IN TH E HIGH COURT OF SOUTH AFRICA
(GAU TEN G DIYI SON, PRETORI A)
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Case No: A259-2024
I) REPORTA BLE: YES/NO
(2) OF INTE REST TO OT HER JUDGES: YES/NO
(3) REVISED.
NV KIIUMA LO J
SIGNAT RE
NV Khumalo
DATE
29 April 2026
In the matter between :
SHAZIM SOLIMAN
And
B ARTNICK SIGNAT URE DEVELOPMENTS
(Registration number: 2013/113548 -00117
APPELLANT
RESPOND ENT
This judgment was handed down electronically by circulat ion to the parties' representatives by email.
The date and t ime of hand-down is deemed to be 29 April 2026.
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JUDGMENT
Khumalo NV, J (with Nyathi and Millar JJ concurring)
Introduction
[1] This is an appeal noted by the Appellant, Mr Shazim Salim against the whole
order and judgment that was handed down by Manamela AJ on 21 August 2023
dismissing the Appellant's application for the winding up of the Respondent,
Hai1nick Signature Developments. The reasons were handed down on 19 September
2024.
[2] The Appellant brought the application in terms of s 344 (f) read withs 344 (h)
of the Companies Act 61 of 1973 ("the Old Act") alternatively in terms of s 81 ( 1)
( c) (ii) of the Companies Act 71 of 2008, 1 ("the New Act") alleging that the
Respondent is unable to pay its debts as envisaged ins 345 of the Old Act, have on
its own admitted that it is unable to do so, is factually and commercially insolvent
and it is just and equitable that it be wound up.
[3] The court a quo dismissed the application finding that the Appellant has no
locus standi to apply for the winding up order since it failed to prove any of the
alleged grounds especially s 345 (1) of the Old Act that is deemed to be applicable
under a s 344 ( f) winding up, or that the Respondent is factually and commercially
insolvent, or alternative ly that it was just and equitable to wind up the Respondent.
The appeal is with leave of the court a quo.
1 Caseline 002-22 Applicant's Heads of Argument
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[4] The Appellant's brief grounds of appeal are that the court a quo erred in
refusing the Application as it misconstrued the subsection applicable on s 345 (I),
which is s 345 (1) (c) with which it alleges, to have complied. He argues in the
alternative to have shown that it is just and equitable that the Respondent be wound
up which on its own admission is factually and commercially insolvent.
[5] The Appellant, is a businessman and the Respondent is a private limited
liability company duly incorporated and registered in terms of the Companies Laws
of South Africa. The Respondent's sole director and shareholder Mr Bartnick, who
had filed the Respondent's opposing papers and the heads of argument on appeal,
intended to appear in person on behalf of the Respondent. The court raised a concern
about his appearance, since there was no indication that a special permission was
sought and granted for him to appear representing the Respondent. It was ordered
that Mr Bartnick ('Bartnick') cannot appear, however the documents filed to date
will be considered, seeing that winding up proceedings are not regarded to be legal
proceedings per se. 2 A director has authority to represent the company to oppose an
application for provisional winding up,3 however cannot appear formally in a legal
representative capacity as he has no right of appearance in court.4
Factual Background
2 In Kings Pie Holdings Pty Ltd v King Pie (Pinetown) (Pty) Ltd; King Pie Holdings (Pty) Ltd v King Pie (Durban) Pty
Ltd 1998 (4) SA 1240 (D) at 187 held that : "Applications for provisional or final wind ing up of a company are not
"civil proceedings "as envisaged by sub-s (1) (a) since such an application does not result in an order in the nature
of a declaration of rights or of giving or doing something"
3 Venbor (Pty) Ltd v Vendaland Development Co (Pty) Ltd t/a Camp Store 1989 2 SA 619 (V) and Attorney -General
v Blumenthal 1961 4 SA 3133 (T); SA 167 SCA
v Blumenthal 1961 4 SA 3133 (T); SA 167 SCA
4 Manong & Associates ( Pty) Ltd v Minister of Public Works and Another 2010 (2)
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[6] The court a quo judgement succinctly and briefly sets out the factual
background. In this judgment the relevant background is broadly outlined to give
context to the issues raised on appeal.
