Bank of China Limited Johannesburg Branch v Matrox Investments (Pty) Ltd (12499/2024) [2026] ZAKZPHC 84 (21 August 2026)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in
compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL DIVISION, PIETERMARIZBURG
CASE NO: 12499/2024
In the matter between:

BANK OF CHINA LIMITED APPLICANT
JOHANNESBURG BRANCH
(Registration Number: 2000/00843410)

and

MATROX INVESTMENTS (PTY) LTD RESPONDENT
(Registration Number: 1997/013464/07)
___________________________________________________________________
ORDER
___________________________________________________________________
The following order is made:
1. The respondent is placed under provisional winding -up in the hands of the
Master of the High Court, Pietermaritzburg.
2. That a rule nisi do issue calling upon the respondent and all other interested
parties to show cause to this Court on the 27th of November 2026 at 9h30, or
so soon thereafter as the matter may be heard, why the respondent should
not be finally wound up.
3. The copy of this order:
3.1. be published on or befor e 15 October 2026 in one edition of The
Mercury newspaper and in one edition of the Government Gazette;

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3.2. served in compliance with s 346A of the Companies Act 61 of 1973.
4. Costs reserved.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Sipunzi J

Introduction
[1] This is an opposed application in terms of which the applicant, Bank of China
Limited (‘BOC’) seeks the provisional winding -up of the respondent (Matrox) on the
ground that it is commercially insolvent as it is deemed to be unable to pay its debts 1
in terms of s 345(2) of the Companies Act 61 of 1973 (‘the 1973 Companies Act’).

[2] Matrox opposed the application. It raised various defences to contend that the
provisional winding -up sought by BOC could not be sustained. Such defences
included it having a genuine and bona fide defence against its alleged indebtedness
to BOC. Matrox also contended that there was a pending action that was instituted
by BOC against it, arising from the same alleged debt. Also, that BOC had already
instituted a winding-up application against Educor and A1 Capital on the basis of the
same alleged debt. Matrox also opposed the application on the basis that the
suretyship agreement which BOC sought to enforce was null and void and of no
effect due to the failure by Matrox and A1 Capital to comply with the mandatory
requirements of s 45 of the Companies Act 71 of 2008 (‘the Act’), when they provided
financial assistance to Educor.

The parties
[3] BOC is an authorised and registered financial and credit services provider. In
the ordinary course of its business, over a period of time, and on various occasions,
it advanced four credit facility agreements to Educor Holdings (Pty) Ltd ( ‘Educor’).

1 Section 345(1)(c) provides that: ‘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) …
(c) it is proved to the satisfaction of the Court that the company is unable to pay its debts.’

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Educor had failed repay the debts and was therefore allegedly in breach of its credit
facility agreements.

[4] Educor was a subsidiary of A1 Capital (Pty) Ltd ( ‘A1 Capital ’), the holding
company. A1 Capital was the sole shareholder of Educor. The shareholders of A1
Capital were the Baobab Family Trust; Leo Chetty Family Trust and Vadivaloo Family
Trust. Baobab Family Trust was the holding company of Success College which
owned Matrox. Matrox, Educor and A1 Capital had their principal places of business
at the same premises, 5[...] U[...] Road, Pinetown, KwaZulu-Natal.

[5] The respondent is Matrox Investments (Pty) Ltd, a private company duly
registered and incorporated in terms of the Act, with registration number
1997/013464/07. Matrox stood as surety for the indebtedness owed by Educor to
BOC.

Background
[6] On 26 November 2016, BOC and Educor concluded a credit facility
agreement in terms of which a R200 million demand loan credit facility was
advanced to Educor. The facility was advanced for a term of 12 months, with 18
November 2017 as the expiry date, with interest to be repaid quarterly. When the
debt became due for repayment, Educor failed to meet its obligations in terms of the
facility agreement. Subsequent interactions between BOC and Educor resulted in the
review and extension of their initial agreement. Then, a second facility agreement ,
with 15 December 2018 as the expiry date, was concluded.

[7] At the instance of Educor a review of the second facility agreement was
initiated on 15 October 2018. Pursuant thereto, on 31 December 2018, a third facility
agreement was concluded and BOC continued to provide a demand loan credit
facility to Educor for R200 million. The new expiry date was amended to 13 March
2020. Starting from 26 November 2016 when the first loan facility agreement was
concluded, they were all secured by A1 Capital for a limited suretyship of an amount
of R200 million.

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[8] When payment became due on 13 March 202 0, Educor failed to honour the
facility agreement. As a result, on 22 July 2020, BOC issued a breach notice to
Educor, demanding payment of R208 031 072.18, with interest. Notwithstanding the
efforts in demanding payment, the debt remained unpaid. Instead, Educor
approached BOC for a new agreement which would restructure the debt due.
[9] Consequently, on 25 September 2020 the fourth facility agreement was
concluded between Educor and BOC. The material terms of this facility agreement
were that BOC provided a credit facility to Educor in the amount of R200 million. This
agreement was a restructuring of the debt that had become overdue under the prior
existing facility agreements between Educor and BOC. The payments that had
become overdue from the third facility agreement would be repaid on a monthly
basis commencing from 31 October 2020, up to 31 March 2021. This facility
agreement was secured by Matrox’ s suretyship to the amount of R100 million, in
favour of BOC. As collateral thereto, Matrox also committed an immovable property
and ceded the proceeds of its three building insurances policies on behalf of Educor.

[10] On 29 September 2020, Success College, as the shareholder of Matrox
passed a special resolution in terms of which:
(i) Matrox would bind itself as surety and principal debtor in favour of BOC for
fulfilment of the debt owed by Educor to BOC to the limit of R100 million;
supported by the collateral of:
(a) registration of a continuing covering mortgage bond for an amount of
R100 million plus 20 percent of the remainder of Erf 4[...], Z[...] V[...]
KwaZulu-Natal in the name of Matrox and the registration of same to
commence within one week of signing of the fourth facility agreement;
and
(b) cession of AIG South Africa Limited Building Insurance Policy and
SASRIA Cover Coupon.
(ii) Ms Johnson, the director of Matrox was authorised to sign the suretyship and
other related documents on behalf of Matrox;

other related documents on behalf of Matrox;
(iii) Munsami signed on behalf of Success College.

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[11] This was followed by a Matrox resolution on 29 September 2020, which stated
that:
‘In terms of section 45 of the 2008 Companies act, the directors had considered all
reasonably foreseeable financial circumstances of the company in applying the solvency and
liquidity test and had had sight of the shareholder resolution in respect of the unlimited
suretyship. That the terms of the financial assistance in the form of a suretyship were fair
and reasonable. That the assets of the company or, if the company is a member of a group
of companies, the aggregate assets of the company, as fair valued, equal or exceed the
liabilities of the company, or, if the company is a member of a group of companies, the
aggregate liabilities of the company, as fair valued.’2

[12] Subsequent thereto, on 7 October 2020, the resolution that Matrox’s assets
exceeded its liabilities was certified by its auditors and based on the draft annual
financial statements for year ended 28 February 2019, Matrox reported that its
assets exceeded its liabilities. In adopting s 45 resolution, the directors of Matrox
would have considered all reasonably foreseeable financial circumstances of Matrox
by applying the solvency and liquidity test. On 9 October 2020, at the request of
BOC, it was furnished with the structure of the group of companies; and how they
were connected to each other. This information included Matrox’s company
documents; the title deed of the immovable property it owned; the ceded insurance
documents; Matrox’s insolvency certificate; and the resolution.

[13] On 28 October 2020, the suretyship agreement was signed by Matrox to
secure the debt owed by Educor to BOC for up to R100 million. The agreement
specifically stated that all the appropriate consents or special resolutions had been
obtained in terms of s 45 of the Act. 3 Matrox also recorded that its constitutional and
incorporation documents did not prohibit or limit the provision of financial assistance

incorporation documents did not prohibit or limit the provision of financial assistance
by suretyship; the terms of which were fair and reasonable and that assets of Matrox
were fairly valued and exceeded its liabilities.

[14] On the payment due date, 31 March 2021, Educor failed to pay the full loan
amount and interest to BOC. Against the debt of R200 million, Educor had paid up to
R4,5 million by 31 December 2021, leaving a balance of R195 million. According to

2 Replying affidavit, para 44.7; the fourth facility agreement, annexure “BC16”.
3 Annexure “BC18”, clause 26; replying affidavit, para 44.9.

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the certificate of balance that was issued by BOC dated 7 June 2023, the
outstanding amount owed by Educor was R301 457 514.21.

