Schmidt v Fire Fanatix CC and Others (2025/038772) [2025] ZAGPJHC 831 (25 August 2025)

begin wrapper begin container begin header begin slogan-floater end slogan-floater - About SAFLII About SAFLII - Databases Databases - Search Search - Terms of Use Terms of Use - RSS Feeds RSS Feeds end header begin main begin center # South Africa: South Gauteng High Court, Johannesburg South Africa: South Gauteng High Court, Johannesburg You are here: SAFLII >> Databases >> South Africa: South Gauteng High Court, Johannesburg >> 2025 >> [2025] ZAGPJHC 831 | Noteup | LawCite sino index ## Schmidt v Fire Fanatix CC and Others (2025/038772) [2025] ZAGPJHC 831 (25 August 2025) Schmidt v Fire Fanatix CC and Others (2025/038772) [2025] ZAGPJHC 831 (25 August 2025) Download original files PDF format RTF format make_database: source=/home/saflii//raw/ZAGPJHC/Data/2025_831.html sino date 25 August 2025 FLYNOTES: COMPANY – Winding up – Deadlock – Improper conduct – 50% membership interest – Exclusion from business – Relationship between members had irretrievably broken down – Implications of fronting – Defence did not raise a bona fide irresoluble dispute of fact – Lacked credibility – Commercial insolvency not proven – Deadlock and improper conduct justified winding up on just and equitable grounds – Need for investigation into irregularities – Provisional winding up order granted – Companies Act 61 of 1973, ss 344(f) and (h). REPUBLIC OF SOUTH AFRICA IN THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, JOHANNESBURG CASE NUMBER: 2025-038772 1.REPORTABLE: NO 2.OF INTEREST TO OTHER JUDGES: NO 3.REVISED: NO 25 AUGUST 2025 In the matter between: KIM SAMANTHA SCHMIDT                                                APPLICNT and FIRE FANATIX CC                                                              FIRST RESPONDENT WARREN ANDRE SCHMIDT                                              SECOND RESPONDENT JUDGMENT Delivered: This judgment was handed down electronically by circulation to the parties’ legal representatives by e-mail and uploading it onto the electronic platform. The date and time for hand-down is deemed to be 14h00 on the 25 th of August 2025. DIPPENAAR J : [1] This application is yet a further chapter in the bitter divorce between the applicant and the second respondent. The applicant sought the winding up of the first respondent under s 344(h) of the Companies Act, 61 of 1973 on the basis that it is just and equitable to do so and in terms of s 344(f) as it is unable to pay its debts. A final; alternatively; a provisional winding up order was sought at the hearing. [2] The background to this application is uncontentious. The applicant and the second respondent were married in 2010. There is presently an acrimonious divorce pending between them, instituted during the course of 2019. The parties are each registered with CIPC as holding a 50% interest in the first respondent. It is common cause that the second respondent is an employee of Facility Fire (Pty) Ltd (‘Facility Fire’), which is engaged in similar business activities as the first respondent. The second respondent’s father is the sole director of Facility Fire. [3] The factual averments in both parties’ affidavits are scant. The application is characterised more by what is omitted than by what is expressly stated by the respective parties. No written association agreement was put up [1] and all that is relied upon are vague contentions of oral agreements between the parties. [4] The applicant’s case is that she is a 50% member of the first respondent and has been prevented by the second respondent from having any access to the affairs and business of the first respondent for a period in excess of seven years. She relied on the documentation from CIPC reflecting her as a 50% member. She placed reliance on the so-called deadlock principle in support of the winding up being just and equitable. [5] According to the applicant, the second respondent and his father executed a stratagem to subsume the business of the first respondent into Facility Fire. The applicant put up three sets of unaudited financial statements of the first respondent for the years 2021, 2022 and 2023. In each, the applicant and second respondent are reflected as being the holders of a 50% membership interest. The statements bear the signature of the first respondent only as a 50% member.  