IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
JUDGMENT
Case number no: 2024-145838
In the urgent intervention application of:
BRIGHT IDEA PROJECTS 1402CC
JOHN ANDREW BARNS
First Intervening Applicant
Second Intervening Applicant
FOR LEAVE TO INTERVENE AS AN APPLICANT IN THE FOLLOWING
PENDING APPLICATION FOR THE WINDING-UP OF THE RESPONDENT:
In the matter between:
FLUERY KWEKERY (PTY) LTD
and
MISCHA PREMIER VINES CC
(Reg. No.:1987/002460/23)
!Converted to a company under registration number:
2019/234022/07 on or about 13/05/2019]
Case No: 2024-145838
Applicant
Respondent
Registered address: Mischa Estate, Oakdene Road, Wellington, Western Cape
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Coram : Nziweni, J
Heard : 11 August 2026
Delivered : 14 September 2026 (electronically)
Summary : Insolvency Law - Concursus Creditorum-An intervening creditor who
alleges a desire to protect the collective interest of creditors, but subsequently
withdraws their application upon receiving a private, preferential debt settlement from
the respondent, acts incompatibly with the principles of the concursus creditorum.
Such a party leverages the judicial process for personal preference and cannot claim
"substantial success" or seek to fund a private, tactical exercise from the corporate
estate.
Practice - Motion Proceedings & Evidence- Motion proceedings are decided on
proven facts, not conjecture. - A party alleging an improper motive or lack of genuine
intent by an applicant bears the onus of producing clear, unassailable evidence. -
Speculative and generalised assertions cannot displace objectively established
statutory rights when jurisdictional requirements are met.
Practice - Costs on Withdrawal - A party who unilaterally withdraws an application
following a private settlement is generally liable for the wasted costs and is not entitled
to a costs order in its favour. -A rule nisi inviting parties to show cause regarding costs
creates no prima facie entitlement to a costs order.
Company - An unpaid creditor who clearly establishes a company's commercial
insolvency is entitled to a winding-up order as a matter of right - ex debito justitiae.
Where the primary application is unopposed and commercial insolvency is proven,
alternative internal disputes, domestic deadlocks, or 'just and equitable' grounds
raised by an intervening shareholder become secondary and redundant.
Insolvency - Costs of Superfluous Intervention- An intervening party's costs will only
be borne by the insolvent estate if their intervention contributes significantly to the
Court's decision to grant the winding-up order. If the intervention fails to alter the
Court's decision to grant the winding-up order. If the intervention fails to alter the
inevitable statutory consequence of the company's financial demise, it is entirely
superfluous and does not entitle the intervenor to costs order out of the estate.
ORDER
1. The respondent company is placed under final winding-up in the hands of the
Master of the High Court.
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2. The costs of the applicant creditor shall be costs in the liquidation of the
respondent estate.
3. The application for costs in the liquidation by the first intervening party is
dismissed.
4. The first intervening party shall bear its own costs incurred in these
proceedings.
5. The application for costs in the liquidation by the second intervening party is
dismissed.
6. The second intervening party shall bear his own costs incurred in these
proceedings.
JUDGMENT DELIVERED ELECTRONICALLY
Nziweni, J
Introduction and background
[1] This matter presents two distinct interesting questions regarding the entitlement to
costs in liquidation: first, whether an intervening creditor who withdraws their
application upon being paid by the respondent company is entitled to costs; and
second, whether a shareholder who intervenes in those same proceedings as an
applicant is also so entitled to costs.
[2] The main application entails an application for the respondent's compulsory
winding up as envisaged in section 66 and 69 of the Close Corporations Act, Act 69 of
1984 read with section 344 (f) and 345 ( 1) of the Companies Act, Act 61 of 1973 (as
amended). The applicant commenced the proceedings for the respondent's winding
up. The first intervening party was the respondent's unpaid trade creditor when it
brought the application to intervene.
[3] The first intervening party is Bright Idea Projects 1402 CC that is trading under
name and style of Hugo & Hugo Electrical. When the first intervening party lodged its
application to intervene, the respondent in the main application, operating as Mischa
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Premier Vines (Pty) Ltd (''the respondent''), was indebted to the first intervening party
for R 141 823.66.
