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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: 2024 - 147172
In the matter between:
KHUTSO-NAKETSI COMMUNAL
PROPERTY ASSOCIATION
(REG NO: 08/1143/A) Applicant
and
KHUTSO-NAKETSI AGRI (PTY) LIMITED Respondent
HENNING PETRUS NICOLAAS PRETORIUS First Intervening Party
HPN BESTUUR (PTY) LIMITED Second Intervening Party
STEPHAN PRETORIUS Third Intervening Party
THE EMPLOYEES OF THE RESPONDENT Fourth Intervening Party
JUDGMENT
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
…………………….. ………………………...
DATE MOKOSE SNI
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MOKOSE J
[1] The applicant, on 12 December 2024 applied on an urgent basis for the winding -up of the
respondent on the basis of its inability to pay its debts, alternatively that it is just and equitable to
wind up the company under Sections 344(f) and 344(h) of the Companies Act 1973 (“the Act”). The
application was struck for lack of urgency. On 10 March 2025 intervention applications were
instituted on behalf of Mr HPN Pretorius, a minority shareholder in the company , his son Stephan
Pretorius, HPN Bestuur (Pty) Limited and the employees, which application was granted on 12
August 2025.
[2] The applicant is of the view that as the matter has been fully ventilated, the order sought is
now for the final winding up of the company. The notice of motion has been accordingly amended.
[3] The brief facts are as follows: the North-West Department of Agriculture, Land Reform and
Rural Development (“the Department”) purchased a farm for the purposes of l and reform. The
property was transferred to the communal property association (the CPA), the applicant, in terms of
the Communal Property Associations Act of 1996. For the purposes of skills transfer, the Department
recommended that the new landowner , the CPA, conclude a joint venture agreement with the
previous owner of the farm , HPN Bestuur (Pty) Limited (“HPN”). KNA (Khutso Naketsi Agri) was
established for the purposes of this joint venture partnership in which the CPA holds 70% of the
shareholding in KNA whilst the balance of 30% is held by HPN . KNA was the vehicle through which
the farm was controlled and managed . HPN was appointed to manage the farm’s operations and
KNA’s business for the duration of the joint venture.
[4] In terms of the shareholder’s agreement the joint venture between the CPA and HNP would
endure for a period of five years commencing on 26 June 2019 until 24 June 2024 whereafter it
would be terminated. At the commencement of the joint venture, the Department approved
would be terminated. At the commencement of the joint venture, the Department approved
funding in the sum of R87,1 million to be used by the CPA to fund the KNA’s operations.
[5] On 24 June 2024 the joint venture between the CPA and HNP terminated. The lease over the
farm also lapsed on 25 June 2024. However, the applicant contends that it allowed KNA to continue
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occupying the farm until 30 September 2024. The CPA initially intended to cause KNA’s business to
be wound down without the need for formal liquidation proceedings . To this end, several directors
of CPA were appointed to KNA’s board of directors in September 2024. However, it became apparent
to the directors that there was a need for formal liquidation proceedings to be launched against KNA
as it was insolvent and could not pay its debts, one of them being a debt to CPA for R1 245 568,86.
Furthermore, its former employees were owed at least R6 million. They had since been retrenched
and the company had ceased trading and was merely an empty shell with liabilities. This was the
reason for this application presently before the court.
[6] The application is not opposed by KNA which admits its insolvency . The application is
however, opposed by the intervening parties , Henning Pretorius, a director and shareholder of HPN
and his son Stephan Pretorius, HPN itself and the employees of the respondent.
[7] The intervening parties deny that KNA is unable to pay its debts, den y that it will be just and
equitable to liquidate KNA . They contend that the liquidation application is an abuse and a mere
ploy to circumvent the CPA’s contractually imposed obligation to buy out the intervening parties’
share in KNA. Furthermore, the intervening parties contend that there is silence in respect of the
sixty million rands that was availed and earmarked for vegetable farming by the department. An
action for the winding up the company in the present circumstances is a mechanism of avoiding its
liability upon grounds which are disputed on bona fide and reasonable grounds.