The statements do not reflect any payments in relation to employees. They further reflect diminishing trading activities over the three year period provided. [6] The second respondent is the deponent to the respondents’ opposing papers. They opposed the application primarily on the basis that there is an irresoluble dispute of fact on the papers pertaining to whether the applicant holds her 50% interest in the first respondent as his nominee, rather than in her own right. On that basis they challenged the applicant’s locus standi. By and large, the respondents baldly denied the applicant’s version and mounted their opposition squarely on an attack on the applicant’s locus standi as member of the first respondent and her entitlement to seek winding up relief. [7] On the respondents’ version, during 2008 to 2015, prior to the name change of the first respondent’s prior iteration, 100% of the membership interest in the first respondent was transferred to the applicant under her maiden name, Van Heerden, to ‘ avoid undue allegations of nepotism’ as the second respondent’s father was referring business to the first respondent. In reply the applicant admitted that the membership interest in the first respondent was given to her and registered in her name to enable the first respondent to get a better BEE rating. [8] According to the respondents, the agreement between the applicant and the second respondent was never a true agreement but rather a legally unenforceable simulated agreement. It was discussed as ‘ part of the conversations between husband and wife ’ . The applicant contended the opposite and maintained that she held the membership interest in her own name.  According to the second respondent: ‘ after the name change and on discovery of the affair the applicant unlawfully only transferred 50% of the members interest back to my name…to gain undue leverage over me and extort money from me.’ [9] Despite the factual nuances in the respective versions of the applicant and the second respondent as to whether the applicant obtained the membership in the first respondent to obtain a better BEE rating or whether it was the result of an unlawful simulated transaction, on both these versions, it effectively amounts to fronting. That is improper and may well amount to a fraud having been perpetrated on innocent third parties who conducted business with the first respondent. Such conduct may also bring the provisions of the Prevention and Combating of Corrupt Activities Act 12 of 2004 (“PRECCA”) and an offence under s 3 into play. At best for the second respondent, it illustrates the absence of bona fides . [10] Section 34 of PRECCA enjoins any person who holds a position of authority and who knows or ought to reasonably have known or suspected that any other person has committed an offence in terms of the relevant sections of PRECCA involving an amount of R1 000 000.00 or more, to report such suspicion to the police official in the Directorate for Priority Crime Investigation. Considering the facts, an offence has prima facie been committed. [11] In relevant part, s 34 of PRECCA provides: ‘ 34 Duty to report corrupt transactions (1) Any person who holds a position of authority and who knows or ought reasonably to have known or suspected that any other person has committed- (a) an offence under Part 1, 2, 3 or 4, or section 20 or 21 (in so far as it relates to the aforementioned offences) of Chapter 2; or (b) the offence of theft, fraud, extortion, forgery or uttering a forged document, involving an amount of R100 000 or more, must report such knowledge or suspicion or cause such knowledge or suspicion to be reported to any police official. (2) Subject to the provisions of section 37 (2), any person who fails to comply with subsection (1), is guilty of an offence. [Date of commencement of sub-s. (2): 31 July 2004.] (3) (a) Upon receipt of a report referred to in subsection (1), the police official concerned must take down the report in the manner directed by the National Commissioner, and forthwith provide the person who made the report with an acknowledgment of receipt of such report. (b) The National Commissioner must within three months of the commencement of this Act publish the directions contemplated in paragraph (a) in the Gazette. (c) Any direction issued under paragraph (b), must be tabled in Parliament before publication thereof in the Gazette. (4) For purposes of subsection (1) the following persons hold a position of authority, namely- (e) the manager, secretary or a director of a company as defined in the Companies Act, 1973 (Act 61 of 1973), and includes a member of a close corporation as defined in the Close Corporations Act, 1984 (Act 69 of 1984); (h) any person who has been appointed as chief executive officer or an equivalent officer of any agency, authority, board, commission, committee, corporation, council, department, entity, financial institution, foundation, fund, institute, service, or any other institution or organisation, whether established by legislation, contract or any other legal means; (i) any other person who is responsible for the overall management and control of the business of an employer; or (j) any person contemplated in paragraphs (a) to (i), who has been appointed in an acting or temporary capacity.’ [12] In terms of s 34(4)(e) as read with s 34(1) of PRECCA, there is thus an express duty to report an offence and the improper transaction on both the applicant and the second respondent as the members of the first respondent. There is no indication on the application papers that they have done so. [13] As held in Zinyana, [2] a lthough there is no express duty on judicial officers to report under s 34(1) of PRECCA, there is an inherent duty on judicial officers to uphold the Constitution and not to condone unlawful conduct. In those circumstances, it may well be appropriate to refer the application papers to the relevant authority for investigation. This is best left for the Court dealing with the application on the return date, given that the determination is presently made on a prima facie basis only. [14] The respondents to a large extent left the remainder of the applicant’s version unchallenged and did not meaningfully grapple with the various factual averments made by her. The relevant facts are peculiarly within the knowledge of the second respondent. Considering the applicant’s version, specifically pertaining to how the second respondent was conducting the business of the first respondent, it was incumbent on the respondents to do so. [3] The failure to do so renders credence to the applicant’s averments. [15] Significantly, it was not meaningfully disputed on the papers that the business of the first respondent has been subsumed into Facility Fire. Facility Fire has a similar logo and telephone numbers to the first respondent. Documentary corroboration for that averment was put up by the applicant by way of a letter penned by the second respondent on the letterhead of the first respondent, speaking to the reasons for ‘the change of company’. It inter alia confirmed that Facility Fire would occupy the first respondent’s premises and that the staff complement would remain the same. Such conduct would be unlawful and may well amount to passing off. [16] The respondents further did not put up any recent financial information pertaining to the first respondent, nor was the interrelationship between the first respondent and Facility Fire meaningfully addressed. The undisputed facts speak to various untoward dealings in relation to the first respondent’s business. [17] According to the respondents, the applicant was merely employed as an administrator and received a salary from the first respondent. On the respondents’ version, the parties during August 2017 discussed that the applicant would not be required to attend the premises, but would receive payment of her salary, cellphone and petrol benefits for a period of 24 months. According to the respondents, the arrangement was that when the applicant received two thirds of those payments, the applicant would transfer her 50% membership interest to the second respondent. According to the second respondent, that was a mechanism to avoid unnecessary confrontation and did not constitute any acknowledgement that the applicant beneficially owned such members’ interest. [18] That explanation is tenuous and unconvincing and proffers no explanation why such ‘arrangement’ would have been reached if the applicant was not a member of the first respondent. It was common cause that the second respondent in any event did not adhere to the ‘arrangement’ as 17 months later the payments stopped, thus short of the 18 month period contended for by him. [19] On this basis, the respondents argued that the applicant was not entitled to invoke any just and equitable grounds for a winding up and that, as the applicant was aware of the factual dispute prior to the launching of the application, her application was doomed to failure. It was further submitted that insofar as a court may be unable to resolve the factual disputes on the papers, the respondents sought a referral of the matter to oral evidence. [20] The second respondent states in the answering affidavit that: ‘ I have instructed my legal representatives to launch action proceedings to reclaim the member’s interest the applicant unlawfully holds…..the existence of the factual disputes is the only reason why I have been advised not to launch a counter-application concomitantly with these papers’. [21] However, no such proceedings were ever launched up to the time the application was argued. The current impasse between the parties has existed for many years. Significantly, if the respondents’ version is to be believed, the dispute between the parties on the membership issue arose some years ago, without the second respondent having taken any steps to remedy the situation. [22] The respondents’ version also stands in contrast to the second respondent’s conduct in representing to the world at large by way of the CIPC documentation that the applicant was a 50% member of the first respondent and by signing the unaudited financial statements without demur for some three years after the dispute between the parties arose, which clearly reflects the applicant’s status as 50% member of the first respondent. [23] In order to defeat the application, it is necessary for the dispute to be a bona fide one and that the respondents’ version cannot be rejected on the papers as palpably false or untenable. [4] The respondent’s version is not corroborated by any documentary evidence. It was further not explained why he took no steps to procure