THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO. 091/2004

In the matter between

MELVIN PETER PAARWATER
Appellant

and

SOUTH SAHARA INVESTMENTS (PTY) LTD
Respondent
___________________________________________________________
CORAM:
ZULMAN, FARLAM JJA

et MAYA AJA

HEARD:
22 FEBRUARY 2005

DELIVERED:
3 MARCH 2005
___________________________________________________________

Summary: When is it just and equitable to wind up a company in terms of
s 344 (h) of the Companies Act 61 of 1973, as amended? – onus on
applicant for a final order on the return day to show, on a balance of
probabilities, that the provisional winding-up order should be confirmed.
___________________________________________________________

JUDGMENT
___________________________________________________________
ZULMAN JA

[1] The appellant obtained a rule provisionally winding-up the

respondent. After the filing of further affidavits, the court a quo on the
return day of the rule, discharged the rule and ordered the appellant to pay
the costs of the proceedings. The appellant appeals to this court, with the
leave of the court a quo, against the aforementioned order.
[2] The question on appeal is whether on the conspectus of all of the
facts of the matter it is correct to conclude that it is ‘just and equitable’,
within the meaning of s 344 (h) of the Companies Act 61 of 1973 (the
Companies Act) to liquidate the respondent finally.
[3] At the outset it is important to point out that the onus rested upon
the appellant in seeking a final order to satisfy the court, on a balance of
probabilities, that it was indeed ‘just and equitable’ finally to liquidate the
respondent. Furthermore, the degree of proof required when an
application is made for a final order is higher than that for the grant of a
provisional order. In the former case a mere prima facie case need be
established whereas the court, before it will grant a final order, must be
satisfied on a balance of probabilities, that such a case has been made out
by the applicant seeking confirmation of the provisional order. (See for

example Kalil v Decotex (Pty) Ltd and Another1, Hilleke v Levy2 and
Braithwaite v Gilbert (Volkskas Bpk Intervening)3 Indeed in granting the
provisional winding-up order in this matter, Foxcroft J, on the
information then before him granted a provisional winding-up order on
the basis that all the appellant was required to establish was a prima facie
case.
[4] An analysis of all of the facts which were before the court a quo
when the appellant sought a final order reveals that there were serious
disputes in regard to the essential matters that the appellant was required
to satisfy the court upon in order to establish that it was ‘just and
equitable’ to wind-up the respondent. Furthermore it is important to note
that the applicant, who bore the onus, as I have previously mentioned, did
not seek an order referring such disputes for the hearing of oral evidence
as he might have done (cf Kalil4 and Emphy and Another v Pacer
Properties (Pty) Ltd5). In the circumstances the following test enunciated
by Corbett JA in the oft referred decision of Plascon-Evans Paints

1988 (1) SA 943 (AD) at 979 B-E.
1946 AD 214 at 219.
1984 (4) SA 717 (W) at 718 A-D.
(supra) at 979 C-D.
1979 (3) SA 363 (DCLD) at 369 F – H.

Limited v Van Riebeeck Paints (Pty) Limited6 is of application:
‘Secondly, the affidavits reveal certain disputes of fact. The appellant
nevertheless sought a final interdict, together with ancillary relief, on the
papers and without resort to oral evidence. In such a case the general rule was
stated by Van Wyk J (with whom De Villiers JP and Rosenow J concurred) in
Stellenbosch Farmers Winery Ltd v Stellenvale Winery (Pty) Ltd 1957 (4) SA
234 (C) at 235 E - G to B: “... where there is a dispute as to the facts a final
interdict should only be granted in notice of motion proceedings if the facts as
stated by the respondents together with the admitted facts in the applicant’s
affidavits justify such an order ... Where it is clear that facts, though not
formally admitted, cannot be denied, they must be regarded as admitted.”
... It seems to me, however, that this formulation of the general rule
particularly the second sentence thereof, requires some clarification, and
perhaps, qualification. It is correct that, where in proceedings on notice of
motion disputes of fact have arisen on the affidavits, a  final order, whether it
be an interdict or some other form of relief, may be granted if those facts
averred in the applicant’s affidavits which have been admitted by the
respondent together with the facts alleged by the respondent, justify such an
order ... In certain instances the denial by a respondent of a fact alleged by the
applicant may not be such as to raise a real, genuine or bona fide dispute of
fact ... Moreover there may be exceptions to this general rule, as for example,
where the allegations or denials of the respondent are so far-fetched or clearly
untenable that the Court is justified in rejecting them merely on the papers...’