[15] Matrox was accordingly informed of Educor’s failure to meet its commitments
and failed demand. 4 BOC sought to enforce the security that was provided by
Matrox, to the extent that Matrox was implicated. On 9 September 2022, the first
statutory demand in terms of s 345(1)(a) of the 1973 Companies Act was sent to
Matrox. Despite receipt of the second statutory demand on 13 October 2022 and the
third demand on 3 November 2022, Matrox failed to meet its obligations in terms of
the suretyship agreement. The efforts of BOC led to the current dispute. On 25 April
2023, BOC also instituted action proceedings against Matrox under case number:
D4412/2023. In addition, on 8 September 2023, BOC launched liquidation
proceedings against Educor under case number: D9983/2023 and also against A1
Capital under case number: D9982/2023, out of the Durban High Court. The
liquidation applications and action proceedings were opposed and still pending when
this application was argued.

Issues
[16] The main questions that arise from Matrox’ s resistance in casu shall be
predicated below under subheadings.

Did Matrox provide financial assistance to Educor
[17] It is common cause that Matrox was engaged in property investment as its
principal business activity. As part of its property portfolio, Matrox owned immovable
property, described as Erf 4[...], Z[...] V[...] KwaZulu-Natal. The security that was
provided by Matrox to Educor’s debt was as set out below:
‘2.2. Proposed security
2.2.1. Limited suretyship of R100 000 000.00 from Matrox Investments (Pty) Ltd Registration
number: 1997/013464/07, supported by collateral referred to below.
2.2.2. Registration of CCMB for an amount of R100 000 000 00 plus 20% cover clause over
Remainder of Erf 4[...], Z[...] V[...] KwaZulu Natal in the name of Matrox Investment (Pty) Ltd
for the Borrower in favour of the Bank.

for the Borrower in favour of the Bank.

4 This was compliance with Clause 3.6 of the fourth facility agreement.

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2.2.3. Cession of AIG South Africa Limited Building Insurance Policy Number: 4[...] and
SASRIA Cover Coupon: FE 12014050/2019, Policy Number 0[...]. Building insurance cover
is not to reduce below R200 000 000.00. The registration of the mentioned collateral in cluse
2.2.2 to commence within one week of the signing of Facility Agreement.’

[18] Educor was registered as an educational institution that was providing tuition
for various education qualifications. Although Educor and Matrox shared the same
business address premises at 5[...] U[...] Road, Pinetown, KwaZulu-Natal, there had
been no indication that Educor had any involvement or contribution and influence in
the operations, interest or control of Matrox and vice versa.

[19] Section 45(1) of the Act defines financial assistance as:
‘(a) includes lending money, guaranteeing a loan or other obligation, and securing any
debt or obligation; but
(b) does not include-
(i) lending money in the ordinary course of business by a company whose
primary business is the lending of money;’ (My emphasis.)
The section therefore excluded those whose primary business is the lending of
money, and the loan is made in the ordinary cause of that business.5

[20] The definition of financial assistance must be applied to the factual matrix that
characterised the provision of security by Matrox, in favour of BOC for a debt that
was owed by Educor. At the time that this security was provided, and on a closer
reading of s 45(1), Matrox was neither lending money to Educor in the ordinary
course of its business nor was it engaged in the business of lending of money.
Matrox was also not providing an accountable advance to Educor for purposes of
legal expenses nor was there any anticipated expenses to be incurred by any person
on behalf of Educor. Accordingly, by securing the debt or obligation of Educor to
BOC to the limit of R100 million, Matrox provided financial assistance as
contemplated in s 45(1)(a).

contemplated in s 45(1)(a).





5 Henochsberg on the Companies Act 71 of 2008 (Service Issue 40, May 2026) at 196.

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Any relation or inter-relation between Matrox and Educor
[21] The next question that must be answered is whether the provision of the
financial assistance fell within the ambit of s s 45(2)-(4) of the Act. This brings to the
fore, the question of whether Educor and Matrox were related or inter -related or the
assistance was to “to a related or inter -related company or corporation, or to a
member of a related or inter -related corporation, or to a person related to any such
company, corporation, director, prescribed officer or member, subject to subsections
(3) and (4)”.6

[22] In terms of ss 45(3) and (4) of the Act:
‘(3) Despite any provision of a company's Memorandum of Incorporation to the contrary, the
board may not authorise any financial assistance contemplated in subsection (2), unless-
(a) the particular provision of financial assistance is-
(i) pursuant to an employee share scheme that satisfies the requirements
of section 97; or
(ii) pursuant to a special resolution of the shareholders, adopted within
the previous two years, which approved such assistance either for the
specific recipient, or generally for a category of potential recipients,
and the specific recipient falls within that category; and
(b) the board is satisfied that-
(i) immediately after providing the financial assistance, the company
would satisfy the solvency and liquidity test; and
(ii) the terms under which the financial assistance is proposed to be given
are fair and reasonable to the company.
(4) In addition to satisfying the requirements of subsection (3), the board must ensure that
any conditions or restrictions respecting the granting of financial assistance set out in the
company's Memorandum of Incorporation have been satisfied.’ (My emphasis.)

[23] An outline of s 2 of the Act becomes imperative. It provides that:
‘2. Related and inter-related persons, and control
(1) For all purposes of this Act-
(a) an individual is related to another individual if they-

(1) For all purposes of this Act-
(a) an individual is related to another individual if they-
(i) are married, or live together in a relationship similar to a marriage; or

6 Section 45(2) of the Act.

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(ii) are separated by no more than two degrees of natural or adopted
consanguinity or affinity;
(b) an individual is related to a juristic person if the individual directly or indirectly
controls the juristic person, as determined in accordance with subsection (2); and
(c) a juristic person is related to another juristic person if-
(i) either of them directly or indirectly controls the other, or the business of the
other, as determined in accordance with subsection (2);
(ii) either is a subsidiary of the other; or
(iii) a person directly or indirectly controls each of them, or the business of each
of them, as determined in accordance with subsection (2).
(2) For the purpose of subsection (1), a person controls a juristic person, or its business, if-
(a) in the case of a juristic person that is a company-
(i) that juristic person is a subsidiary of that first person, as determined in
accordance with section 3 (1) (a); or
(ii) that first person together with any related or inter-related person, is-
(aa) directly or indirectly able to exercise or control the exercise of a
majority of the voting rights associated with securities of that company,
whether pursuant to a shareholder agreement or otherwise; or
(bb) has the right to appoint or elect, or control the appointment or election
of, directors of that company who control a majority of the votes at a
meeting of the board;
(b) in the case of a juristic person that is a close corporation, that first person owns the
majority of the members' interest, or controls directly, or has the right to control, the
majority of members' votes in the close corporation;
(c) in the case of a juristic person that is a trust, that first person has the ability to control
the majority of the votes of the trustees or to appoint the majority of the trustees, or to
appoint or change the majority of the beneficiaries of the trust; or
(d) that first person has the ability to materially influence the policy of the juristic person

in a manner comparable to a person who, in ordinary commercial practice, would be
able to exercise an element of control referred to in paragraph (a), (b) or (c).’ (My
underlining.)

[24] The starting point is that BOC noted that it was aware of the links and
relationships between the various entities illustrated under the organigram that was
provided to it by Matrox on 9 October 2020. However, according to BOC, neither
Educor nor Matrox were related nor inter-related within the meaning of the provisions

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of s 2. 7 And therefore on that basis, the security of the debt provided by Matrox was
not subject to the requirements set out under ss 45(2) and (3).

[25] In this regard, Mr Mentjies for BOC submitted:
‘(a) that the funds were advanced in the BOC’s ordinary cause of business and in order to
secure that debt, BOC obtained security from A1 Capital and Matrox.
(b) when the funds were advanced, BOC held no shares and was neither involved or
exercised control of a majority of the voting rights of the securities or the right to appoint or
elect or control the appointment or election of a majority of directors in either Educor or A1
Capital or Matrox.’8

[26] In addition, it was contended that for purposes of determining whether Matrox
and Educor were related or inter -related, the enquiry was whether either entity
directly or indirectly controlled the other, or whether a common person directly or
indirectly controlled both entities, within the meaning of s 2 of the Act. In this regard,
reliance was placed on the statutory indication of control, including the ability to
exercise or control the exercise of a majority of the voting rights, or the right to
appoint or elect, or control the appointment or election of, directors who control a
majority of the votes at a board meeting.