his member’s interest for a period in excess of 7 years. [24] The approach in dealing with factual disputes in winding up applications differs from applications in general. Guidelines were laid down in Kalil v Decotex (Pty) Ltd and Another [5] . According to these guidelines a distinction is to be drawn between disputes regarding the respondents’ liability to the applicant and other disputes. Regarding the latter, the test is whether the balance of probabilities favours the applicant’s version on the papers. If so, a provisional order will usually be granted. If not, the application will either be refused or the dispute referred for oral evidence, depending on inter alia the strength of the respondents’ case and the prospects of viva voce evidence tipping the scales in favour of the applicant. [6] [25] In the present instance, the respondents’ version that the applicant holds her 50% interest in the first respondent as the second respondents’ nominee, does not in my view create a bona fide irresoluble dispute of fact. It would serve no purpose to refer that issue to oral evidence. Given the facts, the balance of probabilities favours the version of the applicant on the papers, at least prima facie . It follows that the applicant has established her locus standi, at least on a prima facie basis. [26] The second respondents’ version moreover amounts to an admission of improper conduct which as stated, may well bring the provisions of PRECCA into play. Whatever his motive may have been in having the membership interest in the first respondent registered in the name of the applicant, it was expressly done to create the impression that the applicant legitimately held such membership interest in the first respondent in her own name. It does not assist him to rely on an ‘unlawful simulated transaction’. [27] The applicant manifestly failed to make out any case that the first respondent is commercially insolvent or unable to pay its debts. The financial statements, albeit unaudited, do not support such version. It follows that the applicant’s reliance on s 344(f) and s 344(h) of the 1973 Companies Act must fail. [28] That leaves winding up on the ground of it being just and equitable. During argument, the applicant placed reliance on the just and equitable provision in s 81(1)(d)(iii) of the Companies Act 71 of 2008 .  Such misnomer is not fatal to the application. [7] It was not contended by the respondents during argument that different principles applied or that reliance on s 81(1)(d)(iii) of the 2008 Act was improper. [29] The relevant principles applicable to winding up on the grounds that it is just and equitable were enunciated by the Supreme Court of Appeal in Thunder Cats Investments 92 (Pty) Ltd v Nkonjane Economic Prospecting and Investment (Pty) Ltd . [8] It is trite that in relation to solvent companies, the provisions of the 2008 Act prevail. Those are regulated by ss 79-81 of the Act. [9] S 344 of the 1973 Act, on which the applicant relied in her founding papers, applies to insolvent companies. Otherwise just and equitable is explained thus by Malan JA: [10] “ Section 344(h) of the 1973 Act provides that a company may be wound up by the court when it is ‘just and equitable’ to do so. A winding up on this basis postulates not facts but only a broad conclusion of law, justice and equity, as a ground for winding-up. The subsection is not confined to cases which were analogous to the grounds mentioned in other parts of the section. Nor can any general rule be laid down as to the nature of the circumstances that had to be considered to ascertain whether a case came within the phrase. There is no fixed category of circumstances which may provide a basis for a winding up on the just and equitable ground… Section 344(h) gave the court a wide discretion in the exercise of which certain other sections of the Act had to be taken into account. Some of the categories that have been identified are the disappearance of a company’s substratum, illegality of the objects of the company and fraud connected in relation to it; a deadlock; oppression and grounds similar to the dissolution of a partnership. The word ‘deadlock’ is not always given the same meaning…. The ‘deadlock principle’ ..is founded on the analogy of partnership and is strictly confined to those small domestic companies in which, because of some arrangement, express, tacit or implied, there exists between the members in regard to the company’s affairs a particular personal relationship of confidence and trust similar to that existing between partners in regard to the partnership business. The superimposition of equitable considerations in such a case may justify the dissolution of such a company under the just and equitable provision’. [30] Is it just and equitable for the first respondent to be wound up? A decision on this issue involves a factual determination; and; if it is concluded on the facts found to be relevant that winding up would be just and equitable, the exercise of a judicial