[4] In his founding affidavit, the second intervening party reveals that on 11 July 2025,
he instituted an independent urgent application for the compulsory winding-up of the
respondent, which is enrolled for hearing in October 2026. He subsequently withdrew
that application and instead sought leave to intervene in this application.
[5] The second intervening party is intervening in these proceedings in his capacity as
a 50 % shareholder of the respondent. The second intervening party is also a director
of the respondent. The second intervening party stated in its founding papers that he
intervened in this application for purposes of supporting the winding up of the
respondent. The second intervening party also holds the view that, given that the
concursus creditorium is created on the date of presentment of the application to the
Registrar, it would be to the advantage to the general body of creditors to do everything
possible to support this application so that in the event that the applicant or the first
intervening applicant do not persist with or unsuccessful in the main application, then
the application should be wound up on the basis of his application.
[6] The debt of the first intervening party was fully paid shortly after its intervening
application and the winding up application were delivered. The first intervening party
contended that after the payment of the debt no tender was made for costs of the
appearance.
[7] On 20 June 2025, pursuant to the first intervening party being paid in full, the
application to intervene by the first intervening party was removed from the roll and
the issue of costs was postponed for later determination.
[8] On 12 March 2025, the main application was postponed to 24 March to afford the
applicant and the respondent an opportunity to explore a settlement.
[9] On 24 March the application was once more postponed to 09 May 2025, for the
[9] On 24 March the application was once more postponed to 09 May 2025, for the
applicant and the respondent to explore settlement.
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[1 0] On 09 May 2025, the matter was postponed to 20 June 2025, for the applicant
and the respondent to explore settlement.
[11] The first intervening party launched its application to intervene in these
proceedings on 05 June 2025.
[12] On 20 June 2025, after the court heard submissions from the first intervening
party's counsel, its application was removed from the court's roll and the costs were
stood over for later determination.
[13] On 18 March 2026, the second intervening party lodged its application to
intervene as applicant in the main application.
[14] In its founding affidavit, the first intervening party averred that it brought the
intervening application in support of Fleury Kwekery (Pty) Ltd ("the applicant") and to
protect the first intervening party's interest should the applicant decide not to proceed
with the main application.
[15] On 18 March 2026, the second intervening applicant launched its application to
intervene.
[16] On 03 June 2026, the second intervening applicant was granted leave to intervene
as an applicant. Additionally, a rule nisi was issued placing the respondent on
provisional liquidation and inviting parties to amongst others, show cause on 11 August
2026, as to why the costs of the intervening parties should not be part of the insolvent
estate.
[17] This application came before me as one of the cases on an unopposed motion
roll [referred to in the Western Cape Division as the Third Division], on 11 August 2026.
[18] On 11 August 2026, it was a return date of the provisional winding up order that
was granted by Mapoma, AJ on 3 June 2026. When Mapoma, AJ granted the
provisional liquidation order, he reserved the issue pertaining to the intervening parties'
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entitlement to costs and whether such costs are to form part of the costs in the
liquidation.
[19] On the return day, the applicant and two intervening parties addressed this Court
in relations to the intervening parties' entitlement to costs and whether such costs are
to form part of the costs in the liquidation of the respondent.
[20] The parties then argued and I requested them to also submit written submissions.
The applicant's submissions
[21] It is the applicant's contention that it is entitled to an order confirming the Rule Nisi
insofar as its own costs are concerned . The applicant also contended that it ·does not
dispute that the second intervening party is entitled to an order awarding him costs of
his application to intervene, since he was successfully joined as a party to the
applicant's liquidation application. However, the applicant disputes that the second
intervening party's costs of his application to intervene in the applicant's liquidation
application should be costs in the liquidation of the respondent.
[22) As far as the first intervening party is concerned the applicant disputes that it is
entitled to any costs whatsoever as against the respondent (whether in liquidation or
otherwise).
[23) Regarding the costs pertaining to the second intervening party, the applicant
places reliance on various authorities for the proposition that the second intervening
party is only entitled to an ordinary concurrent costs award as opposed to
administrative costs.
[24] In respect of the submissions made by the first intervening party, the applicant
asserted that it [ the first intervening party] launched its intervention application in order
to obtain an order establishing a concursus creditorium and failed to obtain such an
order or any form of order at all. Accordingly, it was submitted on applicant's behalf
that a party that fails to obtain any relief whatsoever that was substantially successful.
