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[2026] ZAKZPHC 69
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Indgro Outsourcing (Pty) Ltd v Basfour 3281 CC (2025/230396; 2025/230421) [2026] ZAKZPHC 69 (18 June 2026)
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IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 2025-230396
In the matter between: -
INDGRO
OUTSOURCING (PTY) LTD
Applicant
and
BASFOUR
3281 CC
Respondent
AND:
CASE
NO: 2025-230421
In the matter between: -
INDGRO
OUTSOURCING (PTY) LTD
Applicant
and
SAVE
WHOLESALERS CASH AND CARRY CC
Respondent
ORDER
1.
Application 2025-230396, (The “
Basfour
application”), is dismissed and the applicant is directed to
pay the costs on scale B
2.
Application
2025-230421 (The “
Save
application”), is dismissed and the applicant is directed to
pay the costs on scale B.
JUDGMENT
PITMAN
J
Introduction
[1] On 9 June 2026
I heard argument in these two opposed applications for the
provisional liquidation of each respective respondent.
They were
argued simultaneously as, although the respondent differs in each,
the applicant is the same and the basic material facts
and law in
relation to the issues in both applications is the same. It was, in
fact, agreed by the parties’ representatives,
advocate
Pietersen for the applicants and advocate Hartzenberg SC for both
respondents, that the matters should be dealt with by
me on that
basis. As a result, this judgement is a judgement in respect of both
applications. The orders will differentiate them.
I will refer to the
respondent in matter 2025- 230396 as “
Basfour”
and
the respondent in matter 2025-230421 as “
Save”
.
The material facts
[2] In my judgement
the material facts and issues determinative of these applications are
fairly straightforward despite the
volume of the paper comprising
each application and the voluminous heads of argument submitted on
behalf oin each.
[3] As its name
suggests the applicant is the provider of temporary employment
services in the nature of what was previously
known as “labour
broking services”. Notwithstanding the nomenclature, these type
of services remain legislated for
and are of application and
definition in, for example, s198 (1) of the Labour Relations Act 66
of 1995 (“LRA”).
[4]
Basfour
conducts the business of supermarkets at various locations.
Save
is described as a discount and wholesale distributor of groceries.
[5] On about 1
April 2014 the applicant and
Save
concluded written agreements
establishing a contractual relationship between them in terms of
which the applicant would provide
temporary employment and related
services to
Save.
On 30 January 2019 the parties concluded a
written addendum to those agreements.
[6] On 23 July 2024
the applicant and
Basfour
concluded similar written
agreements, by now referred to as Service Level and Commercial
Agreements in relation to various
Basfour
businesses. These
agreements also established a contractual relationship between the
applicant and the
Basfour
in terms of which the applicant
would provide temporary employment services to
Basfour.
[7] Although not
strictly relevant to the outcome of this matter, in July 2025 a
dispute arose regarding the alleged cancellation
by
Save
of
the agreements at its “Save Hyper Frontline” and “Save
Hyper Online” departments. Notwithstanding the
dispute the
applicant continued providing services to
Save
until September
2025.
[8] The applicant
alleges that during August 2025 it became aware that certain of its
employees had become employed by other
service providers and notified
both
Basfour
and
Save
, in different letters, that what
the applicant called “placement fees” were accordingly
due to it by both
Basfour
and
Save
in respect of those
employees, as a consequence of the relevant agreements.
Basfour
and
Save’s
attorneys’ responses, dated 1 September
2025, set out that both were terminating the agreements on the
required notice periods,
and would require no further services during
those notice periods. The letters stated that both would pay the
applicant the agreed
“service fees” for the notice
periods, notwithstanding. Although not identifying specifically a
response to the claim
for “placement fees”, the letters
point out that
Basfour
and
Save
took the view that all
the employees in question had become the respondent’s employees
by operation of law in terms of s 198
A (3) of the LRA.
[8] The applicant’s
then attorneys responded in writing, in a letter dated 5 September
2025, to the effect that the
termination was accepted. It also
accepted that the relevant employees it had provided who had exceeded
3 months employment at
Basfour
and
Save
had, by
operation of law, become
Basfour
and
Save’s
employees. They submitted that because of the “triangular”
nature of the relationships between them, the employees
and the
corporations together with the “contractual” agreements,
that the “placement fees” had become due.