[27] On the other hand, Matrox persisted that it was the fact that these entities
were related or inter -related which created the obligation for compliance with s 45
and the failure of which rendered the suretyship agreements which BOC sought to
enforce to be null and void, and of no effect. Matrox highlighted that Educor was a
100 percent subsidiary of A1 Capital whose shareholders were the Baobab Family
Trust (the second tier holding company of Matrox); Leo Chetty Trust and Vadivaloo
Family Trust. Matrox was therefore related/inter -related to A1 Capital, as A1 Capital
shareholders also exercised control directly or indirectly over Matrox and Educor.9

shareholders also exercised control directly or indirectly over Matrox and Educor.9

[28] In order to reach a determination on this issue, there must be a close
examination of the amount of control, if any, that each of the companies or entities
exercised over the other. The basic layout being that A1 Capital was the holding

7 Replying affidavit, paras 34-36.
8 The applicant’s heads of argument, para 89.
9 Respondent’s heads of arguments, page 14, paras 36 and 37.

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company of Educor and a series of other subsidiary companies. Educor was solely
owned and therefore controlled by A1 Capital. Baobab Family Trust held 37 percent
shares in A1 Capital. Baobab Family Trust held 100 percent shares in Success
College, which held 100 percent shares in Matrox.

[29] The central question that arises from the above layout is whether the
shareholding of Baobab Family Trust in A1 Capital induced any relations or inter -
relations between A1 Capital; Educor and Matrox. It must be noted that as a 37
percent shareholder in A1 Capital, Baobab Family Trust was not the majority
shareholder and exercised no majority control or material influence and therefore not
a controller in A1 Capital. Matrox did not feature in the shareholding or memorandum
of incorporation that granted it some exercise of control and did not have any
material influence in Educor and vice versa.

[30] Baobab Family Trust was registered as a trust in 2011, with three trustees,
namely Chetty; Govender and Delgado. The Trust held 100 percent shares in
Success College. It is common cause that A1 Capital is the sole shareholder of
Success College, which is the sole shareholder of Matrox. Then, it would be correct
to classify Matrox as an indirect subsidiary (second tier) of Baobab Family Trust,
which was one of the three shareholders of A1 Capital. However, Baobab Family
Trust shareholding in A1 Capital was 37 percent, which was a minority shareholding,
and not a controller. Educor which was a subsidiary of A1 Capital, which did not hold
any shares in Matrox and Baobab Family Trust and with no controlling power over
Educor. There was also no memorandum of incorporation or any agreement in place
that granted either Educor or A1 Capital control that gave them material influence
over the operations of Matrox.

[31] On the facts, Matrox held no shares or rights, either to vote or control in
Educor and A1 Capital. Conversely, neither Educor nor A1 Capital exercised control

Educor and A1 Capital. Conversely, neither Educor nor A1 Capital exercised control
or majority shareholding in Matrox. Therefore, there was no basis for the proposition
that Matrox was related or inter -related to Educor. The fact that Baobab Family Trust
held 100 percent in Success College, which wholly owned Matrox, and 37 percent in
A1 Capital shareholding, did not establish the requisite control. The 37 percent held
by Baobab Family Trust in A1 Capital did not confer unto it s majority control over A1

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Capital or its board. There had been no evidence to indicate that Baobab Family
Trust possessed any material or majority influence in A1 Capital’s policies in a way
that is contemplated in s 2(2)(d) of the Act.

[32] In Kuttel v Master of the High Court and Others 10 the Supreme Court of
Appeal (SCA) observed that control exists where there is sufficient voting power and
the ability to materially influence the company’s policy. In casu, there was no basis
or there were no factors which suggest that Baobab Family Trust exercised majority
control over A1 Capital, and if there was any arrangement or agreement that granted
it majority voting powers or any material influence in the affairs of Educor. Therefore,
in the absence of any evidence to imply otherwise, there was no inter -relations or
relations between Educor and Matrox, either directly or indirectly within the meaning
of s 2 of the Act. Ultimately, when Matrox decided to secure Educor’s debt in favour
of BOC, it was not engaged with a company that was related or inter -related to it, as
there was no relations or inter-relations established between Matrox and Educor.

[33] Therefore, the mere fact that Baobab Family Trust controlled Success
College, and through it , Matrox, while holding 37 percent interest in A1 Capital, does
not suffice, in the absence of any other requisite voting rights, or control in the
appointment of directors, to accord Baobab Family Trust direct or indirect control on
Matrox and Educor. These characteristics of Baobab Family Trust do not establish
the necessary statutory connection of control between Matrox and Educor. Upon a
closer examination of the influence or lack thereof of Baobab Family Trust within A1
Capital, Matrox operated and functioned entirely independent from A1 Capital and
Baobab Family Trust. The link between A1 Capital and Baobab Family Trust is not
sufficient to induce any form of relation/inter-relation between Educor and Matrox
within the meaning of s 2 of the Act.

within the meaning of s 2 of the Act.

[34] As to whether there was relations or inter -relations between A1 Capital and
Educor, it was common cause that Educor was the subsidiary company of A1
Capital. A1 Capital also exercised complete control over the operations and policies
of Educor, as its holding company. According to the organigram of the entities that

10 Kuttel v Master of the High Court and Others [2022] ZASCA 156; 2023 (3) SA 498 (SCA).

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were registered under the umbrella of A1 Capital, Educor ’s name appears.
Therefore, on the basis of this connection, A1 Capital directly or indirectly controlled
Educor, or its business as its subsidiary. Educor was thus related to A1 Capital as
contemplated in s 2(1)(c) of the Act.

[35] However, in this regard, BOC contended that, in terms of the 2024
amendment to s 45 of the Act and by virtue of Educor being a subsidiary of A1
Capital, the exemption from compliance with s 45 applied. This shall be examined
closely below.

Was there compliance with s 45 of the Act
[36] BOC contended that even though compliance with s 45 was not necessary for
the validity of Matrox ’s suretyship that it sought to enforce, Matrox and A1 Capital
had satisfied both the solvency and liquidity tests when they secured Educor’s debts
in favour of BOC. 11 Further thereto, BOC argued that, by virtue of Educor being the
subsidiary of A1 Capital, A1 Capital’s compliance with s 45 was not a prerequisite for
the validity of the security that was provided by Matrox. BOC also argued for
retrospective application of s 45(2A) which came into operation in December 2024,
for the purposes of A1 Capital ’s suretyship. According to BOC , a retrospective
application of s 45(2A) would imply that compliance with s 45 requirements was no
longer a prerequisite for the validity of the A1 Capital suretyship because Educor was
its subsidiary.

[37] In demonstration of the alleged compliance with s 45 by both Matrox and A1
Capital, BOC highlighted that:
(a) On 17 November 2016, A1 Capital shareholders passed a special resolution
in terms of which it would bind A1 Capital as surety and co -principal debtor in
favour of BOC for due fulfilment of obligations that arose or which could arise
in future for Educor or for which Educor could become contingently liable to
BOC and the suretyship was limited to R200 million. This was signed by
shareholder representatives; the directors and the auditor of A1 Capital.

shareholder representatives; the directors and the auditor of A1 Capital.

11 Replying affidavit, para 40.

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(b) On the same day, a resolution was signed by A1 Capital directors. They
resolved that:
‘in terms of s 45 of the companies Act of 2008, the directors of the company had
considered all reasonably foreseeable financial circumstances of the company in
applying the solvency and liquidity test and had had sight of the special resolution of
the shareholders in respect of the unlimited suretyship below. The terms of the
financial assistance in the form of a suretyship are fair and reasonable. The assets of
the company or, if the company is a member of a group of companies, the aggregate
assets of the company, as fairly valued, equal or exceed the liabilities of the company
or, if the company is a member of a group of companies, the aggregate liabilities of
the company as fairly valued.’

[38] BOC highlighted that Matrox, had denied that there were s 45 resolutions
when it pleaded to the action proceedings that were instituted under case number:
D4412/2023. Furthermore, through Ms Johnson, Matrox was emphatic that neither
its board nor that of A1 Capital applied the liquidity test on the basis that they were
required to only consider the solvency test.12

[39] On the other hand, still on the question of s 45 compliance, Matrox gave
mutually destructive versions as to whether there were s 45 resolutions or not. In the
answering affidavits deposed to by Ms Johnson dated 27 November 2023 and 19
January 2024, she denied the existence of such resolutions. She emphasized that
she had personal knowledge of it. In her affidavit dated 26 September 2024 , her
version changed and she admitted the existence of the s 45 resolutions. However,
she claimed that the existing resolutions were inadequate due to there being no
substantive compliance with s 45.13

[40] Matrox’s case was that relations and inter -relations between itself, A1 Capital
and Educor, were always known to BOC and that these attracted the applicability of

and Educor, were always known to BOC and that these attracted the applicability of
s 45. Matrox also contended that BOC had conceded that the Matrox suretyship; and
the bond and cessions which BOC sought to enforce constituted financial assistance
within the meaning of s 45. In this regard, Matrox referred to the following

12 Applicant’s heads of argument, para 139.
13 Answering affidavit dated 26 September 2024, Vol xi, page 837, para 133; page 840, para 149.