[5] Applying this well-known test to the facts of this matter, the
following emerges:
5.1
The appellant is a director and shareholder of the respondent.
5.2
The respondent is an investment company.
5.3
The only asset of the respondent is a 90% shareholding in South
African Beef (Pty) Limited (SAB).

1984 (3) SA 623 (A) at 634 E- 635 C.

5.4
Gideon Francois Bothma (Bothma) is also a director and a
representative of the remaining shareholder of the company (the
Bothma Trust).
5.5
The appellant is not a creditor of the respondent.
5.6
No creditor of the respondent, if indeed there are any, has sought to
wind-up the company.
5.7
In the early part of 2002 Bothma and the appellant agreed to
commence a business of purchasing, raising, slaughtering,
processing and marketing of cattle and other meat products. The
intended business was to be conducted by SAB which then would
be jointly controlled by Bothma and the appellant. They were
advised to establish a holding company and this was done, the
respondent becoming that holding company.
5.8
On 2 March 2002 they also entered into a shareholders’ agreement.
Clause 2.2 of the agreement states that the parties ‘wish to record
in writing the terms and conditions applicable to their relationship

as shareholders in the Company...’ In clause 23 it is specifically
recorded that the ‘agreement does not constitute a partnership.’
5.9
Initially the appellant owned 51% of the share capital of the
respondent and Bothma, through the Bothma Trust, owned the
balance of the shares.
5.10 In June 2002 the appellant sold a portion of his shareholding to the
Bothma Trust and reduced his shareholding in the respondent to
25%. SAB received some R2 000 000,00 from another company
known as Rumcortin Meat Processors (Pty) Ltd which was issued
with 10% of the shareholding in SAB.
5.11 On 29 August 2002 the appellant and Bothma entered into a second
shareholders’ agreement which replaced the first agreement. Again
this agreement contained identical provisions recording the
relationship between the parties and the fact that the agreement did
not constitute a partnership (clauses 2.3 and 20).
5.12 On 10 March 2003 Bothma invited the appellant to meet him to
discuss the future of the business of SAB. The appellant parked in

the parking area of a shopping centre and then had a discussion
with Bothma in a restaurant in the centre. When the appellant
returned to the parking area he found that the vehicle that he had
parked earlier was no longer there. Some minutes later Bothma
telephoned him on his cell phone and told him that the vehicle had
been repossessed by SAB’s bankers as SAB could no longer afford
to pay the instalments due in respect of the vehicle.
[6] The appellant contends that the respondent is a domestic company
or quasi-partnership and falls to be liquidated due to the complete
breakdown of the relationship of reasonableness, good faith, trust,
honesty and mutual confidence which should exist between the appellant
and the respondent’s other director and representative of its only other
shareholder at the time, Bothma. It is upon this essential basis, relying on
cases where domestic companies which were in reality partnerships or
quasi partnerships, that the applicant founds his argument that it is ‘just
and equitable’, in the particular circumstances, to wind-up the respondent.
(See for example well-known cases such as Moosa NO v Mavjee Bhawan

(Pty) Ltd and Another7, Ebrahimi v Westbourne Galleries Ltd8, Lawrence
v Lawrich Motors (Pty) Ltd9 and Marshall v Marshall (Pty) Ltd and
Others10) This allegation is denied by the respondent in an affidavit
deposed to by Bothma. More particularly Bothma states as follows in this
regard:

‘I should point out further that the relationship between myself and the
applicant was not for all times relevant hereto in the nature of a partnership.
We only started doing business together in about February 2002. Prior to that
date we had never met each other and neither had we had any business
dealings. The venture we entered into was purely that of co-directors and co-
shareholders in a business to try to get a large beef processing business off the
ground. It is so that we worked together as co-entrepreneurs, shareholders and
directors of the various entities involved in the project. But we did not act as
partners. This is borne out by the fact that the applicant [appellant] never made
me aware of his financial problems until a fair time after the business
relationship between us has taken its inception. As set out in para 8.2 of my
opposing papers, the applicant only approached me in July/August 2002 with
his financial difficulties, despite the fact that they had obviously been of a long
and ongoing nature, as is evidenced by the contents and the dates of annexure
“GB 4” to my answering papers.’