[9] Statutory s 345
letters of demand, dated 13 October 2025, were then served (on 15
October 2025) on both
Basfour
and
Save
by the
applicant. It demanded “placement fees” of R300 987.23
and RR521 230,40 respectively, as the underlying
alleged debts.
[10]
Basfour
and
Save’s
attorneys responded in writing on 10 November
2025. They informed the applicant,
inter alia,
that it was
common cause that all employees in question earned below the
threshold set by the Minister of Labour as contemplated
in s198A(2)
of the LRA, and that the employees in question had become
direct employees of
Basfour
and
Save
after 3
months and had not been “solicited” by
Basfour
or
Save
as required by the relevant “placement”
penalty clauses. It was submitted that they were accordingly not
liable to the
applicant for “placement fees”. The letters
emphasised the solvency of the corporations, cautioned against the
institution
of liquidation proceedings, referred specifically to the
“Badenhorst Principle” regarding a disputed debt, and
threatened
“punitive costs” if such liquidation
applications were pursued.
[11] A further
letter was sent to the applicant’s attorneys, dated 15
November, denying again any liability by either
Basfour
or
Save
for any “placement fees”.
[12] Both
liquidation applications were, notwithstanding, instituted on 26
November 2025.
[13] It is common
cause that the applicant relies entirely, in respect of each
respondent, on a debt alleged to be “placement
fees”. In
establishing these debts, it relies on two particular identical
clauses in both sets of the relevant agreements.
Those clauses read
as follows-
‘
The
Respondent shall not solicit, in any manner whatsoever, any temporary
employee to leave their engagement with the Applicant,
or offer
employment directly or indirectly to any such temporary employee
during the period of such temporary employee's employment
with the
client or within a period of 12 (twelve) months after the termination
thereof’
and
secondly;
‘
In
the event that the Respondent offers employment to any temporary
employee directly or indirectly as aforesaid, then the Respondent
shall be obliged to pay the Applicant an amount equal to 12% (twelve
percent) based on the annual gross (cost to company) salary
package,
and this shall include the employment of any temporary employee
through any alternative service provider.’
The argument
[14] The applicant
submitted the following:
a)
The respondents had both agreed, in terms
of the written agreements, to pay all “
service
fees including, but not limited to, value added tax and all other
fees of whatsoever nature ancillary to the rendering of
services”
by the applicant in pursuance of the agreements.
b)
The “
placement
fees”
charged fall within the
definition of service fees.
c)
The respondents, in their attorneys’
letters of 1 September had agreed to pay all “
service
fees”.
d)
Therefore, for the above two reasons, the
“
placement fee”
liability was proved on the papers to be due by the respondents to
the applicant.
e)
Even if that was not so, the placement fees
were service fees and, on that basis, due.
f)
As a result, the respondents were
substantial creditors of the applicant, had failed to comply with the
s345 Notices, and were therefore
deemed to be unable to pay their
debts.
g)
The financial statements put up by the
respondents to prove liquidity constituted hearsay and should not be
given any weight.
h)
The applicant was accordingly entitled to
the provisional liquidation of the respondents.
[15] The
respondents submitted the following:
a)
“
Placement fee” is not defined
in the agreements. Only “service fee” is.
b)
The “placement fee”, as it
allegedly arises pursuant to the possible application of the two
clauses set out above, is
clearly not a “service fee”
given the definition of “service fee” as it appears in
the agreement.
c)
The placement fee in any event is, and has,
the effect of, an unenforceable, illegal, and
contra
bonis mores
penalty provision.
d)
In any event further, the possible
application of the two clauses above, requires triggering events
which the applicant has neither
averred nor proved on these papers.