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[25] The applicant further submitted that its application for the winding up of the
respondent was an arm's-length proceeding, predicated primarily upon the
respondent's inability to pay its debts. The applicant contended that this unopposed
liquidation application was launched for the benefit of the collective body of creditors.
Consequently, the applicant argued that it is difficult to conceive why either of the
interventions was necessary, or how the information disclosed by the second
intervening party to substantiate a 'just and equitable' case could be of any significance
or assistance to the Court in determining whether the respondent should be wound up
on the ground of commercial insolvency.
[26] The applicant further contended that both intervening applications were simply
obvious attempts to extract legal costs from the respondent under circumstances
where neither contributed anything to the decision to liquidate the respondent at the
applicant's insistence on the basis that it could not pay its debts. To support this
argument, the applicant pointed out that this was made all the more obvious when
regard is had to the fact that the applicant's application ran to only 50 pages, whereas
the combined papers in the two intervening party's applications ran to approximately
500 pages.
[27] On that premise, applicant's counsel submitted that the second intervening
party's conduct is rendered even more disturbing when one considers that he is the
director of the respondent who is, in any event , duty bound to disclose all relevant
information concerning the respondent during the course of the liquidation process.
First Intervening Party's submissions
[28] The first intervening applicant argues that it brought the application to intervene
in the liquidation application on the basis that it has a direct and material interest in
the outcome of the litigation.
[29] The first intervening party also mentioned in its founding affidavit that the
[29] The first intervening party also mentioned in its founding affidavit that the
respondent's director [Mr Barns], seem to be disposing of assets in security and
otherwise and borrowing money against future income in an attempt to pay certain
creditors whilst leaving the balance of its creditors in the dark.
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[30] According to the first intervening party, it sought leave to intervene as a co
applicant, as it also sought an order for the winding up of the respondent. During the
course of its written and oral submissions the first intervening party stated that shortly
before the hearing of the provisional winding up application, before Mapoma AJ, the
respondent paid the entire claim of the first intervening applicant. The first intervening
party argues that the payment of its claim left the issue of costs open for determination.
[31] The first intervening party argues that the rule nisi issued by Mapoma, AJ, invited
parties on the return date to show cause why the costs of the intervening parties should
not be part of the insolvent estate.
[32) The first intervening party submits that its .cost should form part of the
administrative costs of the insolvent estate for the following reasons:
• It acted in the best interests of the concursus creditorium;
• Its affidavit contained information that assisted the Court in making a just
determination in this matter;
• The first intervening party was substantially successful as its claim was paid
and the respondent was placed in liquidation; and
• The prima facie order in the liquidation case.
[33] Thus, the intervening party argued that if it was not for its intervention in the
liquidation proceedings, the respondent would not have settled the debt, resulting in
the application being withdrawn. And in so doing the respondent benefitted one
creditor to the prejudice of the balance of creditors.
[34) The first intervening party further submitted that it asserted in its founding affidavit
that the applicant instituted liquidation proceedings against the respondent and the
applicant's claim is subject to settlement negotiations and the matter was postponed
to 20 June 2025, to explore negotiations. It is further stated in the first intervening
party's founding affidavit that the most likely result was that the applicant would
party's founding affidavit that the most likely result was that the applicant would
withdraw the application and would be paid its claim.
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[35] It is further submitted that it appears that the applicant does not have genuine
intention to liquidate the respondent but rather to use the application to leverage a
settlement of its claim. The first intervening party developed these submissions in the
course of its written argument. It submitted that given the clear insolvency of the
respondent, such a payment and misuse of a liquidation application cannot stand in
way of the expedited resolution of this matter to the advantage of the whole body of
creditors.
[36] In respect of bona fides the first intervening party submitted that it acted in good
faith and intervened in the main application to ensure that the respondent is liquidated,
rather than the applicant withdrawing its liquidation application having received a
settlement to the prejudice of the concursus creditorium .
[37] In relation to the question posed in the applicant's written submission as to why it
was necessary for an intervention in the liquidation proceedings, it was submitted on
behalf of the intervening party that it could not take the gamble on whether or not the
applicant would indeed press forwards with the application to liquidate the respondent.