[7] On 12 March 2019, the Appellant and the Respondent entered into a written
agreement in terms of which the Appellant commissioned the Respondent to
construct a residential property on his site in a secured residential estate. In terms of
the stipulated contract period, the construction was to be brought to practical
completion by 31 January 2020. The Appellant later accused the Respondent of
failure to rectify defects and to complete the construction work within the stipulated
contract period. He thereafter denied the Respondent access to the property. On 17
June 2020 he cancelled the contract on an allegation of breach of contract. He
proceeded to engage the services of an independent third party to complete the
construction. The Appellant alleges to have suffered damages in the amount of
Rl 836 638.85 because of the Respondent's breach and contract cancellation which
he is claiming from the Respondent.
[8] On 26 June 2020 the Respondent raised a dispute against the Appellant for
non-payment of long outstanding payment ce1tificates on building costs and services
rendered. The disputes were referred to arbitration in accordance with the terms of
their contract before an AASA affiliated arbitrator that was appointed on 3 February
2021. A pre-arbitration conference was held between the parties with the Respondent
represented by Bartnick, its sole director. A record of the minutes indicates that the
Respondent had filed a statement of defence and a counterclaim to the Appellant's
claim.
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[9] On 16 May 2022, in the pre-arbitration hearing of the patties and the
arbitrator, it was agreed that the parties are equally liable for the arbitrator's fees and
costs of the arbitration. The arbitrator's fees were payable prior to the
commencement of the arbitration that was set down on 22 July 2022.
[ 1 O] On 18 July 2022, Hartnick addressed a letter under oath to the arbitrator,
which he alleges to have sent in confidence, apprising the arbitrator of the
Respondent's distressed financial situation since 2019 and its running at a loss for
the past 2 years, whilst carrying a very large bad debt as a result of a group of its
clients' failure to pay for the work done. The Arbitrator was requested to consider
whether it was still viable or necessary to proceed with the arbitration, in the light of
the ongoing settlement negotiations initiated by the Respondent and of the advice by
the Respondent's accountant that due to the company not having any current projects
to sustain the company operations or assets to liquify to current cash flow, and
deemed to be an empty shell, that it be deregistered. Also seeing that the Respondent
could not afford an attorney and that the arbitration might run at a risk of nonpayment
for the services rendered.
[11] On 25 July 2022 there was no appearance from the Respondent even though
the arbitrator had advised Hartnick to attend the arbitration. The proceedings were
postponed sine die and the Respondent ordered to pay the wasted costs that included
the arbitrator and the Appellant's costs. The Respondent was later served with an
invoice issued by the arbitrator for his fees dated 25 July 2022 that is pro rata to its
contribution in the amount of R75000. The Respondent in the interim sent a
compromised settlement proposal to the Appellant.
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[ 12] The arbitration proceedings remain pending. The Respondent failed to pay his
contribution towards the arbitration costs and the arbitration awarded wasted costs.
The Appellant as a result proceeded with the application for the provisional
liquidation based on that, the Respondent:
[ 12.1] on its own admission, was factually and commercially insolvent, unable
to pay its debts as they become due and payable, evidenced by the letter to the
arbitrator, highlighting its distressed financial situation.
[12.2] committed various acts of insolvency in terms of the provisions of s 8
of the Insolvency Act, including failing to pay the wasted costs and its portion
of the arbitration costs and the compromised settlement proposal on the
Appellant's claim,
[12.3] was indebted to the Appellant in the amount ofRl 836 638.85, being a
contingent claim, a subject of the current arbitration process, besides also
owing the Arbitrator and the Appellant's wasted costs in terms of the
arbitration award,
[12.4] that it is just and equitable that the Respondent be placed under
provisiona l liquidation in the hands of the master.
[13] The applicable provisions ins 344 read:
344. Circumstances in which company may be wound up by the court.- A
Company may be wound up by the court if:
(I) the company is unable to pay its debts as described in section 345;
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(h) it appears to the court that it is just and equitable that the company
should be wound up.