Those tiggering events comprise a “solicitation” of
employment by the respondents
and/or “an offer” of
employment by the respondent.
e)
The common cause facts are that the
relevant employees became permanent employees of the respondents by
operation of law and thus
the “triggering” events are not
the cause of such employment on any level.
f)
That being so, the fundamental basis of the
application, requiring proof of the respondents being creditors of
the applicant, does
not actually exist, let alone
prima
facie
exist.
g)
The Badenhorst principle is accordingly of
application. The respondent has shown a
bona
fide
defence to the alleged debts based
on reasonable grounds.
h)
In any event further, the respondent has
put up substantial evidence by way of financial statements and other
documents proving
the respondents’ liquidity and clear ability
to pay its debts, and certainly these debts, even if they were to be
valid.
i)
As a result, these liquidation applications
constitute “egregious abuses of process” deserving of
punitive costs orders
upon their dismissal, which dismissals, it is
argued, are inevitable.
Legal Principles
[16] The core idea
underpinning liquidation in South African law is to ensure, and
provide, an orderly and fair, way to end
a company’s life when
it cannot pay its debts or continue operating properly.
Philosophically and legislatively, the process
is creditor-focused.
The process exists primarily for the benefit of creditors. Whilst
business rescue tries to save a company,
liquidation accepts that the
company is terminal ill and focuses on, as some have expressed an
orderly funeral for it.
[17] Section 345 of
the Companies Act 61 of 1973 provides a statutory mechanism for
establishing that a company is deemed
unable to pay its debts,
thereby grounding an application for winding-up under section 344(f).
The section reads, in relevant part:
‘
(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; ... 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 ... (c) it is
proved to the satisfaction of the Court that the company is unable to
pay its debts.’
[18] The
requirements for a valid section 345 (1) (a) demand are therefore
straightforward and strict:
1.
The applicant must establish that it is a
creditor to whom the company is indebted in a sum of not less than
R100 that is then due.
2.
The demand must be served by leaving it at
the company’s registered office (or in the prescribed manner
for external companies).
3.
The company must neglect to pay the sum, or
secure or compound for it to the creditor’s reasonable
satisfaction, for a period
of three weeks after service.
Compliance with these
formalities creates a
prima facie
case of commercial
insolvency via the deeming provision.
[19] In the present
matters, the applicant relies on unanswered s 345 demands served on
15 October 2025, both of which remained
unsatisfied for the statutory
period. This, so it is argued, establishes the necessary
prima
facie
foundation for the provisional orders sought.
[20] However, the
deeming effect of s 345 is not absolute. It operates as a rebuttable
presumption and does not preclude a
respondent from raising a defence
that the alleged indebtedness does not exist or is not good in law.
Where the respondent shows,
on reasonable grounds, that the debt is
bona fide
disputed — including on the basis that the
applicant is not a creditor at all — the court will ordinarily
decline to
grant even a provisional winding-up order and relegate the
parties to ordinary action proceedings.
[21]
This engages the well-established Badenhorst principle. As stated in
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
,
[1]
winding-up proceedings ought not to be resorted to in order to
enforce payment of a debt the existence of which is
bona
fide
disputed on reasonable grounds. The procedure for winding-up is not
designed for the resolution of disputes as to the existence
or
non-existence of a debt. The procedure for winding-up is not designed
for the resolution of disputes as to the existence or
non-existence
of a debt.
[22] This principle
is rooted in the fundamental nature of liquidation as a collective
remedy for the benefit of all creditors
and shareholders, rather than
a private debt-collection mechanism for a single claimant. Granting a
provisional winding-up order
on a disputed debt risks inflicting
irreparable commercial harm before the underlying liability has been
properly established.
Liquidation affects the interests of all
stakeholders, disrupts ongoing business, and carries severe
reputational and economic
consequences. It should therefore not be
invoked lightly or as a form of procedural pressure or, as has often
been said, as a “
weapon in terrorem”
to pay an
alleged debt.
[23] Winding-up
provisions in the Companies Act (and its predecessors) were intended
to address genuine commercial insolvency,
not to shortcut ordinary
civil litigation. Courts have long recognised that ordinary action
proceedings provide the proper forum
for ventilating contested
issues, with pleadings, discovery, oral evidence, and
cross-examination. Whereas liquidation applications
proceed on
affidavit and are ill-suited to resolving complex factual or legal
disputes over the very existence of indebtedness.