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communication between Mr Trevor Dou of BOC, and Ms Johnson dated 27 October
2021:
‘Hello Trevor attached please find the A1 Group structure and that of Matrox for reference to
Item 2 below. You will note that both have baobab Family Trust as shareholders, which is
where the link is to the group.’

[41] According to Matrox, BOC failed to provide evidence that the directors of
Matrox applied the correct solvency and liquidity tests. Matrox insisted that the
correct application of the test, which was not followed in its instance, would have
been for the board of directors, immediately after providing the financial assistance,
firstly, to consider all reasonable and foreseeable financial circumstances of Matrox
at the time and if its assets, when fairly valued, equal led or exceeded the liabilities of
Matrox. Secondly that they failed to consider if Matrox would be able to pay its debts
as they became due in the ordinary course of its business for a period of 12 months
after the date when they applied the test.

[42] Matrox contended that BOC did not give its board the opportunity to
adequately comply with s 45 in that they could not engage with the terms for the
proper solvency and liquidity tests. Instead, it was BOC which presented resolutions
that it drafted, wherein BOC dictated terms. Matrox therefore argued that the
financial assistance it provided in the form of a suretyship and/or mortgage bond and
cession were void and unenforceable in terms of s 45(6). It was contended that the
validity of Matrox’s suretyship was a condition for the fourth facility agreement and its
invalidity rendered the facility void ab initio. According to Matrox the question of the
validity of the suretyship agreement laid in the failure by its directors to comply with s
45 requirements to the extent that the failure rendered the agreements null and void
and of no effect.

[43] What constitutes compliance with s 45 was settled in Constantia Insurance Co

[43] What constitutes compliance with s 45 was settled in Constantia Insurance Co
Ltd v Master, Johannesburg High Court and Others 14 where the SCA held that: “the
board of a company must adopt a resolution to provide financial assistance to a
company or person mentioned in s 45(2)”; if it is satisfied that “after providing the

14 Constantia Insurance Co Ltd v Master, Johannesburg High Court and Others [2022] ZASCA 17;
2023 (5) SA 88 (SCA (Constantia Insurance) para 27.

16

financial assistance, the company would satisfy the solvency and liquidity test”;15 and
that “the terms under which the financial assistance is proposed to be given are fair
and reasonable to the company”. 16 The board must satisfy itself, in terms of s
45(3)(b) that “it was appropriate to place its assets at risk” in terms of the financial
assistance provided.17 The SCA also clarified that:
‘Formal and procedural requirements must be distinguished from substantive requirements
for the validity of a resolution or agreement… The requirements that the board of a company
must resolve to provide financial assistance under s 45 and that it must be satisfied of the
matters mentioned in s 45(3)(b), are substantive requirements.’18

[44] The starting point should be to record that contrary to the evidence of Matrox,
for both A1 Capital and the Matrox suretyships, including the collateral mortgage
bond and cession, there were resolutions passed by the respective shareholders and
the board of directors. However, the point that remains to be determined would be
the value, if any, that could be attached to these resolutions in regard to whether
they fulfilled the requirements of s 45, where necessary. The main complaint by
Matrox is that, although these resolutions, which they earlier denied existed, sought
to satisfy the solvency and the liquidity tests, they were inadequate and fell below
the threshold of substantive and substantial compliance requirements.

[45] In regard to Matrox, evidence shows that on 25 September 2020, Success
College as the sole shareholder of Matrox passed a special resolution in terms of
which Matrox would bind itself as surety and principal debtor in favour of BOC for
fulfilment of debts owed by Educor to the limit of R100 million. This was followed by
a resolution of Matrox on 29 September 2020 wherein directors applied the solvency
and liquidity test and resolved that they considered all reasonably foreseeable

and liquidity test and resolved that they considered all reasonably foreseeable
financial circumstances of the company. In addition, thereto, this resolution was later
endorsed by their auditors on 7 October 2020, wherein the solvency of Matrox was
confirmed. On 13 October 2020, Matrox furnished BOC with its annual financial
statements for the period that ended February 2020. Subsequent thereto, on 28
October 2020 the suretyship was executed.

15 Ibid para 28.
16 Ibid.
17 Ibid para 31.
18 Ibid para 34.

17


[46] Before the first credit facility agreement dated 17 November 2016 was
concluded, the directors of A1 Capital recorded their resolution that “they considered
all reasonably foreseeable financial circumstances of the company in applying the
solvency and liquidity test and had sight of the special resolution of shareholders in
respect of the unlimited suretyship”.19 Notably, clauses 1-4 of the resolution reflected,
verbatim, the requirements for compliance as contemplated in s 45(3) (b) of the Act
and Constantia Insurance. This resolution finds consistency in clause 2.1 of the
facility agreement that was between Educor and BOC, dated 18 November 2016 and
concluded on 26 November 2016, and the annual financial statements for December
2018 of A1 Capital endorsed that both the solvency and the liquidity tests were
performed.20

[47] The processes followed, as illustrated above, involved and purposeful
compliance with s 45 requirements in regard to the factual and commercial solvency
of both Matrox and A1 Capital. They also demonstrate that when the resolutions
were passed, the respective decision makers were not merely going through the
motions. The passing of these resolutions are not consistent with Matrox’s
allegations that the resolutions were drafted by BOC and merely given to individual
directors to append their respective signatures. The endorsements by the respective
auditors and sharing of annual financial statements with BOC (13 October 2020 in
respect of Matrox and 2 November 2020 in respect of A1 Capital) strengthen BOC’s
argument that there was meaningful consideration of the s 45(3) requirements.

[48] With reference to Ekurhuleni Municipality v Germiston Municipality Retirement
Fund,21 regard must also be had to context in which these suretyship agreements
were executed. It seems that compliance with the requirements in s 45 was
motivated by BOC. It would be fair to conclude that in all likelihood, BOC was

motivated by BOC. It would be fair to conclude that in all likelihood, BOC was
conscious of its importance to the facility agreements that were under consideration
and the financial assistance that w as to be extended to Educor. Even as the various
boards proposed the respective sureties, BOC was actively involved to ensure their

19 Resolution passed by directors of A1 Capital in terms of s 45 of the Act.
20 A1 Capital annual financial statement for the year ended 31 December 2018, Vol viii, page 592.
21 Ekurhuleni Metropolitan Municipality v Germiston Municipality Retirement Fund [2009] ZASCA 154;
2010 (2) SA 498 (SCA) para 13.

18

validity. These efforts on the part of BOC must also be viewed in light of the realities
that, it had no control on the internal operations of all the entities that were involved
but still made efforts to safeguard the integrity of the agreements, as funds were
advanced to Educor.

[49] It must be noted further that although Matrox was initially untruthful about the
existence of the s 45 resolutions, at a later stage when they were presented, it no
longer persisted that there was complete non -compliance but changed its stance to
allege that compliance was inadequate. Despite the mutually destructive versions of
Ms Johnson in this regard, evidence had been presented to demonstrate that s 45
resolutions were passed, and were correct procedurally and in substance, at the
levels of the shareholders and directors. There were annual financial statements and
endorsements by the auditors.

[50] On a conspectus of the evidence; having closely examined the substance and
processes in the s 45 resolutions, a nd fortified by Constantia Insurance, nothing
would render as invalid, the suretyship agreement that was concluded by Matrox.
Accordingly, Matrox’s suretyship to the fourth facility agreement fully complied with s
45 and is valid.

[51] Matrox also attacked BOC’s reliance on the Matrox surety agreement on the
basis that they were invalid and void for the reason that A1 Capital ’s suretyship had
failed to comply with s 45 mandatory requirements when they secured the first to the
third facility agreements. Matrox contended that, because the fourth facility
agreement was an extension of the first three agreements, it followed that the
suretyship it concluded in favour of BOC also fell to be invalid and void. It argued
that it was this invalidity that rendered the Matrox suretyship agreement to be invalid
and void. This was Matrox’ s case after it had earlier pleaded in the action
proceedings, that no s 45 resolutions were passed at all. However, when these

proceedings, that no s 45 resolutions were passed at all. However, when these
resolutions were provided by BOC, the version of Matrox changed to admit the
existence of the resolutions. However, the goal post shifted with Matrox claiming that

19

the existing resolutions were inadequate due to no substantive compliance with s
45.22
[52] On the other hand, BOC argued that this argument was absurd, and referred
to Hartley v Pyramid Freight (Pty) Ltd t/a Sun Couriers, 23 to make the point that,
requiring BOC to establish that the directors applied both liquidity and solvency test s
would amount to paternalism, which was contrary to the caveat subscriptor rule. 24
BOC also submitted that, even if it were found that the A1 Capital resolution was
invalid for failure to comply with s 45, such defect should not negatively affect the
validity of the Matrox suretyship agreement. BOC argued that the A1 Capital
suretyship agreement of the first to third facility agreements had no bearing on the
fourth facility agreement and the validity of the Matrox suretyship agreement.