(38) The first intervening party further submitted that in these proceedings all three
intervening parties were substantially successful in the relief sought and the
information provided by all parties combined, resulted in the liquidation order being
granted. So far as a substantially successful party is concerned, the first intervening
party submitted that the general rule that a substantially successful litigant should be
entitled to a cost order should not be departed lightly.
[39] In respect of the rule nisi granted by Mapoma, AJ, the first intervening party
argued that the rule nisi is formulated as a prima facie case in favour of including the
intervening applicant's costs as it serves as an invitation for parties to show cause why
intervening applicant's costs as it serves as an invitation for parties to show cause why
the costs of the intervening parties should not be part of the respondent's estate. On
that premise the first intervening party submitted that the applicant has not shown any
additional evidence as to why this prima facie position should be disturbed by this
Court.
Submissions by the second intervening party
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[40] The second intervening party contends that his intervention serves to advance an
alternative basis for the company's liquidation, arguing that the withdrawal of his initial
application yields a dual advantage. First, in the event that the primary applicant or the
first intervening party fails to prosecute or succeed in the main application, the
company would nonetheless be wound up under his alternative ground to the benefit
of the general body of creditors. Second, this procedure precludes the court from being
burdened with competing winding-up applications in respect of the same respondent.
[41] Accordingly, the second intervening party submitted that he placed before the
Court essential information pertaining to the financial position of the Company and the
rest of the entities in the family group. He asserts that an irretrievable breakdown in
the relationship between himself and his estranged brother, who holds the remaining
50% shareholding in the respondent, renders it impossible to conduct the respondent's
business to the advantage of its shareholders. He also asserts that his brother has
failed to discharge his fiduciary duties to the respondent and its shareholders.
[42] He also asserts that his brother has failed to inform him of the financial crisis being
suffered by the respondent. He states that it is evident that the respondent is not
functioning as a corporate entity, or even as partnership, with joint consensual decision
making as intended by their late father. According to him there is insurmountable
deadlock between him and his brother in relation to the affairs of the respondent. He
also states that he has lost confidence and trust in his brother who has not conducted
himself reasonably and honest vis-a-vis the affairs of the respondent.
[43] He also maintains that there is no longer a reasonable possibility of running the
respondent through a majority vote.
[44] The second intervening party asserts that his brother has run the business into
[44] The second intervening party asserts that his brother has run the business into
the ground and refusing to accept that the respondent is trading in insolvent
circumstances.
[45] The second intervening party further states in his founding affidavit that the
respondent, Vineyard Logistics and Mischa Wines carried on business on the farms
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Mischa, Dunedin, Eventide and Talana Hill. According to the second respondent, the
three farms that the respondent relied on for its vineyard nursery business were
recently sold by his mother. As such, it is highly unlikely that the respondent will be
able to continue with its business.
[46] The second respondent submits that the respondent has lost its substratum and
it is unable to fulfil its objects and/or continue its business. On this basis, the second
intervening party argued that it is just and equitable that the respondent should be
wound up. He further submits that his brother is unable to accept the inevitable.
[47] The second intervening party also relies on the authority of Confrees (Pty) Ltd v
Oneanate Investments (Pty) Ltd 1996 (1) SA 759 (C) at 766, for its contention that it
is entitled to costs in the winding up.
Evaluation
[48] As previously mentioned, the fundamental and the key question in this matter
which immediately occurs to one is whether the first and second intervening applicants
are entitled to an order that orders that their costs should be costs in the winding up,
and whether, on the bottom line, any cost order should be awarded to the intervening
parties. I am bound to state that, looking at the history of the matter, it is apparent that
the respective applications to be join these proceedings as intervening parties were
not opposed.
{a) Costs of the first intervening party
[49] In this matter, it is common cause that the first intervening party joined the
proceedings on the basis that it was a creditor of the respondent and subsequently
withdrew its application after its debt was settled by the respondent. Although the
validity of this settlement payment is not directly before me, I consider it necessary to
comment on the transaction. The timing of the payment, made after the party had
already intervened in these liquidation proceedings, is highly questionable and raises
critical concerns under established principles of insolvency law.