[8] The applicant contends that the intervening parties’ opposition to the application should be
seen in the following context:
(i) that at the commencement of the partnership in June 2019 the department approved
funding in the sum of R 87,1 million to be used by the CPA in funding KNA’s operations . At
funding in the sum of R 87,1 million to be used by the CPA in funding KNA’s operations . At
the inception of the partnership the intervening parties projected an EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization) in 2019 in the sum of R20million. This
never materialised despite having conducted farming operations for 5 years under the
management of HPN . KNA was also never paid a distribution of profits in that time to the
CPA.
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(ii) No meaningful explanation was given to the CPA by the intervening parties as to how KNA
operated unprofitably for the last five years . No reliable management accounts detailing
KNA’s finances for that period were furnished by the respondents nor were financial
statements furnished. Those statements which were furnished could not be relied upon.
(iii) On 31 July 2024 KNA paid to the intervening parties the sum of R2 million. A further amount
of R6 million was paid to the m on 3 1 August 2024 ostensibly as repayment of HPN’s loan
account.
(iv) Pertaining to the funding from the department, all that is known is that a substantial amount
was paid over to fund the operations of KNA which is now insolvent and unable to pay its
debts.
(v) The applicants believe that KNA has been mismanaged and that the funding by the State has
been misappropriated.
[9] The applicant is of the view that KNA should be would up as it unable to pay its debts in
terms of Section 344(f) and Section 345 (1)(c) of the Companies Act. The applicant contends that it
became apparent when KNA’s new board of directors were appointed that its affairs had not bee n
properly conducted. No financial provision had been taken for the retrenchment of the more than
300 employees of KNA in anticipation of the cessation of its operations. KNA’s former employees
were retrenched after the board of directors took advice having taken note of such. Their contracts
were terminated a couple of days prior to the liquidation application being launched. Severance pay,
notice pay and accrued leave was not paid to them and is now due and payable and KNA is unable to
pay the debt which stands at approximately R6 million.
[10] The applicant further contends that KNA is also indebted to the CPA in the sum of
R1 245 568,86 being in respect of the rental for the use of the farm and CPA’s assets which were sold
and the proceeds thereof not paid over to the CPA. The applicant contends that the intervening
parties’ denial of the debt is not bona fide as Stephan was present when an agreement was reached
pertaining to the schedule of the amounts being drawn up.
[11] Furthermore, the applicant contends that it is just and equ itable for KNA to be wou nd up in
terms of Section 344(h) of the Act.
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[12] The intervening parties deny that the respondent is unable to pay its debts and that it is just
and equitable that the respondent is wound up . As stated, the intervening parties contend that the
liquidation application is a mere ploy to circumvent the CPA’s contractually imposed obligation to buy
out the intervening parties ’ share in the respondent, abscond from its liability and responsibilities
towards the employees and to lay claim to an amount of R60 000 000,00 which held to the benefit of
the respondent to be utilised for its earmarked purpose of vegetable farming.
[13] It is trite that our law recognises two forms of insolvency – factual insolvency and
commercial insolvency. In respect of the former, the company’s liabilities exceed its assets and in
respect of the latter, the company is in such a state of illiquidity that it is unable to pay its debts even
though its assets may exceed its liabilities.
[14] Section 344(f) and Section 345(1)(a) and (c) of the Companies Act (1973) read as follows:
“344. Circumstances in which a company may be wound up by a Court – A company may be
wound up by a Court if –
…………
(f) the company is unable to pay its debts as described in Section 345;
………..
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 of 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
……….
(c) it is proved to the satisfaction of the Court that the company is unable to pay its debts.”
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[15] A liquidated amount due to a creditor which is not disputed and which has not been paid
when demand has been made is prima facie evidence of the company’s inability to pay such debt .
Where a debtor is unable to pay its debts, an unpaid creditor is entitled ex debito justitiae to a
winding up order .1 Furthermore, liquidation applications should not be resorted to as a means of
enforcing a debt, the existence of which is bona fide disputed by the company on reasonable
grounds.2 The test for a final winding up order differs from the test in respect of a provisional order .