[14] Whilst s 345 reads:
345. When company deemed unable to pay its debts.- (1) A company or body
corporate shall be deemed to be unable to pay its debts if -
( a) A creditor, by cession or otherwise, to whom the company
is indebted in a sum not less than one hundred rand then due-
(i) has served on the company by leaving the same at its
registered office, a demand requiring the company to pay
the sum so due; or
(ii) ... or
and the company or body corporate has for three weeks
thereafter neglected to pay the sum, or to secure or
compound for it to the reasonable satisfaction of the
creditor,· or
(b) ... or
(c) it is proved to the satisfaction of the Court that the
companv is unable to pay its debts,
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(2) In determining for the purpose of subsection (1) whether a
company is unable to pay its debts, the Courts shall also take into
account the contingent and prospective liabilities of the company.
[15] Section 81 of the Old Act reads:
81. Winding-up of solvent companies by court order
(I) A court may order a solvent company to be wound up if-
(c) one or more of the company's creditors have applied to the court
for an order to wind up the company on the grounds that-
(ii) it is otherwise just and equitable for the company to be wound
up;
[16] The court a quo was not satisfied with the extent to which the Appellant
demonstrated its compliance withs 344 (f) and 344 (h) of the Old Act or alternatively
s 81 ( 1) ( c) (ii) of the New Act to justify the winding up of the Respondent. It
dismissed the Application on the basis that as the Respondent was solvent, the
Appellant failed to prove that the Respondent could not pay its debts as they arise.
[ 17] The court noted that for a pa11y to rely on s 344 (f), it must also comply with
at least one of the requirements ins 345 (1) (a) to (c), the latter section acting as a
mechanism upon which a company, despite its solvent state, may be deemed unable
to pay its debts, which can potentially lead to liquidation proceedings.
Notwithstanding having confirmed that the requirements ins 345 (a) to (c) apply in
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the alternative, it, in what seems to have been an oversight, incon-ectly proceeded to
base its findings only s 345 (1) (a).
[ 18] It was only the Appellant's locus standi to apply for liquidation based on its
prospective claim for wasted costs and contingent claim for damages yet to be
quantified that was taken into consideration, and led the court to find that the
Appellant, as a contingent creditor, failed to prove where and when did he set out
a demand for the awarded wasted costs, as per requirement in terms of s 345 ( 1 )( a).
Moreover, that the Appellant had not presented its bill of costs to the Respondent.
[19] The court was therefore not satisfied that the Appellant has complied with the
requirements for s 345 (1) ( a). It questioned the consideration of the claims as a debt
due, given the fact that the alleged damages debt was a contingent debt the quantum
of which was still to be determined and that of the wasted costs, a prospective debt
yet to be quantified, hence it insisted on the presentation of a bill or demand being
made to determine the inability to pay.
[20] The Appellant correctly points out the court a quo's error in dismissing his
Application having had no regard to s 345 ( 1 )( c ), the correct section applicable, as a
separate and alternate subsection from s 345 (1) (a) for granting an order for the
winding up of the Respondent. It has also misconstrued the implication of contingent
and or prospective debts in establishing commercial insolvency .
[21] Contingent liability is described as one which, by reason of an existing legal
obligation between the creditor and the company (vinculum iuris), may become an
enforceable liability on the happening of some event, whilst the prospective liability
is which by reason of an existing (vinculum iuris) legal obligation between the
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creditor and the company will become an enforceab le liability on a future date or on
a date dete1minable by reference to future events. Section 345 (2) is instructive that
the court should take the contingent and prospective liabilities into account for the
purpose of determining all three scenarios including whether a company is able to
pay its debts.5 This was overlooked by the court a quo that proceeded to consider
these liabilities incorrectly to dete1mine compliance only under s 345 (1) (a) and
finding in that instance that the debts were not due, as a result Appellant failed to
prove an inability to pay.
[22] In Murray & Others v African Global Holdings6 referred to by the court a quo,
the SCA held that:
"The feSI is r1Jther whether u company is ah/e lo meet its currem liabilities.
inc/111/i11g nmfingent and prospectivl! /iahilitil!s as they cu111e due. /11 other 11•ords.
