Afgri Operations Ltd v Hamba Fleet Management (Pty) Ltd

Afgri Operations Ltd obtained a taxed costs order against Hamba Fleet Management (Pty) Ltd in the amount of R156 796.64, which Hamba failed to pay. Afgri issued a statutory demand under s 345(1)(a) of the Companies Act 61 of 1973, which was not satisfied. Hamba did not dispute the existence or non-payment of the debt, did not allege factual or commercial solvency, was not trading, and admitted having no assets. Its sole defence to the winding-up application was the existence of a counterclaim exceeding R22 million, arising from alleged unlawful transfers made years earlier under a management agreement. The counterclaim was illiquid, had not been pursued since summons was issued in 2009, and was not substantiated in the answering affidavit. The High Court dismissed the winding-up application based on its discretion, relying on the counterclaim. Afgri appealed to the Supreme Court of Appeal.

The appeal was upheld. The High Court’s order was set aside and replaced with an order placing the respondent under a final winding-up in the hands of the Master. The appellant’s costs in both the appeal and the High Court were ordered to be costs in the liquidation.

The case reaffirms core principles governing winding-up proceedings in South African company law, particularly the narrow discretion to refuse liquidation where an admitted debt is unpaid. It clarifies that a counterclaim, especially an illiquid or unsubstantiated one, does not on its own bar liquidation, and reinforces the application of the Badenhorst rule and the ex debito justitiae entitlement of unpaid creditors. The judgment also limits reliance on certain English authorities where South African law is settled.