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[50] It is a trite principle of our law that motion proceedings are decided on proven
facts and not on conjecture, speculation, or subjective impressions. Where a party
seeks to impute an improper motive or allege a lack of genuine intention on the part
of an applicant, it bears the onus of placing clear, unassailable evidence before this
Court to substantiate such a claim. Generalised and speculative assertions, no matter
how forcefully pleaded in written argument, lack evidentiary value and cannot serve to
displace objectively established statutory rights. Courts will not allow the judicial
process to be diverted by hypothetical theories regarding a litigant's state of mind when
the objective jurisdictional facts required for the relief sought have been plainly met.
[51] Additionally, the first intervening party's submissions in this regard are entirely
unavailing and expose a profound contradiction. In its written argument, it heavily
censured the applicant, accusing it of lacking a genuine intention to liquidate and using
these proceedings merely to leverage a private settlement. Yet, the subsequent
conduct of the first intervening party demonstrates that it did precisely what it accused
the applicant of doing. Upon receiving payment of its own debt from the respondent, it
immediately sought to withdraw its intervention.
[52] Balancing all factors I hold the view that a litigant cannot complain of an abuse of
the court process or an infringement of insolvency law principles when it is entirely
willing to participate in that very same conduct for its own financial benefit. Even if I
were to assume that the first intervening party's initial concerns regarding the applicant
had merit, its own actions have entirely stripped its arguments of any equitable or legal
weight.
(53] The first intervening party further averred in its founding affidavit that it brought
the intervening application in support of the main applicant and to protect its own
the intervening application in support of the main applicant and to protect its own
interests should the applicant decide not to proceed with the main application. While
this is frequently framed as a protective litigious measure, the first intervening party's
subsequent conduct completely belies this stated purpose. If the intervention was
genuinely launched to support the winding-up of a demonstrably insolvent company
for the collective benefit of the concursus creditorum , the first intervening party would
not have abandoned the proceedings the moment its own pocket was satisfied. By
accepting a private settlement and immediately seeking to withdraw, it demonstrated
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that the intervention was deployed purely to leverage a personal preference. It cannot
now seek to fund that private, tactical exercise at the expense of the corporate estate.
[54) This self-serving conduct similarly disposes of the first intervening party's
arguments regarding its alleged bona fides, its reluctance to 'take a gamble' on the
applicant's persistence, and its claim to 'substantial success'. A party that leverages
an intervention to secure a preferential, private payout, thereby attempting to escape
the concursus creditorum, cannot claim to have achieved substantial success in terms
of the main winding-up application. Furthermore, the rule nisi granted by Mapoma AJ
did not create a prima facie entitlement to costs; it merely invited the parties to show
cause why such an order should or should not be made. The first intervening party
has failed to show such cause.
[55] The withdrawal of the application to intervene was prompted by the respondent's
settlement of the intervening party's debt. It is a well-established principle that a party
who unilaterally withdraws an application is generally liable for the wasted costs of the
proceedings and is not entitled to a costs order in its favour. It is thus axiomatic that
the first intervening party is not entitled to any costs order in these proceedings.
Moreover, I could find nothing in insolvency law to authorise the granting of the relief
sought by the first intervening party.
{b) Costs of the second intervening party
[56] In considering the parties' arguments, I need to first state certain established
principles that govern the issue of costs in winding up. In terms of section 97 of the
Insolvency Act 24 of 1936, read with the relevant provisions of the Companies Act, the
costs of liquidation enjoy top statutory preference as administrative expenses , paid out
of the free residue of the estate before claims of general preferent and concurrent
creditors.
creditors.
[57] Because liquidation costs enjoy this absolute priority, allowing unnecessary or
self-serving legal costs, such as a shareholder's internal dispute or a withdrawn
creditor's application, to be classified as a 'cost in the liquidation' would directly drain
the finite asset pool, leaving less money for the genuine creditors whom the statute is
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designed to protect. Consequently, this Court must exercise its discretion guardedly to
ensure that the estate is not burdened by litigation that does not advance the interests
of the concursus creditorum.
[58] The applicant does not dispute that the second intervening applicant is entitled to
a costs order but maintains that the costs order should be an ordinary costs order and
not costs in administration.
[59) It is true that the second intervening party's founding affidavit sets forth serious
charges against the management of the respondent. However, it is common cause
that he approaches this Court strictly in his personal capacity as a shareholder, and
not as a director. Under our law, while an individual shareholder possesses
independent statutory standing to seek a winding-up on just and equitable grounds,
he lacks the authority to act on behalf of, or bind, the corporate entity itself without a
valid board or shareholder resolution. As a fundamental principle, an individual seeking
to involve a corporation in liquidation proceedings under the guise of corporate
representation must present clear credentials demonstrating their authority to do so.