[53] The argument by Matrox failed to appreciate that A1 Capital directors
recorded that there were adequate financial resources to continue operating for the
foreseeable future and that the consolidated annual financial statements had been
prepared. They were satisfied that A1 Capital was in a sound financial position and
had access to sufficient borrowing facilities to meet foreseeable cash requirements.
The directors had reported that they were not aware of any material non -compliance
with statutory and regulatory requirements or of any pending changes to legislation
that could affect the company.25

[54] The financial statements of 31 December 2018 also record A1 Capital ’s
financial liabilities, which acknowledged that:
‘The company (Educor) had a facility agreement with the bank of China amounting to
R200M, with interest at the 3 months JIAR plus 3 % per annum, the interest was payable
quarterly. Further that the facility was secured by limited suretyship of R200M from A1
Capital.’26
I agree with BOC’s argument that the detail and substance of the resolution, and to
the extent that it may present with some faults and weaknesses, should not be

the extent that it may present with some faults and weaknesses, should not be
imputed on BOC and have no negative bearing on the validity of the subsequent

22 Answering affidavit dated 26 September 2024, Vol xi, page 837, para 133; page 840, para 149.
23 Hartley v Pyramid Freight (Pty) Ltd t/a Sun Couriers [2006] ZASCA 10; 2007 (2) SA 599 (SCA para
9.
24 The applicant’s heads of argument, page 150, para 133.5.
25 Ibid page 540, para 8.
26 Ibid page 592.

20

suretyship agreement. Having said that, upon consideration of the particulars and
the purpose for which the resolution s were made, I am satisfied that on a balance of
probabilities there was adequate compliance with s 45 when the security was
provided by A1 Capital to Educor’s facility agreements.

[55] Mr Harpur SC for Matrox argued that s 20(7) of the Act, alternatively common
law estoppel did not apply to s 45 non -compliance. He further argued that estoppel
could not render valid a contract that was void in terms of the statute.

[56] As to the question of the applicability of s 20(7) of the Act, in light of the
finding above, I consider it unnecessary to traverse this question. Overall, BOC has
demonstrated material factors that also distinguished its issues from those in
Constantia Insurance, where there was no evidence that the board had considered
the matters mentioned in s 45(3) (b) in respect of entering into indemnity. 27 In the
case of Matrox and Educor, any proposition that there was no compliance with s 45
does not find support in the technical evidence to the contrary and cannot be
sustained. There was full compliance , even though the two entities were neither
related nor inter -related. Accordingly, the contention that alleged non -compliance
with s 45 rendered the Matrox suretyship agreement null and void and of no effect
fails. In the circumstances s 45(6) has no effect on the Matrox suretyship.

Should A1 Capital suretyship agreements have any impact on the validity of
Matrox’s suretyship
[57] The initial facility agreements between Educor and BOC were secured by A1
Capital. Educor was the subsidiary of A1 Capital when the financial assistance was
provided to in favour of BOC.

[58] When the first debt became due for payment, and when Educor had failed to
pay the debt, BOC did not enforce the A1 Capital suretyship that was in operation.
Instead, second and third facility agreements were concluded, extending and

Instead, second and third facility agreements were concluded, extending and
revising the terms of the initial agreement/s. Still the debt remained unpaid. Then the

27 Constantia Insurance para 31.

21

fourth facility agreement that was in part secured by Matrox was concluded. This too
was not paid by Educor.

[59] Matrox also attacked the validity of its suretyship by arguing that, since the
suretyship provided by A1 Capital to the other facility agreements was void and of no
effect, then it followed that the suretyship provided by Matrox also fell to be void and
of no effect.

[60] According to Matrox, although it had earlier disputed the existence of A1
Capital’ s 45 resolutions, after they were presented, it argued that those resolutions
did not adequately comply with s 45, which rendered them to be void and of no
effect. Further with that being the precursor to the fourth facility agreement, the
suretyship agreements of A1 Capital were intertwined and inseparable to that of
Matrox, which secured the fourth facility agreement. On that basis, Matrox argued,
the invalidity of the A1 Capital suretyship rendered the Matrox suretyship invalid and
of no force.

[61] In my view, the inclination to integrate the A1 Capital suretyship into the
Matrox suretyship should be rejected for it fails to appreciate that:
‘[11] A contract of suretyship is distinct from the contract or contracts between the principal
debtor and the creditor that give rise to the principal indebtedness, but it is accessory to that
contractual relationship and the principal debtor's obligations under it. Subject to any specific
limitation, such as a suretyship in a limited amount, the surety's obligations are coterminous
with those of the principal debtor. Where the surety signs as a co -principal debtor, as did …,
the addition of those words shows that the surety is assuming the same obligations as the
principal debtor. In other words, the obligation of the surety is the same as that of the
principal debtor. It follows from the accessory nature of the surety’s undertaking that the
liability of the surety is dependent on the obligation of the principal debtor.

liability of the surety is dependent on the obligation of the principal debtor.
[12] A consequence of this is that, if the principal debtor’s debt is discharged, whether by
payment or release, the surety’s obligation is likewise discharged.’28 (Footnotes omitted.)


28 Van Zyl v Auto Commodities (Pty) Ltd [2021] ZASCA 67; 2021 (5) SA 171 (SCA). See also Trevo
Capital Ltd and Others v Steinhoff International Holdings (Pty) Ltd and Others 2021 (6) SA 260 (WCC)
para 126.

22

[62] Furthermore, for the validity of the Matrox suretyship, it should suffice that it
complied with s 6 of the General Law Amendment Act 50 of 1956; that it secured the
fourth facility agreement which was successive to the initial facility agreements; and
that it was an independent contract that was not extending and incorporating the
surety agreements of A1 Capital. More particularly that the fourth facility agreement
was concluded with its own terms that were unique to it. 29 Indeed, Matrox secured a
debt the fourth credit facility agreement after the first three agreements, which were
secured by A1 Capital . However, there is no legal basis upon which Matrox
suretyship agreement should be susceptible to the A1 Capital suretyship
agreements. If at all, the validity of Matrox’s suretyship agreement could only be
impacted by the invalidity of the principal debt, which was the fourth facility
agreement in this instance.30

[63] In casu, the suretyship agreement in favour of BOC, by Matrox, is a distinct
contract that does not engage A1 Capital’s suretyship in any way or form. A1 Capital
had no obligations to Matrox , and vice versa, arising from the suretyship that was
executed by Matrox in favour of BOC. The debt owed to BOC by Educor remained
unpaid, at least to the extent that Matrox was implicated by the suretyship
agreement, Matrox’ s liability to BOC depended on the existence of Educor’s
indebtedness to BOC and not on the validity of a separate suretyship that was
furnished by A1 Capital to the other facility agreements. The involvement of A1
Capital’s surety agreements have no bearing whatsoever to the alleged obligations
of Matrox to BOC.

[64] The Matrox’s suretyship constituted a separate and independent agreement
from any suretyship furnished by A1 Capital. Furthermore, in the absence of any
provision in the Matrox suretyship agreement that it was expressly conditional upon
the validity of the A1 Capital suretyship, there is clearly no legal reason for treating

the validity of the A1 Capital suretyship, there is clearly no legal reason for treating
these suretyship agreements as inseparable. A1 Capital suretyship agreements are
distinct and of no effect to the Matrox suretyship agreement. Therefore, as Educor's
indebtedness to BOC has not been discharged, Matrox’ s accessory obligation as
surety likewise remains extant and enforceable.

29 Neon and Cold Cathode Illuminations Pty Ltd v Ephron 1978 (1) SA 463 (A).
30 Kilroe-Daley v Barclays National Bank 1984 (4) SA 609 (A).

23


Did the 2024 amendment of s 45 have retrospective application
[65] Section 45(2)(A) provides that:
‘The provisions of this section do not apply to the giving by a company of financial
assistance to or for the benefit of its subsidiaries.’
This amendment came into operation on 27 December 2024. Bearing in mind that
the conclusion of the suretyship s by Matrox and A1 Capital preceded the date on
which this provision commence , the question that arises is whether the exemption
provided by s 45(2A) should apply to the financial assistance that was provided to
Educor.

[66] In this regard, Mr Mentjies emphasised that, if for any reason, the entities
affected were found to be related or inter -related in the context of the Act, it should
be found that by virtue of this amendment, Matrox and A1 Capital were exempt from
compliance with ss 45(2) and (3).