[24] This principle
upholds the rule of law and procedural fairness. It guards against
abuse of process by preventing a putative
creditor from using the
drastic remedy of liquidation as leverage to force payment or
settlement of a claim that may ultimately
prove unfounded. In my
judgment, even where a section 345 demand has been ignored, a
bona
fide
and reasonable dispute raised in opposition of a liquidation
application can account for a
prima facie
case, particularly
at provisional stage. The respondent bears the onus of showing the
dispute meets the required threshold, but
once reached, the court
will ordinarily refuse the order.
Analysis
[25] In the present
matter, these principles find direct application. Whilst the
applicant relies on the deeming effect of
an unpaid, and unanswered
timeously s 345 demand, the respondents’ defences that the
alleged liabilities are not good in
law (and that the applicant is
accordingly not a creditor) engages, in my judgment, with the type of
dispute the Badenhorst rule
seeks to protect.
[26] It is a matter
of undeniable logic that the timing of the defence cannot
automatically undermine its
bona fides,
particularly if the
grounds advanced are reasonable. The timing of the dispute, even if
raised only after expiry of the s345 three-week
period, may be
relevant to the credibility of the defence but does not, without
more, render it disingenuous,
mala fides
, or of no relevance.
The court must still evaluate whether the grounds advanced are
reasonable and whether the dispute’s
resolution ought to be
established in the ordinary course of a trial.
[27] On the issue
of whether the respondents have discharged the onus of showing
bona
fide
defences, the argument is that they have done so by showing,
bona fide
, that the alleged debts arising out of the alleged
“placement fee” claims have no foundation or basis on the
facts
set out.
[28] In my judgment
that argument is good. I am satisfied that far from falling “clearly
under the “service fee”
definition, as argued by counsel
for the applicant, there is a
bona fide
and reasonable
argument that it does not. The precise definition of what “services”
were understood by the parties
to be actual services, and whether
“placement fees” were agreed to have fitted into that
definition when the written
agreements were concluded is, in my
judgment, a
bona fide
triable issue. According to the current
legal position regarding the interpretation of written agreements by
our Courts, there
are a number of factors which may need to be
considered beyond the mere
ipsissma verba
of the document/s.
That will necessitate oral evidence.
[29] On the facts
before me, I am of the view that if pressed upon for decision at this
stage, and only on the papers, I would
hold that “placement
fees” cannot be interpreted as “service fees” given
only the agreements themselves
and the submissions made herein by the
respondent’s counsel in relation to them. In my judgment, the
applicant’s letter
agreeing to pay the one or two months
“service fees”, could not have been meant an admission to
include various “placement
fees” which would have been
one off amounts and not monthly amounts. There seems to me to be a
clear distinction in the agreements
between the two types of fees.
[30] During
argument I asked counsel for the applicant whether, if the applicant
had proceeded by way of action instead, and
if this defence (that the
respondents were not creditors for these reasons) had been raised in,
as is now the summary judgment
procedure, a summary judgment
answering affidavit in opposition to an application for summary
judgement, what submissions he would
make to support an argument that
the defence does not constitute a
bona fide
defence avoiding
summary judgment. In my judgment he was unable to provide one. I am
aware that the tests may be a little different
in context, but in my
view any acceptance that the defence is
bona fide
triable as a
summary judgment defence also, which I am of the view it does, ends
all debate about its basis for the liquidation
of the respondents in
these matters.
[31] The defence
is, however, also
bona fide
, in my judgment, in respect of the
requirement of the triggering events before any “placement
fees” (as referred to
be the applicant) or “penalty
provisions” (as referred to by the respondents) would in any
event become due. These
triggering events are not alleged or proved
by the applicant on these papers because all relevant employees
became so by operation
of law. They were not solicited or “offered”
employment on the facts before me. Thus, on the applicant’s own
papers the “debts” are, in my judgment, not proved.