//,(· question is 11·hi!ther the comrwny has c11011xh liquid assl!fs or rl!adi(v realisable
ass!!IS 111·oilahle in order lo ml!el its liahilit ies as and ll'h!:'11 they fi,ll clue (in 1he
ordinary course olb11siness}, and thereafia to be in a position to earn; un normal
trading . :lccording to 1'1c SCA, a company ·s curre111.financia/ position. as ll'el! as
its financial position in the i111111ecliatefi1ture. should be co11siden!d in order to
dewr111ine the con,mercial so!Pency ofa company.
[23] It is therefore instructive that a contingent or prospective liability is not to be
treated as if it were due and payable as the court a quo had done, but as it is, an
immediate future debt and as one of the factors affecting a court's decision on
whether or not the Respondent is unable to pay its debts as they arose.7 Subsection
5 Aylorond Stein NNO v Koekemoer 1982 (1) SA 374 (T) at 380)
6 2020 (2) SA 93 SCA at par 31
7 Barclays Bank v Riverside Dried Fruit CO (Pty) Ltd 1949 (1) SA937 (C) at 949
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2 is considered to extend the meaning of "unable to pay its debts" to the immediate
future. In such a case, one of the question that a court has to consider is whether it is
possible that the contingent or prospective liabilities will become actual liabilities ,
and if so whether the company will probably be able to pay them when they do. If
the answer to the second question is that it will not be able to pay them when they
become actual liabilities as it is in the Respondent's case were even deregistration is
indicated to be imminent, when the company is de facto not functional, the court is
to hold that the company's inability to pay debts is proved. 8
(24] The court a quo as a result misdirected itself in not having regard that the
Appellant 's being a contingent and or prospective creditor is one of the factors to be
taken into consideration as instructed in s 345 (2) for the purpose of s 345 (1) ( c ), to
decide whether there is inability to pay debts. The test remains the same whether the
company 'is able to meet its current liabilities, including contingent and prospective
liabilities as they come due.9 Put slightly differently, it is whether the company 'has
liquid assets or readily realisable assets available to meet its liabilities as they fall
due to be met, in the ordinary course of business and thereafter to be in a position to
carry on normal trading - in other words, can the company meet current demands on
it and remain buoyant?' 10
(25] The court in this instance is satisfied that the Appellant has complied with s
345 ( c) having proven and it being common cause that the Respondent on its own
admission was both factually and commercially insolvent, since it admitted in its
letter to the Arbitrator that it is unable to pay its debts existing and prospective , due
8 Taylor and Steynn NNO V Koekemoer 1982 (1) SA 374 (T) at 380
9 Rosenbach and Co (Pty) Ltd v Singh's Bazaars {Pty) Ltd 1962 (4) SA 593 (D) at 5978-C
9 Rosenbach and Co (Pty) Ltd v Singh's Bazaars {Pty) Ltd 1962 (4) SA 593 (D) at 5978-C
10 ABSA Bank Ltd v Rhebokskloof (Pty) Ltd 1993 (4) SA 436 (C) at 440F-H.
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to its distressed financial situation and to have no cash or liquid assets realizable to
meet such debts as they arise. A fact it confirmed to have been corroborated and
documented by the Respondent's accountant who indicated that it was actually an
empty shell with no cmTent projects to sustain the company operations or assets to
liquify to current cash flow.
[26] The Respondent 's counter allegation that the situation was divulged in
confidence to the arbitrator and therefore could not be used against it, does not apply
in insolvency proceedings as it was clearly explained in Absa Bank Limited v
Hammerle Group (Pty) Ltd11 that:
"Where a party therefore concedes insolvency, as the respondent did in this case,
public policy dictates that such admissions of insolvency should not be precluded
ji-om sequestration or winding-up proceedings, even if made on a privileged
occasion. The reason/or the exception is that liquidation or insolvency proceedings
is a matter which by its ve,y nature involves the public interest. A concursus
creditorum is created and the trading public is protected from the risk of further
dealing with a person or company trading in insolvent circumstances. It follows
that any admission of such insolvency, whether made in confidence or otherwise,
cannot be considered privileged. "
[27] Furthermore the Respondent's conduct sending a compromised settlement
proposal to the Appellant in the pretrial meeting and failure to pay its outstanding
contribution towards the arbitrators costs having indicated in its letter that it will not
be able to do so, confirms the dire situation of the Respondents inability to satisfy
its debts as and when they become due.