Absent such a resolution, the second intervening party cannot be said to speak for or
act on behalf of the respondent company.
[60] It is clear from the facts that the second intervening party is not acting on behalf
of, or in the interest of, the respondent company. The second intervening party argued
in the application to intervene [which heads of arguments have been incorporated in
this application and founding affidavit], that he wishes to promote an alternative ground
upon which the Company should be wound up, namely that such winding up would be
just and equitable in terms of section 344(h) of the Companies Act, Act 61 of 1973
(alternatively in terms of section 81 (1) (d) of the 2008 Companies Act). It is further
argued that this is on the basis inter alia, of the insurmountable deadlock between the
argued that this is on the basis inter alia, of the insurmountable deadlock between the
shareholders and directors. Additionally, it was argued that as a consequence of this
deadlock the business of the Company cannot be conducted to the advantage of the
shareholders. It was also argued that, moreover, and in any event, the Company has
lost its substratum, and it is therefore just and equitable to wind it up.
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[61] Of course, there may be circumstances the court could order of the intervening
party to be paid out of the estate. This will inevitably be a much more sophisticated
question and entirely dependent on the facts of the particular case.
[62] In Silwer Heinings (Pty) Ltd v Standard Bank of South Africa Ltd 1984 (2) SA 821
(W), the court clarified that the legal system permits the costs incurred by an
intervening creditor to be ordered as costs in the liquidation. The court stated the
following at pages 824-825:
«[t]here is perhaps a more compelling reason for holding that the statute does not
disentitle a Court from awarding an intervening creditor his costs in a proper case .. .
In my opinion, it could hardly have been intended that the costs of an intervening
creditor, incurred by him in bringing to the notice of the Court important information
regarding the application, could not come out of the estate as a preference when his
purpose was to ensure that an order of sequestration or liquidation was made,
whereas if he unsuccessfully opposed the grant of such relief, the Court would be
empowered to make an order in his favour.
I believe that that anomaly is decisive of the proper meaning to be attached to the
section, and accordingly, so long as it can be said that the intervention arises in
connection with the application for sequestration or liquidation, as the case may be,
and the circumstances warrant an order being made, the intervening creditor's costs
are properly incurred and payable out of the assets of the estates as a preference. In
those circumstances, the intervening creditor acts in the interests of and for the benefit
of all the creditors. Emphasis added.
[63] In Oneanate Investments supra, the court stated that the question to be asked in
relation to an intervening creditor's cost is whether the information furnished by the
intervenor has contributed significantly to the_reaching by the court of the conclusion
that the order should be granted.
that the order should be granted.
[64] The second intervening party seeks to justify its intervention by introducing
alternative grounds for the winding-up of the respondent, albeit an independent
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creditor has already sealed the respondent's fate through objective financial demise.
A shareholder cannot leverage internal disputes to interfere with the concursus
creditorum.
[65] Specifically, when relying on section 344(h) of the Companies Act 61 of 1973
(alternatively section 81(1)(d) of the Companies Act 71 of 2008), contending that a
liquidation is warranted on a 'just and equitable' basis due to an insurmountable
deadlock between the shareholders and directors, a resulting inability to conduct
business to the advantage of the shareholders, and a total loss of the company's
substratum.
[66] While these submissions raise classic grounds for a just and equitable winding
up, they are entirely redundant in the present proceedings. The main application was
brought by an unpaid creditor on the ground that the respondent is commercially
insolvent and unable to pay its debts. In our law, an unpaid creditor who establishes
commercial insolvency is entitled to a winding-up order ex debito justitiae [as a matter
of right]. See in this regard: Afri Operations Ltd v Hamba Fleet(Pty) Ltd 2022 (1) SA
91 (SCA) at para 12. To this end, the second intervening party's allegations did not
advance the primary inquiry before this Court.
[67] As previously noted, the second intervening party contended that his intervention
was necessary to alert the Court to the respondent's internal mismanagement. This
intervention was, however, entirely superfluous. The applicant creditor had already
established a clear case for liquidation based on the respondent's commercial
insolvency.