[32] Even if I were
to be wrong on both of the above issues, in my judgment the
respondents have none-the-less discharged
all obligations they have
in establishing that they are not insolvent, despite the deeming
effect of s345. The respondents attached
current audited annual
financial statements (“AFS’”). These are signed off
by the respondents’ deponent
himself as member. They are not
therefore ordinary hearsay documents, but are corporation records
vouched for by the member himself.
They are routinely accepted by our
courts as the corporations’ own records. That they are audited
adds further weight to
them.
In casu
none are challenged by
any alternative evidence. The applicant has no knowledge of the
respondents’ financial status. The
applicant identifies no
other creditors of the respondents save for a vague assertion that
there are bound to be some.
[33] In each matter
the AFS’ show anything but insolvent entities. They are, on
those documents, both presently commercially
and actually solvent,
and able to pay their debts, in my view.
Conclusion
[34] In my
judgment, therefore, both applications must fail. For the reasons set
out above-
a)
The applicant has not shown that it is a
creditor of the respondents, the alleged debts being disputed on
bona
fide
and reasonable grounds.
b)
In any event, no triggering events needed
to create the alleged debts are proved by the applicant.
c)
The respondents have demonstrated that they
are solvent and able to pay their debts despite the “deeming”
provisions
of s345.
d)
The liquidation process is not to be used
as a debt collecting procedure.
Costs
[35] Costs are a
matter of my discretion, which discretion I must exercise judiciously
and judicially. There is no reason
why the costs should not follow
the result. However, I have decided not to grant punitive costs as
requested by counsel for the
respondents. I do so based on an
equitable consideration and balance of the following facts:
a)
The applicants requested the “placement
fees” from the respondents in their August 2025 letters.
b)
The respondents’ responses did not
tackle the “placement fees” issue directly. Instead, it
only pointed out LRA
consequences of short-term employment.
c)
The statutory s 345 letters of demand were
served on 15 October 2025 on both
Basfour
and
Save
by the applicant.
d)
The respondents ignored them.
e)
The respondents then corresponded with the
applicant after 26 days only, wherein they denied liability for
“placement fees”.
f)
However, by then the respondents had,
because of their failure to respond timeously both become “deemed”
in law to be
unable to pay their debts, entitling the applicants to
proceed.
g)
I am aware that in a letter dated 15
November 2025 the respondents again caution the applicant against the
“liquidation”
route.
h)
The applicant issued the papers in both
applications on 26 November 2025.
i)
The “Financials” upon which the
respondents rely, were only put up with the papers after issue of
these applications.
j)
The respondents’ heads of argument,
practice notes, list of authorities, and chronology were over 100
pages for each application.
Despite both applications having been
agreed to be argued on the same day, both of those voluminous sets of
heads documents are
to a significant extent identical. The
respondents’ voluminous bundles of argument were entirely
unnecessary both in extent
and repetition.
k)
The applicant’s equivalent bundles
are only approximately 23 pages for each.
[36] In my
discretion, therefore, whilst the costs should follow the result,
they should be ordinary party and party costs
on scale B.
Order
1.
Application 2025- 230396, (The
Basfour
application), is dismissed with costs on scale B
2.
Application 2025-230421 (The
Save
application) is dismissed with costs on scale B.
JUDGE
PITMAN
APPEARANCE
Counsel for the
Applicant: Advocate Petersen
Instructed by:Ward Brink
Attorneys
12th floor, Touchstone
House
7 Bree Street
CAPE TOWN
Tel: (021) 271 0700
Email:
[email protected]
;
[email protected]
Counsel
for the Respondent: Advocate H
artzenberg
SC
Instructed by:
Venns Attorneys
23 Montrose Park
Boulevard Victoria
Country Club
170 Peter Brown Road
Pietermaritzburg 3201
Email:
[email protected]
[email protected]
CASE INFORMATION
Date Judgment
Reserved:
09 June 2026
Date
Judgment Handed Down:
This
judgment is delivered electronically by circulation to the parties’
legal representatives via email and by uploading
it to Court Online.
It is deemed to have been handed down on 18 June 2026 being the date
it is uploaded to Court Online.
[1]
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
1956(2)
SA 346 (T) at 347H-348C