(Annexure ‘GB 4’ is a document which Bothma states was given to
him by the appellant as indicating that the appellant was facing
claims from various creditors in July and August 2002 some of
whom had obtained judgments against him.) It was as a result of

1967 (3) SA 131 (T).
[1972] 2 All ER 492 at 500.
1948 (2) SA 1029 (W) at 1032.
1954 (3) SA 571 (N) at 579 A-D.

this financial predicament, according to Bothma, that the appellant
agreed to dispose of 25.1% of his shareholding in the respondent to
Bothma for an amount of R25 000,00. It is of some significance
that in his founding affidavit seeking the liquidation of the
respondent, the appellant merely states that with effect from
1 June 2002 he sold a portion of his shareholding in the respondent
to the Bothma Trust and reduced his shareholding to 25%. He
makes no mention of the fact that he was in financial difficulty at
the time or what led to the sale in question. Furthermore the case
subsequently, and now contended for, by the appellant to the effect
that in reality the respondent was a partnership or a quasi-
partnership between himself and Bothma is not made out. I find
nothing in Bothma’s affidavits which indicates that what he states
about the nature of the company and his relationship with the
appellant are, in the words, of Corbett JA in Plascon-Evans Paints
Limited11 so far-fetched or clearly untenable that the Court is
justified in rejecting them merely on the papers. I am,

1984 (3) SA 623 (A) at 635 C.

notwithstanding this conflict of fact, prepared to assume, for the
sake of argument, in favour of the appellant, that even if there was
no partnership relationship as such there was nevertheless a quasi-
partnership.
[7] The appellant also seeks to rely upon the shareholders’ agreement
entered into in March 2002. This shareholders agreement was, as
previously stated, replaced in August 2002 by a second shareholders’
agreement. In terms of the second agreement the Bothma Trust was
recorded as owning 75% of the shares in the respondent. The agreement
further provided for the majority of directors of the respondent to be
appointed by the majority shareholder and for decisions to be taken by a
majority of directors. This fact obviously detracts from the appellant’s
contention that there was a close relationship or partnership between the
appellant and Bothma. It was the second shareholders’ agreement which
was applicable at the time of the launching of the application for winding-
up.

[8] One of the grounds upon which the appellant contends that mutual
trust and confidence between himself and Bothma has broken down is
reliance upon the car incident referred to previously. Bothma explains in
his affidavit that the repossession of the vehicle needs to be considered in
its context. The context is that the appellant, despite having previously
undertaken to do so, and despite having been reminded of his obligations,
did not return the vehicle. The appellant did not disclose this in his papers
and there is no reason to doubt Bothma’s statements in regard thereto. In
any event even if one were to regard this incident as evidencing some
form of oppressive or more accurately surreptitious, conduct on the part
of Bothma, this of itself is no reason to wind-up the company. In this
latter regard Bothma states that the utilisation of the vehicle by the
applicant was not a major issue at the time and points to the fact that
subsequent to the removal of the vehicle he and the appellant had further
meetings and discussions relating to matters concerning the respondent
and SAB.

[9] The appellant refers to an incident concerning the loss of his
briefcase whilst he and Bothma were overseas. Bothma makes it plain
that he had nothing to do with such disappearance and points to the fact
that when the appellant reported the matter to the German police he
simply reported that his briefcase had been stolen and made no mention
of any possible involvement of Bothma. This is a dispute of fact which it
is not possible to resolve on the papers, save to point out that the
applicant’s statements that Bothma involved him in the matter are
unsubstantiated.
[10] The appellant contends that Bothma has usurped his ownership and
interest in the control of the respondent. Bothma points to the fact that the
second shareholders agreement was entered into in August 2002 and
signed by the parties for reasons arising from the appellant’s then
financial embarrassment entirely of his own and self confessed making.
No mention was made whatsoever of any problem with the execution
between the appellant and Bothma of the said agreement in the founding
papers. Accordingly, having regard to Bothma’s statements I do not

