liquidated." This stance was reaffirmed
in a letter dated 4 March 2025 (Annexure "XR4" to the Replying
Affidavit), in which they stated they held "instructions to proceed with
the liquidation of the Company."
55.2. The respondents' subsequent reversal of this position upon the filing
of the applicants' papers was entirely unexplained and highly
opportunistic. By opposing the very relief they had previously
championed, the respondents caused the applicants to incur
substantial legal costs that were inherently avoidable. This type of
volte-face is deprecated in our law as it unnecessarily multiplies trials
and burdens the court's roll.
55.3. Furthermore, the respondents' litigation conduct, characterised by the
late disclosure of material financial information and the advancement
of a counter-application under section 163 that lacked a sound
jurisdictional basis, materially prolonged these proceedings. Such
conduct echoes the prejudicial behaviour addressed in De Wit, where
costs (including two counsel) were awarded against directors whose
contrivances forced unnecessary litigation.
[56] While the applicants did not seek punitive costs, the complexity of the matter
and the respondents' role in inflating the litigation requirements justify costs for senior
counsel on scale C. As observed in Thunder Cats and Knipe, where a party's
opposition is found to be obstructive rather than bona fide, the court is entitled to
ensure the successful party is not out of pocket for costs necessitated by such
opposition.
Order of Court
[57] In the result, the following order is made:
1. Allan Henderson, Cindy Henderson and Petru Henderson are hereby
joined as second, third and fourth respondents, respectively.
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2. The counter-application by the second, third, and fourth respondents is
dismissed with costs, including costs of senior counsel on scale C.
3. The first respondent, Empire Purification (Pty) Ltd (Registration Number:
2019/041956/07), is placed under provisional winding-up in the hands of
the Master of the High Court, on the ground that it is just and equitable to
do so, as contemplated in section 81 ( 1 )( d)(iii) of the Companies Act 71 of
2008.
4. A rule nisi is hereby issued, returnable on 15 June 2026, calling upon all
interested parties, including creditors and members of the first respondent,
to show cause, if any, on the return date, why the provisional order of
winding-up should not be made final.
5. Service of this order shall be effected as follows:
5.1. By the Sheriff upon the first respondent at its registered address;
5.2. By publication in the Government Gazette once; and
5.3. By publication in a local newspaper circulating in the area in which
the first respondent conducts its business, once.
6. The costs of the liquidation application shall be the costs in the liquidation
of the first respondent.
MMMOJAPELO
ACTING JUDGE
HIGH COURT GAUTENG DIVISION, PRETORIA
06 May 2026
Appearances:
Counsel for the Applicant
Attorney for the Applicant
Counsel for the Respondent
Attorney for the Respondent
Adv D van den Bogert
Coombe Inc Attorneys
Adv A P Bruwer
DOV and Chiba Attorneys
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