11 (205/14) [2015) ZASCA 43; 2015 (5) SA 215 (SCA) (26 March 2015)
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[28] As the Respondent on its own admission has not been able to trade, being out
of business and in insolvency circumstances for some time, unable to do so without
current projects to sustain the company operations or assets to liquify to current cash
flow, and having not placed any evidence before the honourable court to prove that
it is or will be able to pay its debts as and when they become due, and without
establishing the existence of a bona fide dispute, it would be in accordance with
public interest policy to place the Respondent under liquidation.
[29] The Appellant has satisfactorily proven the Respondent's inability to pay its
debts as substantiated by the Respondent's admission of its actual state of insolvency
that the appeal should be upheld.
[30] On the allegations of the Respondent having committed vanous acts of
insolvency in terms of the provisions of s 8 of the Insolvency Act, it has been stated
that the provisions of s 8 of the Insolvency Act (prescribing what are "acts of
insolvency") have no appl ication to a company in so far as ability or inability to pay
its debts are concerned. 12
[31] On the question of whether it would be just and equitable to grant a provisional
liquidation order, the principle applicable was enunciated in Std Bank of SA v R Bay
Logistic Systems CC13referred to in the court a quo that:
•• ... if there is evidence that the company is commerc ially insolvent (cannot pay its
debt when they fall due, that is enough for the court to find that the required case
under s 3../4 (h) has been proved. At that level the possible actual solvency of the
12 De Villiers NO v Maursen Properties (Pty) Ltd 1983 (4) SA 670 (T) at 675
13 (205/14) (2015) ZASCA 43; 2015 (5) SA 215 (SCA) (26 March 2015)
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Respondent company is usually only relevant to the exercise of the court 's residual
discretion as to whether ii should grant a winding up order or not even though the
Applicant for such relief has established its case under s 344 (!).
[32] The Respondent on its own admitted that it was not able to meet its
liabilities as they become due, due to its financial constraints as stated in the
letter, and was as a result made to contemplate its deregistration. The
Respondent's inability to pay was also apparent as it failed to pay its share of
the contribution towards the arbitrator's costs that was quantified and had
fallen due, which it had conceded that if the arbitration continues it will not
be able to pay for the costs. Its argument against its winding up for the
arbitration process to proceed is as a result senseless, as it is in no position to
continue with its normal business and have no readily realizable assets to meet
any imminent debts .
[33] When, for whatever reason, a company is unable to access any liquid
assets it is illiquid and unable to pay its debts as they fall due. 14 It is obvious
that the winding up of the Respondent is the only solution and the court a quo
erred when it decided otherwise without considering whether it would be just
and equitable to do so.
[33] In the circumstances I make the following order:
1. The appeal is upheld with costs,
14 Murray and Others NNO v African Global Holdings (Pty) Ltd and Others (306/2019) (2019) ZASCA 152 (22
November 2019).
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2. The order of the Manamela AJ of21 August 2023, is set aside and
substituted with the following order:
I agree
I agree
'(a) The Respondent is liquidated in the hands of the Master of the
High Court.
(b) Costs of the application, will be costs in the winding-up of the
Respondent.'
NV Khumalo
Judge of the High Court
Gauteng Division, Pretoria
JS Nyathi
Judge of the High Court
Gauteng Division, Pretoria
On behalf of the Appellant:
Instructed by:
On behalf of the Respondent:
Instructed by:
M Jorge
A Millar
Judge of the High Court
Gauteng Division, Pretoria
Afzhaal Lahree Attorneys
litigation2@alahree.co.za
Shaheen Hartnick
Director & Shareholder Respondent
Shaheen Ha11nick@yahoo.com
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