discretion that takes into account all the relevant circumstances and with due regard to the justice and equity of the competing interests of all concerned. [11] [31] A person who applies for winding up on the just and equitable ground must come to court with clean hands. If the breakdown in the relationship is due to an applicant’s misconduct, it cannot insist on the company being wound up. [12] The second respondent blames the breakdown of the parties’ relationship on the applicant, who had an extra marital affair. [32] However, a lack of ‘clean hands’ is not an absolute bar. As stated in Ruut v Head [13] : ‘ As a matter of logic, lack of clean hands could not be an absolute bar, else otherwise, for example, where both partners are equally at fault, neither could obtain a winding-up order. Nonetheless it must be an important factor in the exercise of the court’s discretion along with other factors, such as whether the partnership is truly deadlocked.’ [33] It is apposite to refer to Rentekor (Pty) Ltd and Others v Rheeder and Berman NNO and Others [14] , wherein Kriegler J held: ‘ Our law recognizes that in the relationship between shareholders in a company there may at one and the same time be a formal pecuniary nexus and also an intuitus personae, a special relationship of mutual personal trust. Where that relationship is breached, even dehors the affairs of the company (for example adultery by one of two directors/shareholders in Lawrences’s case supra), a winding up order may be found to be just and equitable’. [34] A court should thus assess the respective contributions to the breakdown to determine whether it is just and equitable to liquidate. On the facts it is not possible to attribute blame to each of them to any precise degree. [35] Although the applicant appears to have been the cause of the breakdown of the trust relationship between the parties, her conduct was not causative of the breakdown in the parties’ business relationship and thus this did not bar her from obtaining a winding-up order on the just and equitable ground. [15] Moreover, the second respondent is not without blame. [36] Whilst on the one hand, it has not been established on the facts that the applicant was ever involved in the actual management of the affairs of the first respondent, she performed certain functions and was actively involved, at least until some seven years ago. On the second respondent’s own version, the applicant was excluded from participating in the business of the first respondent, albeit on the basis that certain monies would be paid to her. [37] On the other hand, the second respondent’s silence on how the first respondent’s business was in fact conducted, justifies an inference (at least on a prima facie basis), that the business of the first respondent has been substantially wound down and subsumed into the new business of the second respondents’ father, Facility Fire. It was common cause that the applicant holds a 50% membership interest in the first respondent in all the official records held at CIPC. Both parties seem to be responsible for the breakdown in their relationship and the current state of affairs. [38] Considering all the facts, the evidence establishes at least prima facie , that the deadlock principle is applicable and that the relationship between the applicant and second respondent has irretrievably broken down and they cannot both participate in the first respondent. Prima facie , the evidence further establishes that the first respondent’s business has at least substantially wound down and was subsumed into Fire Facility, indicating that it was not trading at the time the application was launched. The respondents did not present any evidence indicating active trading. [16] These matters require investigation. Although the just and equitable ground is not some catch-all for winding up a company. [17] I am persuaded, on a conspectus of all the facts, that broad conclusions of law, justice and equity dictates that a provisional  winding up order should be granted. [18] [39] Another issue arises in the context of the exercise of the discretion afforded to a court; namely whether winding up the first respondent is the solution. This issue was not expressly addressed by any of the parties in their papers. The second respondent has for many years not pursued any legal remedy to procure the return of his alleged 50 % membership interest held by the applicant, despite belatedly indicating that he intended to do. On the available facts, it cannot be concluded that there are alternative remedies at the disposal of the parties or that the applicant is acting unreasonably in seeking to have the first respondent wound up instead of pursuing that other remedy. [19] Considering all the irregularities particularised in this judgment, a winding up order is appropriate and necessary, so that all the irregularities can be properly investigated. [40] This is not however a case where a final winding up order should be granted at this stage. The