Routemaster (Pty) Ltd v Retro Active CC (SJP Investments CC Intervening)

Routemaster (Pty) Ltd advanced a series of unsecured loans totalling R21,557,289.25 to Retro Active CC for a property development known as the Rylands Retro Active Estate and other business interests. The initial agreement in September 2019 provided for R12.5 million, with a further agreement for R9,057,289.25. Repayment terms required Retro Active to pay Routemaster a minimum profit of 35% (later reduced to 30%) on completion and sale of units, with completion anticipated by September 2020 (later extended to 1 March 2022). Retro Active made only two repayments totalling R230,000 and Routemaster credited a further R728,000. Retro Active's sole member, Mr Boolay, accepted the accuracy of Routemaster's calculation that R29,493,130.09 was owing. By May 2022, relations soured when Retro Active refused to repay anything beyond the capital and refused to sign a consolidation agreement. Routemaster sought a final winding-up order on the return date of a provisional order granted on 17 August 2023. SJP Investments CC intervened in support of a final winding-up order, having lent Retro Active R90 million secured by a covering bond of R73,333,000, which debt was due and unpaid. Mr Boolay made numerous false statements under oath, initially denying the debt and Retro Active's insolvency, then in a subsequent affidavit conceding his earlier affidavit was untruthful and apologising for 'numerous factual inconsistencies'. He also falsely undertook to the Master of the High Court that Retro Active would not oppose a final order, while simultaneously having filed opposing papers.

• Whether Retro Active CC was unable to pay its debts as contemplated in s 345(1)(c) of the Companies Act 61 of 1973, justifying a final winding-up order under s 344(f)
• Whether the court should exercise its discretion to refuse a final winding-up order despite proof of commercial insolvency
• Whether Retro Active's debt to Routemaster was due and payable or merely a contingent or prospective liability
• Whether the management accounts provided by Retro Active constituted credible evidence of factual solvency to defeat the winding-up application
• Whether Mr Boolay's conduct in making false statements under oath warranted referral to the Director of Public Prosecutions for perjury
• Whether the costs of opposition should be disallowed as costs in the liquidation and whether attorney-client costs were warranted

1. Retro Active CC is placed under final winding up. 2. The costs of the application are costs in the liquidation, to be recovered by the applicant (Routemaster (Pty) Ltd) and the intervening party (SJP Investments CC) on a scale as between attorney and client. 3. The costs of Retro Active CC in opposing the application are disallowed as costs in the liquidation. 4. The Registrar is directed to refer this matter to the Director of Public Prosecutions to investigate Mr Boolay, the member of Retro Active CC, for the offence of perjury.

The failure of a debtor to pay an admitted debt is sufficient to demonstrate insolvency, such failure being prima facie proof of an inability to pay its debts. An unpaid creditor has a right, ex debito justitiae, to a winding-up order against a company that has not discharged its debt, and the court accordingly has only a narrow discretion to refuse such an order. Unsubstantiated and doubtful claims about the value of a corporation's assets in support of a claim of factual solvency do not invoke the court's narrow refusal discretion, particularly where commercial insolvency has been established through readily determinable and objective tests such as whether the company can meet its current liabilities.

The court noted that had it refused Routemaster's application for a final winding-up order, it would have granted SJP's conditional application for the same relief. The court also observed that even Retro Active's own management accounts showed its inability to pay its debts, as the claimed value of stock and inventories (R134,856,799) was less than its admitted indebtedness.

This case reinforces the principle in South African insolvency law that commercial insolvency, rather than factual insolvency, is the preferred test for winding-up, following Boschpoort Ondernemings. It affirms that an unpaid creditor has a right, ex debito justitiae, to a winding-up order with only a narrow judicial discretion to refuse. The case is also significant for its strong censure of dishonest litigation conduct, including perjury, and the court's willingness to refer matters to prosecuting authorities and to make punitive costs orders (attorney-client scale and disallowance of the losing party's costs in the liquidation) where opposition is founded on serial dishonesty and vexatious defences.