[67] BOC further argued that the s 45(2A) amendment served as a safeguard to
counter abuse of control and regulate disclosure in certain circumstances. BOC
submitted that for this reason the amendment should apply retrospectively in these
proceedings. Mr Mentjies gave the following four grounds in support of this
argument:
(a) that failure to give it such effect would lead to an absurdity or practical
injustice as the new provision sought to rectify an inequitable state of affairs;
(b) the use of the word ‘shall’ in the text sought to impose certainty;
(c) retrospective application meant that creditors were relieved of the risk of
having their agreements declared void and debtors would not have comply
with the cumbersome compliance requirements; and
(d) no one’s rights would be impaired by retrospective application and there
would be no more obligations and duties or adverse consequences for both
creditors and debtors.

[68] BOC insisted that even in the absence of express retrospectivity in the Act,
the need to remove the apparent injustice or unintended consequences of the

the need to remove the apparent injustice or unintended consequences of the
mandatory requirement had already materialised when the impugned suretyship

24

agreements were executed. Hence it should apply in the instance to A1 Capital and
Matrox.

[69] On the other hand, Mr Harpur submitted that the contention that the 2024
amendment applied retrospectively was without merit. He argued, with reference to
National Iranian Tanker CO v MV Pericles GC,31 that a statute does not apply
retrospectively unless there is an express provision to that effect. He also argued
that retrospective application would not assist BOC because Educor was not the
subsidiary of Matrox.

[70] A historical perspective together with the developments in the build -up of this
amendment may be of guidance when one engages with the question of whether s
45(2A) should apply retrospectively. It remains a fact that the conception of the
amendment dates back to 2011; with some further reconsiderations in 2018 and
2021. However, the reality remains that the amendment which came into effect on 27
December 2024 was expressly silent on retrospectivity.

[71] Further thereto, whilst it must be appreciated that the amendment sought to
remove procedural barriers to promote efficiency and agility in doing business , in the
circumstances at hand, in affording retrospective application must be alive to the
general sentiment against giving retrospective effect to legislative amendments, as
consistently expressed in developed jurisprudence. 32 In National Director of Public
Prosecutions v Carolus and Others ,33 the SCA provided clarity on the circumstances
that would justify retrospective application. The SCA reinforced that courts should
lean against interpretations in the sense of taking away or impairing a vested right
acquired under existing laws.


31 The respondent’s heads of argument, para 14; National Iranian Tanker Co v MV Pericles GC 1995
(1) SA 475 (A) at 483H-I.
32 Mudau v Municipal Employees Pension Fund and Others [2023] ZACC 26; (2023) 44 ILJ 2641
(CC)
where the Constitutional Court cautioned that retrospective rules or legislative amendments ought not

apply prior to their formal registration or promulgations, safeguarding accrued benefits and vested
rights. In S v Mhlungu and Others 1995 (3) SA 867 (CC) para 65 the Constitutional Court emphasized
the presumption against retrospectivity to legislative amendments.
33 National Director of Public Prosecutions v Carolus and Others 2000 (1) SA 1127 (SCA).

25

[72] With all that said, the point of departure should be whether the provisions of s
45(2A) find application to the matrix between BOC and Matrox. The answer to this
question lies in the purpose and literal text of the amendment, which expressly
relates to subsidiaries and their holding companies. As already found above, Matrox
and Educor are neither related nor inter -related and Educor was simply not the
subsidiary of Matrox when the financial assistance was provided. So, even if the
suretyship agreement in issue was concluded after 27 December 2024, it would not
have been subject to s 45(2A). For that reason, even if retrospectiv ity was assumed,
s 45(2A)would not have been applicable to Educor and Matrox.

[73] For the purposes of A1 Capital, as a holding company of Educor, whose
relations would have been covered by the s 45(2A) amendment, to the extent that
retrospective application would have some consideration, guidance must be sought
from the general approach in which the courts always favoured the interpretation that
maintains stability in corporate matters over retrospectivity.

[74] Having due regard to the matters at hand, a case has not been made out to
justify a determination that retrospective application of s 45(2A) is warranted herein.
This position in my view is fortified by the earlier determination that A1 Capital’s
suretyship agreement was distinct from that of Matrox and one agreement had no
impact whatsoever on the other. Perhaps, much more than what is contained in the
available evidence would be necessary to induce an informed determination on the
retrospective application of s 45(2A) to A1 Capital ’s suretyship agreement. One
ought to be reminded that the enquiry in these proceedings was less about the
validity of A1 Capital ’s suretyship than it was about the validity and enforceability of
the Matrox suretyship.

[75] Having considered BOC’s argument , I am not persuaded that s 45(2A)

[75] Having considered BOC’s argument , I am not persuaded that s 45(2A)
applies to Matrox and Educor and that retrospective application is warranted in
relation to A1 Capital and Educor, and to the extent that they may have any bearing
on the validity of Matrox’s suretyship.

The pending litigation and/or lis alibi pendens

26

[76] On 25 April 2023, BOC instituted action proceedings for a money judgment
against Matrox under case number: D4412/2023. BOC sought to enforce the
suretyship agreement that was concluded by Matrox in its favour. BOC claimed
payment of an amount of R100 million, and that the immovable property against
which Matrox executed a mortgage bond be declared specifically executable.

[77] Matrox defended the claim and on 2 November 2023 filed its plea. This was
followed by an application for summary judgment that was launched on 23
November 2023, which Matrox also defended.

[78] In resisting the summary judgment application, Matrox argued that the debt
which BOC sought to enforce was already secured by means of a mortgage bond,
which had a municipal value of R100,87 million. Matrox contended that the further
security that was available to BOC was the ceded benefits from the insurance
policies of Matrox. Matrox also contended that BOC’s claim was not founded on a
liquidated amount and had no certificate of balance and therefore fell outside the
ambit of Uniform rule 32(1).

[79] Matrox further contended that it had a bona fide defence to the claim on the
basis that BOC had failed to disclose that there were other preceding facility
agreements that were concluded before the suretyship agreement which implicated
Matrox. Among others, Matrox raised the defence of non-compliance with s 45 of the
Act, asserting that BOC’s action was based on a suretyship agreement that was null
and void.

[80] On 4 March 2024 Matrox was granted leave to defend the action. BOC
persisted that the defences raised by Matrox failed to raise issues for trial and did not
amount to a bona fide defence but were meant to delay an inevitable judgment
against it. BOC contended that when Matrox answered and/or pleaded to the action
and application proceedings that were instituted under case number: D4412/2023,
Ms Johnson, who deposed to the answering affidavits swore that there were no s 45

Ms Johnson, who deposed to the answering affidavits swore that there were no s 45
resolutions passed at all. However, when these resolutions were attached to the
founding affidavit, her version changed and she admitted the existence of the
resolutions.

27

[81] The liquidation applications were opposed and still pending when this
application was argued. The subject matter of the dispute in casu arise from the
fourth loan facility agreement that was secured by Matrox in favour of BOC.34

[82] The BOC submitted that the Badenhorst principle35 found no application in
this matter. It referred to Trinity Asset Management (Pty) Ltd v Grindstone
Investments 132 (Pty) Ltd36 to make the point that:
‘When the dispute about the debt is not whether it existed or its amount but about its
eligibility, things are different. Then the doubt arises from a disputed principle, not contested
facts. This means that the liquidation or sequestrating court is not diverted into a time -
consuming and complex factual enquiry. The only point before it is a law point.’37

[83] Matrox contended that the fourth facility agreement superseded the initial
three facility agreements on the basis that those initial agreements were void and
unenforceable because they failed to comply with s 45 of the Act, which required the
shareholders’ and directors’ resolutions. Matrox also protested that “BOC has failed
to allege that there were valid section 45 resolutions signed in respect of the other
security agreements”.38 Matrox however later changed this version and admitted that
the resolutions had been concluded.

[84] The Badenhorst principle remains instructive in that winding -up proceedings
may not be resorted to as a means of enforcing payment of a debt which is bona fide
and reasonably disputed. In essence, regard must be had to whether it was
competent for BOC to institute these insolvency proceedings while there was action
proceedings against Matrox and liquidation proceedings against Educor and A1
Capital.
[85] If regard be had to the questions in the liquidation application against Matrox,
when considering the dispute, it must also be borne in mind that, in Trinity Asset
Management, the legal point was the prescription of Trinity’s claim. The

Management, the legal point was the prescription of Trinity’s claim. The

34 Founding affidavit of Arne Alfred Dittrich, para 31 deals specifically with the fourth facility agreement
that implicated Matrox.
35 Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T).
36 Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd [2017] ZACC 32]; 2018
(1) SA 94 (CC) (Trinity Asset Management).
37 Ibid para 87.
38 Answering affidavit of Ms. Johnson in case number: D9983/2023, Bundle XI, page 676, para 46.