believe there is any substance in the appellant’s contention that Bothma
‘managed to have his family, via the Bothma Trust, take over ownership
and control of the’ respondent. The appellant, in my view, has failed to
show on a balance of probabilities that Bothma is guilty of any of the type
of conduct referred to by Lord Skerrington in Thomson v Drysdale 1925
SC 311, a case to which counsel for the appellant, Mr Spottiswoode,
referred in his able argument.
[11] Although
the
appellant
states
that
there
has
been
a
misappropriation of funds of the respondent he offers no concrete
evidence of this other than to suggest that Bothma allegedly went on a
lavish spending spree in Dubai. Bothma disputes that any of the
respondent’s funds were used in connection with the trip that he
admittedly undertook to Dubai.
[12] The appellant’s alleged fears of financial mismanagement by
Bothma of the financial affairs of the respondent and the alleged
misappropriation of an investment in SAB are not substantiated by any

independent evidence by the appellant and in any event are disputed by
Bothma.
[13] The appellant in a replying affidavit annexes a copy of the current
bank account of SAB at Nedbank and states that ‘I endeavoured today [5
March 2003] to obtain a more recent bank statement but was advised by Nedbank that
Bothma had instructed them to remove me as a signatory to the account and that I was
accordingly not entitled to a bank statement, which I previously readily obtained from
time to time.’ Bothma deals with this allegation by stating that he did not
instruct Nedbank to remove the appellant as a signatory on the current
account. Any difficulty which the appellant might have ‘experienced in
accessing the current account statements arose as a result of the banks own internal
procedures. When I learned of these difficulties, I immediately instructed Nedbank to
permit applicant access to the bank account and statements pertaining thereto at all
times. This remains the position today.’ The appellant’s response to this in a
replying affidavit is to the effect that Bothma is guilty of not referring to
the call account. However, the initial allegation made by the appellant
concerning alleged misconduct on the part of Bothma did not refer to the
call account but referred to the current account. It was this allegation

which Bothma answered. Furthermore earlier in his replying affidavit the
appellant refers to a visit which he and his attorney paid to the St Georges
branch of Nedbank in Cape Town in order to obtain copies of the most
recent statements for both the current and call accounts. He claims that on
13 November 2003 he and his attorney were informed by ‘an employee
there called Jackie Alexander that when both accounts were opened on 19 February
2002, Bothma and I were joint signatories. She informed us further that from 19
March 2003, however, only Bothma was authorised by the company to access the
accounts. My attorney then telephoned Jackie Alexander to ask her whether she
would make an affidavit confirming this. She told him that she did not want to get
involved. I have no reason for disbelieving what Jackie Alexander told my attorney
and me at the bank; she listened carefully to our requests, interrogated her computer
accordingly and informed us of the results given to her by the computer system. I
verily believe in the truth and correctness of what she told us’. Plainly what Jackie
Alexander is alleged to have told the appellant and his attorney is
hearsay. Furthermore no attempt is made by the appellant to identify
precisely what position Jackie Alexander occupied at the bank. In
addition it would have been a simple matter for the appellant or his
attorney to request the manager of the branch of the bank to furnish an

affidavit stating who the signatories were to the bank accounts at the
relevant time and if he refused to do so to subpoena him. Equally there
was no reason why the appellant could not have subpoenaed Jackie
Alexander to give evidence or to have required oral evidence on this
aspect of the matter which was plainly in dispute. To say that he had no
reason to disbelieve Jackie Alexander is in my view disingenuous
especially since Bothma had clearly put the matter in issue. At best for
the appellant this again is a matter where there is an unresolved dispute of
fact which detracts from the appellant’s ability to discharge the onus
resting upon him.
[14] Suffice it to say that I am in agreement with the statement by the
court a quo to the effect that it is not possible, on the papers, to find on a
balance of probabilities that a personal relationship existed between the
appellant and Bothma, which admittedly is not good, which precludes the
further proper functioning of SAB and which destroys the role of new
investors in funding the project of the meat processing venture. In
addition it has not been established by the appellant that there is scope for

coming to the conclusion that the respondent company cannot be properly
managed and that the applicant and the respondent cannot deal at arms
length with the co-investors in SAB.
[15] In so far as the appellant suggests that the respondent is insolvent
and unable to pay its debts, there is no evidence of this whatsoever and
again it is a matter which is denied by Bothma and in any event not a
ground, as such, which the appellant relies upon for winding-up the
respondent.
[16] In all of the circumstances I am satisfied that the court a quo
correctly discharged the provisional order. The appeal is dismissed with
costs.

__________________________

R H ZULMAN

JUDGE OF APPEAL

FARLAM JA

)
MAYA AJA

)CONCUR