When seeking a final order of winding up, the applicant must establish on a balance of probabilities
and no t prima facie evidence. If there are irreconcilable facts in dispute, a final order cannot be
granted. The court would be obliged to either dismiss the application or refer the matter to oral
evidence.
[16] The versions of both the app licant and the intervening parties are clearly contradictory and
irreconcilable. Motion proceedings are designed to resolve legal questions and not questions of fact.
The general rule is that final relief in motion proceedings may only be granted if those facts as stated
by the respondent, together with those facts stated by the applicant that are admitted by the
respondent (the intervening parties in this matter) , justify the granting of the application, unless it
can be said that the denial by the respondent of the facts alleged by the applicant is not such as to
raise a real, genuine and bona fide dispute of fact.
[17] In assessing whether a dispute of fact on the papers has been genuinely raised, the court
does not go into the merits of the intervening parties’ defence. It merely considers whether the
intervening parties’ averments, if they were to be established in a trial, would make out a defence to
the applicant’s claim. The court would also assess whether the intervening parties’ averments
making out a defence are made bona fide.
making out a defence are made bona fide.
[18] It is clear from the papers that the intervening parties dispute the claim . The court cannot
dismiss the dispute as not being bona fide. Accordingly, the order sought by the applicant cannot
succeed on this basis.
1 Sammel & Others v President Brand Gold Mining Co Ltd 1969 (3) SA 629 (A) at 662
22 Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T) at 347 - 348
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[19] The applicant further contends that it is just and equitable for the company to be would up.
Section 344(h) provides as follows:
“344. Circumstances in which company may be would up by Court – A company may be would up
by the Court if –
…………
(h) it appears to the Court that it is just and equitable that the company should be would up.”
[20] Over the years our Courts evolved broad categories of circumstances in which they would
grant the winding up of a company on the just and equitable ground. A winding up on this basis
‘postulates not facts but only a broad conclusion of law, justice and equity as a ground for the
winding up’.3 There is no fixed category of circumstances which may provide a basis for a winding up
of a company on this basis. The court in the matter of Sweet v Finbain4 held as follows:
“The ground is to be widely construed; it confers a wide judicial discretion , and it is not to be
interpreted so as to exclude matters which are not euisdem generis with the other grounds specified
in S344. The fact that the Courts have evolved certain principles as guides in particular cases, or
examples of situations where the discretion to grant a winding up order will be exercised, does not
require or entitle the Court to cut down the generality of the words “just and equitable” . Section
344(h) gave the Court a wide discretion in the exercise of which certain other sections of the Act had
to be taken into account.”
[21] The applicant suggests that the mismanagement of a company and the disappearance of the
company’s substratum are reasons which the court should consider in the winding up of the
company in terms of Section 344(h) . The applicant contends that the object or distinct purpose for
which the company was formed or which constitutes the foundation of the company, can no longer
be carried out at all or fully. As such, the company should be would up.
[22] It is noted that the CPA own the farm which was previously owned by HPN. It was purchased
by the Department for the purpose of land reform and to utilise it for the benefit of land
beneficiaries. The intention for the transaction was to facilitate skills transfer by the intervening
3 Moosa N.O. v Mavjee Bhawan (Pty) Ltd 1967 (3) SA 131 (T) at 136H-I
4 1984 (3( SA 441 (W)
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parties to the CPA and KNA was formed for such purpose for a five-year period from June 2019 to
June 2024. As stated above, the period was extended to September 2024. The applicant contends
that the substratum has since been lost as KNA has ceased trading and has retrenched its employees.
On that basis alone, the company should be wound up.
[23] Section 344(h) requires the court to exercise a discretion however, prevailing facts presented
by the respondents (intervening parties in this matter) should be taken into consideration. The
intervening parties contend that should the order be granted on this ground, the applicant would be
allowed to circumvent its obligations in terms of the Labour Relations Act in respect of the
employees. Furthermore, it would be relieved of the contractual obligation to purchase the
intervening parties’ shares in the respondent and will also have access to the available funds
currently held for the benefit of the respondent.