28

Constitutional Court had to determine whether the high court was wrong, as a matter
of law, to decide the law point. Cameron J, concurring with the majority held that the
Badenhorst principle did not preclude the determination of a straightforward law point
by a liquidation or sequestration court, if it was a killer point based on common cause
facts.39

[86] The legal point raised by Matrox was the failure to comply with the mandatory
procedures under s 45 of the Act, which is a point of law, and if proven on a balance
of probabilities would amount to a bona fide defence. Having said that, and at the
risk of repetition, this legal point has been traversed in detail hereabove and was
found to be unsustainable. This I said on the basis that, Ms Johnson who swore
under oath on behalf of Educor and Matrox, gave false versions about the existence
of the s 45 resolutions. After having admitted their existence, she then introduced
another defence that the resolutions failed to fully comply with the s 45 liquidity and
solvency tests. Furthermore, an in -depth examination of the s 45 resolutions, the
financial statements and endorsements by auditors, that were later accepted to exist,
demonstrated unequivocal compliance in substance and in process.

[87] According to BOC, although there is pending litigation between the same
parties, the objectives of the liquidation proceedings are to set the machinery in
motion to have Matrox declared insolvent, as opposed to the action proceedings that
seek to have a money judgment. BOC submitted that the outcome of this matter will
affect the civil status of Matrox and there is no claim for redress or for recovery of the
rights of BOC. BOC also referred to ss 346(1) and 345(2) of the 1973 Companies Act
to make a point that for purposes of liquidation, the creditor’s claim need not be
actually payable.

[88] In demonstrating that the disputes are not the same, BOC emphasised the

[88] In demonstrating that the disputes are not the same, BOC emphasised the
distinction between the liquidation proceedings and the action proceedings, their
respective enquiries and outcomes for both the creditor and the alleged debtor. BOC
referred to ABSA Bank Limited v Van der Merwe40 where the plea of lis alibi pendens

39 Trinity Asset Management paras 86; 92-93.
40 ABSA Bank Limited v Van der Merwe [2018] ZAGPPHC 968.

29

was dismissed on the basis that the sequestration application was not based on the
same cause of action as the pending money judgment. The court held:41
‘…In the action, the applicant is endeavouring to enforce a right against the respondent and
for that purpose have to prove a contract, its breach and its entitlement to claim a specific
amount of money from respondent. A sequestration application is sanctioned by the
Insolvency Act. This act prescribes the requirements which must be met before such order
shall be made. Apart from showing that the respondent is indebted to the applicant in a
prescribed minimum amount the other requirements are totally different from the cause of
action in the action proceedings. .…’

[89] Matrox argued that the distinction upon which BOC relied between the cause
of action in the action proceedings and in the winding -up proceedings could not be
sustained, mainly because the dispute in both proceedings arose from the s 45
defence.42 According to Matrox, BOC’s contention that lis pendens does not apply
was incorrectly based on form over substance and it ignored established
jurisprudence on the doctrine.43

[90] Matrox referred to Caesarstone Sdot-Yam Ltd v World of Marble and Granite
2000 CC and Others,44 where the SCA held:
‘As its name indicates, a plea of lis alibi pendens is based on the proposition that the dispute
(lis) between the parties is being litigated elsewhere and therefore it is inappropriate for it to
be litigated in the court in which the plea is raised. The policy underpinning it is that there
should be limit to the extent to which the same issue is litigated between the same parties
and that it is desirable that there be finality in litigation. The courts are also concerned to
avoid a situation where different courts pronounce on the same issue with the risk that they
may reach different conclusions…’
Matrox asserted that, given the identical issues arising from the pending action and

Matrox asserted that, given the identical issues arising from the pending action and
the application, particularly where s 45 is concerned, it was not possible to divorce
the issues in casu to those that are to be determined in the action proceedings.


41 Ibid para 38.
42 Respondent’s heads of arguments, para 18.
43 Ibid para 19.
44 Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others [2013] ZASCA 129;
2013 (6) SA 499 (SCA) (Caesarstone) para 2.

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[91] The leading case on the approach to lis pendens remains Nestlé (South
Africa) (Pty) Ltd v Mars Inc,45 where the SCA stated:
‘There is room for the application of that principle only where the same dispute, between the
same parties, is sought to be placed before the same tribunal (or two tribunals with equal
competence to end the dispute authoritatively). In the absence of any of those elements
there is no potential for a duplication of actions.…’

[92] In evaluation of the pending action proceedings and the defence of lis alibi
pendens, it can be noted that before the action proceedings were instituted, on 9
March 2021, Matrox had registered a mortgage bond against its property, in favour of
BOC. This can be viewed as a concession or acknowledgment by Matrox that it was
indebted to BOC and that in earnest, Matrox needed to pay the amount of R100
million that was due to BOC, as undertaken in the suretyship agreement. It is also
important to note that the action proceedings sought a money judgment whereas the
proceedings herein seek insolvency processes and therefore do not overlap as they
seek distinct outcomes.

[93] If considered on the basis of Nestlé, these are distinct processes with different
objectives and therefore the defence of lis alibi pendens does not add value to
Matrox’s resistance to the provisional liquidation sought . Without engaging in the
merits of the action proceedings under case number: D4412/2023, and as discussed
in this judgment in detail, the defence of non-compliance with s 45 of the Act does
not advance Matrox’s efforts to resist the relief sought by BOC. In the case of Matrox
there was no legal obligation on the part of Matrox to comply with s 45 of the Act.
Nonetheless, it must also be recorded, that Matrox fully complied with s 45 when it
provided financial assistance to Educor.

[94] Therefore, if considered in light of the underpinning policy in Caesarstone,

[94] Therefore, if considered in light of the underpinning policy in Caesarstone,
although the same parties are involved, it is not the same dispute/issues that are
engaged and the courts involved will not be exposed to the risk of pronouncing on
the same issue. Accordingly, one finds no true duplication of proceedings in the
action proceedings pursued under case number: D4412/2023 and the insolvency
proceedings in casu. The two proceedings pursued by BOC cannot by any measure

45 Nestlé (South Africa) (Pty) Ltd v Mars Inc 2001 (4) SA 542 (SCA) (Nestlé) para 17.

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be described as parallel; the disputes are distinct and they involve the application of
distinct legal principles to different issues; and they seek different outcomes. 46
Furthermore, it must be borne in mind, that according to FirstRand Bank Ltd v Kona
and Another, 47 even if BOC had launched this liquidation application with the
objective of claiming the debt, it is immaterial, if regard is had to the fact that
insolvency proceedings aim “to set the machinery of the law in motion to declare a
debtor declared insolvent ”, with implications for both parties involved and third
parties.48

[95] Upon consideration of the Badenhorst principle and that the alleged non -
compliance or the alleged inadequate non -compliance would amount to a bona fide
and genuine defence, there remains no ground upon which BOC could be barred
from pursuing the liquidation proceedings at hand. Accordingly, Matrox’s claim of lis
alibi pendens in this instance fails.

Was Matrox commercially insolvent (s 345)
[96] The critical question that must be answered is whether Matrox was unable or
neglected to pay the debt of more than R100, after having been served with the
demand to pay the amount owed, which was due, and failed or neglected to pay or
provide security for it to the satisfaction of BOC.49

[97] According to BOC, in compliance with s 345(1)(a) of the 1973 Companies Act,
Matrox was served with statutory demands, which lapsed without any payment or
any security given to the reasonable satisfaction of BOC. BOC argued that the
defence that there was a mortgage bond secured in its favour did not translate to the
reasonable satisfaction of its demand, as this was inadequate. 50 For example,
Matrox had an annual income of R21 million, which was not enough to pay a debt of
R100 million. Further, on its own accord, Matrox admitted that according to its annual
financial statements (dated 30 September 2020, 31 October 2020, 28 February 2021

financial statements (dated 30 September 2020, 31 October 2020, 28 February 2021

46 MV Iran Dastghayb Islamic Republic of Iran Shipping Lines v Terra -Marine SA [2010] ZASCA 118;
2010 (6) SA 493 (SCA).
47 FirstRand Bank Ltd v Kona and Another [2015] ZASCA 11; 2015 (5) SA 235 (SCA).
48 Electrolux South Africa (Pty) Ltd v Rentek Consulting (Pty) Ltd 2023 (6) SA 452 (WCC) para 15.
49 Section 345(1)(a) of the 1973 Companies Act.
50 Applicant’s heads of argument, page 206, para 112.