[68] Once a company is proved unable to meet its current liabilities, its internal
management affairs, shareholder deadlocks, and the potential loss of its substratum
become secondary issues. Introducing a complex, fact-heavy 'just and equitable'
inquiry cannot alter the statutory consequences of a company's financial demise, nor
does it assist the Court in determining the primary question of commercial insolvency.
does it assist the Court in determining the primary question of commercial insolvency.
[69] By forcing these internal disputes into an otherwise clear-cut commercial
insolvency matter, the second intervening party merely added unnecessary paperwork
without advancing the primary inquiry.
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[70] Over and above these reasons, an important submission advanced by the second
intervening party was that it appears that his brother has run the business of the
respondent into the ground and obstinately refusing to accept that the respondent is
obviously trading in insolvent circumstances.
[71] Even on his own version, it was clear that the respondent was trading in insolvent
circumstances, rendering an alternative ground for winding up wholly redundant.
Consequently, he has failed to demonstrate any justification or entitlement to an order
for costs out of the estate. Obviously, in this matter, on the second intervening party's
own version, there was no need for an alternative ground to bring a winding-up
application, as the respondent was indeed insolvent.
[72] It is trite, though worth repeating, that the disappearance of the substratum, that
occurs where the purpose for which the entity was established has become objectively
impossible or has fallen away, constitutes an established ground for the winding-up a
company on just and equitable principles. In the present matter, this failure of
substratum is directly manifested by the insurmountable and irretrievable breakdown
in the relationship between the applicant and his estranged brother. As equal 50%
shareholders in the respondent, their absolute operational and structural deadlock has
resulted in total corporate paralysis, thereby rendering it objectively impossible to
conduct the business of the respondent to the advantage of its shareholders generally.
[73] Furthermore, and perhaps importantly, the second intervening party approaches
this Court purely to protect his personal interests as a shareholder. Despite his
assertions to the contrary, this intervention was not launched to protect or advance the
interests of the respondent or the general body of its creditors ( concursus creditorum);
rather, the alternative ground was advanced merely as a secondary mechanism to
secure his own position.
secure his own position.
[7 4) Hence, I am of the view that by forcing these issues into the present matter, he
conflated two entirely different areas of corporate law. A shareholder cannot
unilaterally expand a straightforward commercial insolvency application into a
----- -------- - - --------- - - - --- - ---------
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battleground for internal corporate disputes and then expect the insolvent estate and,
by extension, the concurrent creditors, to shoulder the legal costs of doing so.
[75] While a shareholder may well have a meritorious case for the liquidation of a
company under different circumstances, I express no opinion on the merits of those
allegations in this instance. As noted earlier, this is because the submissions made in
this case, while raising classic grounds for a just and equitable winding-up, are entirely
redundant in the present proceedings.
Conclusion
[76] The mere fact that the second intervening party's application to intervene was
granted by this Court and was not opposed by the other parties at that juncture, does
not automatically entitle him to a costs order. An order granting leave to intervene
determines nothing more than the party's locus standi to be heard. It does not bind
this court's ultimate, unfettered discretion regarding costs. Given my finding that the
intervention was legally redundant, served a purely private shareholder interest, and
failed to advance the primary insolvency inquiry, it would be an injustice to burden the
respondent's estate with these costs. Consequently, despite the lack of initial
opposition to his intervention, no order as to costs will be made in his favour.
[77] In the result I make the following order:
77 .1 The respondent company is placed under final winding-up in the hands of the
Master of the High Court.
77 .2 The costs of the applicant creditor shall be costs in the liquidation of the
respondent estate.
77.3 The application for costs in the liquidation by the first intervening party is
dismissed.
77.4 The first intervening party shall bear its own costs incurred in these
proceedings.
77.5 The application for costs in the liquidation by the second intervening party is
dismissed.
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77 .6 The second intervening party shall bear his own costs incurred in these
proceedings.
JUDGE OF THE HIGH COURT
Appearances:
Counsel for Applicant : Advocate Alan Newton
Instructed by : Lombard & Kriek Inc.
Counsel for First Intervening Party : Advocate Bennu Viljoen
Instructed by : Duvenhage & De Villiers Attorneys
Counsel for Second Intervening Party : Advocate Craig Cutler
Instructed by : Bemadt Vukic Potash & Getz Attorneys