[24] I have considered the submissions of both the applicant and the intervening parties in this
regard. I note that it would be impossible for KNA to be able to continue with the conduct of its
business as it appears to be insolvent. No meaningful explanations have been given in respect of the
financial affairs of the company for the period of the agreement . No audited financial statements
have been prepared for that period that the company can rely upon, nor have management accounts
been prepared for the said period. The court in the matter of Storti v Nugent and Others 5 held as
follows:
“It is difficult to see how one can show a Court with any degree of confidence that a company is
solvent, without the audited financial statements. Although I look at this state only at the allegations
in the founding affidavit , and treat them as being correct for the purposes of deciding whether the
founding affidavit discloses a cause of action , I consider that a Court would be very reluctant to
accept the mere say -so of a director as to the financial position of a company in the absence of
audited financial statements, particularly where there has been criticism since 1994 of the failure to
produce same…..”
I respectfully align myself with these sentiments in view of the contentions in the founding affidavit
pertaining to the state of the financial affairs of the company which have not been strenuously
refuted.
5 2001 (3) SA 783 (W) at 808
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[25] Insofar as the employees are concerned, they are protected by Section 197 of the Labour
Relations Act that if a transfer of a business takes place and unless otherwise agreed, the new
employer is automatically substituted in place of the old employer in respect of all contracts of
employment in existence before the date of transfer. Furthermore, all the rights and obligations
between the old employer and the employees at the time of transfer continue in force as if they had
been rights and obligations between the new employer and the employees.
[26] However, in the matter in casu, Section 197 would not apply as the employees had been
retrenched prior to this application being launched. No transfer of business had taken place.
[27] The intervening parties claim in their counterapplication, relief in terms of Section 163 of the
2008 Companies Act. Section 163(1) provides as follows:
“(1) A shareholder or a director of a company may apply to a court for relief if-
(a) Any act or omission of the company, or a related person, has had a result that is oppressive
or unfairly prejudicial to, or unfairly disregards the interests of the applicant;
(b) The business of the company , or a related person, is being or has been carried on or
conducted in a manner that is oppressive or unfairly prejudicial to, or that unfairly disregards
the interest of, the applicant; or
(c) The powers of a director of prescribed officer of the company , or a person related to the
company, are being or have been exercised in a manner that is oppressive or unfairly
prejudicial to, or that unfairly disregards the interests of the applicant.”
[28] The claim by the first, second and third intervening parties pertains to the CPA’s refusal to
accept an offer from the second intervening party which will financially cater for KNA’s employees in
circumstances where an agreement to that effect was already concluded and reneged upon . Such
circumstances where an agreement to that effect was already concluded and reneged upon . Such
conduct constitutes oppressive conduct in terms of Section 163. Furthermore, the intervening
parties allege that the CPA refuses to engage at board level to oppose the liquidation application and
that any shareholder that has access to R60 000 000,00 and wishes to cease being operational can
only be oppressive towards the minority shareholder.
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[29] It is noted that Stephan is not a shareholder of KNA and as such has no locus standi in the
application. Secondly, the second intervening party undertook to be bound by the decisions of the
prescribed majority. CPA hold 70% of the shares in KNA. Accordingly, I agree with counsel for the
applicant that no case has been made by the first, second and third intervening parties.
[30] Accordingly, I am satisfied that on a balance of probabilities the applicant has shown that it is
just and equitable for the respondent, KNA to be wound up in terms of Section 344(h). The
following order is granted:
1. The respondent is placed in final winding up;
2. The costs of the winding up application are costs in the winding up of the respondent;
3. The intervening parties’ counter application is dismissed;
4. The first to the third intervening parties, jointly and severally, the one paying the other be
absolved, are or dered to pay the costs of the counter application including the costs of
counsel on Scale “C”.
_____________________
SNI MOKOSE J
Judge of the High Court of South Africa
Gauteng Division, Pretoria
For the Applicant: Adv M Costa
On instructions of: Cox Yeats
For the Respondent: Adv J Hershensohn SC
On instructions of: Langenhoven Pistorius & Modihapula
Date of Judgement: 11 June 2026