applicant has established her case on a prima facie basis and a provisional winding order is appropriate. Importantly, there may well be interested parties, such as creditors of the first respondent, who may wish to participate in the proceedings who should be afforded an opportunity to do so. It is further open to the respondents to seek to persuade a court on the return day of the order that no final order should be granted. [20] The costs are to be costs in the winding up. [41] I grant the following order: [1] The first respondent, Fire Fanatix CC, is hereby placed under provisional winding up; [2] All persons who have a legitimate interest are called upon to put forward their reasons why this Court should not order the final winding-up of the first respondent on 28 OCTOBER 2025 at 10:00 or so soon thereafter as the matter may be heard. [3] A copy of this order is to be published forthwith once in the Government Gazette and once in the Citizen newspaper. [4] A copy of this order is to be served with full compliance with the requirements of s 346A of the Companies Act 1973 on: [4.1]    The first respondent at its registered address and its primary place of business by way of Sheriff; [4.2]   The employees of the first respondent by affixing it to the notice board situated at the first respondent’s business premises at 44 Creativity Boulevard, Business Park, Klipriver, Meyerton by way of Sheriff. In the alternative, should the Sheriff fail to gain entry to the premises, service may be affected on the principal door/entrance to the premises; [4.3]   Any trade union of the employees of the respondent by affixing it to the notice board or primary entrance of the premises situated at the first respondent’s business premises at 44 Creativity Boulevard, Klipriver Business Park, Klipriver, Meyerton by way of Sheriff. In the alternative, should the Sheriff fail to gain entry to the premises, service may be affected on the principal door/entrance to the premises; [4.4]    The South African Revenue Service by way of electronic mail or hand delivery; [4.5]    The Master of the High Court, Johannesburg by way of Sheriff; and [4.6]    All known creditors of the first respondent by electronic mail or pre-paid registered post. [5] The costs of this application are to be costs in the winding up. [6] The applicant and the second respondent, as members of the first respondent, are directed to comply with their reporting duties under s 34 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 . EF DIPPENAAR JUDGE OF THE HIGH COURT GAUTENG JOHANNESBURG HEARING DATE OF HEARING :                            23 JULY 2025 DATE OF JUDGMENT :                         25 AUGUST 2025 APPEARANCES APPLICANT’S COUNSEL :                  Adv. N. Riley APPLICANT’S ATTORNEYS :              Thomson Wilks Inc RESPONDENT’S COUNSEL :              Adv. M. J. Rourke RESPONDENT’S ATTORNEYS :          Jurgens Bekker Attorneys INC. [1] As the Close Corporation Act, 1984 provides for. [2] Zinyana v Smith and Others [2023] ZAGPJHC 27; 2023 (2) SACR 532 (GJ) para 26-27. [3] JW Wightman v Headfour (Pty) Ltd [2008] ZASCA 6 ; 2008 (3) SA 371 (SCA) (“ Wightman” ), at paragraphs 12 and 13. [4] JW Wightman v Headfour (Pty) Ltd [2008] ZASCA 6 ; 2008 (3) SA 371 (SCA) (“ Wightman” ), at paragraphs 12 and 13. [5] Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 942 (A), quoted in Payslip Investments Holdings CC v Y2 Tec Ltd 2001 (4) SA 781 (C) at 783G-I. [6] Quoted in para 3 of Herman and Another v Set-Mak Civils CC 2013 (1) SA 386 (FB). [7] Muller v Lilly Valley (Pty) Ltd (2011/22041) [2011] ZAGPJHC 146 paras 1-2. Budge NO v Midnight Storm Investments 256 (Pty) Ltd and Another; Budge No v Wavelengths 1147 CC and Another 2012 (2) SA 28 (GSJ). [8] Thunder Cats Investments 92 (Pty) Ltd v Nkonjane Economic Prospecting and Investment (Pty) Ltd [2013] ZASCA 164. [9] Thunder Cats para 3, s 67 Close Corporations Act 69 of 1984 [10] Ibid, paras 15-17. [11] Budge para 13. [12] Apco Africa (Pty) Ltd v Apco Worldwide Inc [2008] ZASCA 64 ; 2008 (5) SA 615 (SCA), para 9; Emphy v Pacer Properties (Pty) Ltd 1979 (3) SA 363 (D) para 2; Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 (HL) at 387G-H [13] Ruut v Head (1996) 20 ACSR 160 at 162 quoted in Thunder Cats para 28. [14] Rentekor (Pty) Ltd and Others v Rheeder and Berman NNO and Others 1988 (4) SA 469 (TPD) at 500 A-G, quoted in Knipe para 26. [15] Knipe and Others v Kameelhoek (Pty) ltd and Another; Knipe v Schaapplaats 978 (Pty) Ltd and Another 2014 (1) SA 52 (FB) para 27 referring to Vujnovich and Another v Vujnovich . [16] Afgri Operations Ltd v Hamba Fleet Management (Pty) Ltd [2017] ZASCA 24 para 9 [17] Rand Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd 1985 (2) SA 345 (W) at 350I-351A. [18] Knipe supra paras 20 and 21 and the authorities cited therein. [19] Knipe paras 30-33. [20] Orestisolve (Pty) Ltd t/a Essa Investments v NDFT Investment Holdings (Pty) Ltd and Another 2015 (4) SA 449 (WC) paras [8]-[12] sino noindex make_database footer start