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and 28 February 2022) its liabilities exceeded its assets. 51 Furthermore, the income
that Matrox would have earned through its rental income had been ceded to BOC
which was permissible as held in Oakdene Square Properties (Pty) Ltd and Others v
Farm Bothasfontein (Kyalami) (Pty) Ltd and Others.52

[98] Matrox contended that the mortgage bond and cession concluded could not
stand as security to the debt owed to BOC. The basis for this submission was that as
these collaterals amounted to financial assistance, they ought to have followed the s
45 compliance procedure, which they did not. Matrox highlighted that, unlike in the
Matrox and A1 Capital agreements where BOC presented resolutions, none were
presented in regard to these collaterals. So, there was no compliance with s 45 and
therefore, the collaterals fell to be void and of no effect.

[99] Furthermore, upon service with the third statutory demand on 13 October
2022, Matrox’s correspondence dated 3 November 2022 was communicated to
BOC. In essence, Matrox argued that it was still in negotiations with BOC for the
settlement by raising the ceding of Matrox’s rights in the insurance policies and the
registration of the mortgage bond of the immovable property in favour of BOC.
Matrox also contended that the inability to pay the debt was occasioned by effects of
the Covid 19 pandemic and the floods in KZN, which negatively affected the
business cash flow. Educor was also reliant on Matrox consenting to the sale of the
implicated immovable property on open market, which did not materialise, leaving
the debt unpaid. This in part occasioned the failure to pay the Educor debt, a
consequence of which was BOC’s institution of action proceedings seeking a money
judgment under case number: D4412/2023 against Matrox on 25 April 2023.


[100] The requirements under s 345 of the 1973 Companies Act are straight
forward. It remained incontestable that BOC was an undisputed creditor of Matrox

forward. It remained incontestable that BOC was an undisputed creditor of Matrox
and owed the amount of R100 million by Matrox, as it stood as surety for a debt that
was owed by Educor. It remains common cause that the debt owed had remained

51 Ibid, page 207, para 113.6; and Volume 10, page 884.
52 Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd and
Others [2013] ZASCA 68 ; 2013 (4) SA 539 (SCA) para 36. See also the applicant’s heads of
arguments, para 113.9.

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unpaid, and BOC continues to be embroiled in protracted litigation in its quest to
have the debt paid. As also emphasised in ABSA Bank Ltd v Tamsui Empire Park 1
CC,53 BOC was alive to its responsibility to serve the demand notices on Matrox and
also engaged constructively to have Matrox fulfil its obligations. Despite various
notices as required by the 1973 Companies Act,54 Matrox had failed to make good of
its commitment in terms of the suretyship agreement that was executed in favour of
BOC but instead continued to raise technical defences. Even after the loan
settlement letters of 7 June 2023 and 18 August 2023, the debt remained unpaid.
The failure to meet its obligations or put in place reasonable means in lieu of its debt
to BOC, necessitated the proposal by which Matrox would consent to the sale of its
property or shares on open market. Consistently, Matrox persisted in its failure and
refusal to pay its liabilities to BOC.

[101] In this instance, the efforts by BOC to enforce the Matrox suretyship were in
vain. In its resistance to the relief being sought herein , Matrox also raised other
defences including that it had a bona fide defence to the claim on the proper
application of the Badenhorst principle as well as alibi lis pendens. As discussed in
detail above, Matrox has not demonstrated that its indebtedness is indeed disputed
on bona fide and reasonable grounds 55 and also failed on the lis alibi pendens
defence.

Conclusion
[102] Matrox’s defence that its suretyship was void and of no effect could not stand
scrutiny. This finding if also fortified by the annual financial statements, in which it
was recorded that, ‘The directors had performed the required liquidity and solvency tests
as required by the Companies Act of South Africa, prior to the granting of financial
assistance to the related parties and declaration of dividends as set out in the statement of
changes of equity.’56


53 ABSA Bank Ltd v Tamsui Empire Park 1 CC [2013] ZAWCHC 187.

changes of equity.’56


53 ABSA Bank Ltd v Tamsui Empire Park 1 CC [2013] ZAWCHC 187.
54 Statutory notices dated 3 November 2022; 9 June 2023; 19 April 2024, to which Matrox responded
by raising the Badenhorst principle.
55 Afgri Operations Ltd v Hamba Fleet (Pty) Ltd [2017] ZASCA 24; 2022 (1) SA 91 (SCA).
56 Consolidated annual financial statements for the year ended 31 December 2018, Vol viii, page 540,
para 14.

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[103] It can be accepted that A1 Capital’s liability by means of the suretyship
agreement in favour of BOC was always common cause and not a subject of dispute
between Matrox and BOC. It is however noteworthy that A1 Capital ’s consolidated
annual financial statements for the year ended 31 December 2018 expressly
recorded that A1 Capital conceded in terms of the limited suretyship that it was
liable to BOC as it secured the facility agreement to Educor. A1 Capital also
acknowledged that funds would be available to finance the settlement of its liabilities
in the ordinary course of business.57

[104] In both A1 Capital’s annual financial statements (ending December 2018) and
Matrox’s (year ending February 2019), there were resolutions by each company that
there had been compliance with legislation, thus rendering the defence of the
applicability and non -compliance with s 45 an afterthought that falls short of
absolving Matrox from liability to BOC.
[105] When Matrox provided financial assistance to Educor in the form of a
suretyship agreement, the two entities were not related or inter -related within the
meaning of s 2 of the Act . T herefore, financial assistance that was provided by
Matrox to Educor did not trigger the application of the regulatory obligations under s
45. As discussed above, it has been illustrated that although Matrox was not legally
required to comply with s45, nonetheless, it did so, presumably, out of abundance of
caution.

[106] The defences raised by Matrox, namely the existence of a bona fide and
genuine defence and lis alibi pendens could not withstand scrutiny. Upon closer
examination of the substance of these defences, no sound legal ground could bar
BOC from pursuing the provisional liquidation of Matrox as set out in its notice of
motion. After due service with various statutory demand notices, Matrox still unduly
failed to meet its obligations in terms of the suretyship agreement that it executed in
favour of BOC.

favour of BOC.

[107] Due to the failure of Educor to pay or meet its obligations to BOC in terms of
the fourth facility agreement concluded on 25 September 2020 and executed on 28

57 Consolidated annual financial statements for the year ended 31 December 2018, page 51, para 37.

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October 2020, BOC was within its rights to seek to enforce the suretyship agreement
against Matrox. Matrox has no legal basis to resist its liability, as it remains indebted
to BOC in the amount of R100 million. Furthermore, Matrox on 9 March 2021, when
the mortgage bond was registered in favour of BOC, expressly declared its
indebtedness to BOC to the sum of R100 million. As part of the acknowledgment of
its indebtedness to BOC, on 30 July 2021, Matrox ceded its rights arising from the
insurance policies to BOC.

[108] Undoubtedly, despite the statutory demands dated 27 July 2022 and 9
September 2022, in terms of s 345(1) (a) of the 1973 Companies Act, served on 2
August 2022 and 13 October 2022, Matrox failed and refused to pay this debt.
Matrox has thus been shown to be insolvent and unable to pay its debts within the
meaning of s 345 of the Act.

[109] In as much as evidence has demonstrated that Matrox is insolvent and ought
to be liquidated, a final winding -up order may not be the correct approach at this
stage. A provisional winding -up order will be beneficial to the greater body of
creditors and also safeguard the integrity of the process. Therefore, upon an in-depth
consideration of the evidence and various factors peculiar to the circumstances
between Matrox and BOC, and on the exercise of this court’s due discretion, a
provisional winding-up order is the most suitable.

Costs
[110] In the notice of motion, the BOC did not seek an order in the determination of
costs. BOC neither sought to amend its notice of motion to cater for the costs of this
application. In the circumstances this court is not empowered to exercise its due
discretion in the absence of any relief sought in this regard. Accordingly, the issue of
costs of this application is reserved.

Order

[111] In the result, the following order is made:

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1. The respondent is placed under provisional winding -up in the hands of the
Master of the High Court, Pietermaritzburg.
2. That a rule nisi do issue calling upon the respondent and all other interested
parties to show cause to this Court on the 27TH of November 2026 at 9h30, or
so soon thereafter as the matter may be heard, why the respondent should
not be finally wound up.
3. The copy of this order:
3.1 be published on or before 13 October 2026 in one edition of The Mercury
newspaper and in one edition of the Government Gazette;
3.2 served in compliance with s 346A of the Companies Act 61 of 1973.
4. Costs reserved.

_________________
SIPUNZI J

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CASE INFORMATION


FOR APPLICANT(S): L Meintjies

Instructed by Rothmann
Phahlamohlaka Inc


FOR RESPONDENT(S): G Harpur SC

Instructed by Mooney Ford
Attorneys

HEARING DATE: 17 April 2026

DATE HANDED DOWN: 21 August 2026