A recent judgment of the North West High Court, Mahikeng, has provided welcome clarity on an issue that does not often receive direct judicial attention. In Van der Westhuizen N.O. and Another v The Master of the High Court, Mahikeng and Others, handed down on 27 March 2026, the Court considered whether members of a close corporation become liable to contribute towards winding-up costs simply because they are members. It also dealt with whether a Master’s fee is payable where the insolvent estate has no assets.

The answer to both questions was helpful and commercially significant.

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The background

The matter arose from the voluntary liquidation of Harties Wine Club CC. The close corporation was placed into voluntary liquidation by special resolution, and the winding-up was treated as one for creditors. The joint liquidators later filed a first and final liquidation and distribution account showing that the estate had no assets. No creditors proved claims at the meeting of creditors.

The liquidators took the view that, because there were no assets, no Master’s fee was payable and there could be no contribution demanded from members purely because of their membership. The Master disagreed and contended that a fee of R250.00 was payable and that the members should contribute towards the winding-up costs.

That dispute led to an application for declaratory relief.

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What the Court had to decide

The Court had to decide who, if anyone, is liable for the costs of a voluntary winding-up where:

• The close corporation is insolvent;
• There is no free residue or no assets;
• No creditors have proved claims, and;
• There is no other obvious source from which costs can be recovered.

The Master relied on provisions of the Companies Act 61 of 1973, read with the Close Corporations Act 69 of 1984, to argue that members were “contributories” and therefore liable to pay. The Court rejected that interpretation.

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Membership alone does not create liability

The Court held that members of a close corporation are not liable to contribute to winding-up costs merely because they are members. It stressed that section 2(3) of the Close Corporations Act preserves the separate legal personality of the corporation, and that members are not personally liable for its obligations simply by reason of membership.

According to the Court, liability will arise only where there is some recognised legal basis for it. In this case, that would include situations where:

• The founding statement contractually binds members to contribute in a winding-up;
• A member has signed as surety, indemnitor or guarantor for the corporation’s debts; or,
• There are other statutory grounds for personal liability, such as reckless or fraudulent conduct, or circumstances justifying the lifting of the corporate veil.

Importantly, the Court found that the relevant provisions dealing with contributories and contribution plans are procedural in nature. They can be used to identify and recover contributions from persons who are already liable but they do not create that liability on their own.

That is a useful point. It means the Master or a liquidator cannot simply point to the winding-up machinery and infer personal liability where no substantive basis for liability exists.

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What about the Master’s fee?

The Court also considered whether a Master’s fee was payable in an estate with no assets.

Section 153 of the Insolvency Act read with the amended Third Schedule sets out the fees payable to the Master. The tariff begins at estates where the total gross value of assets is R5 000.00 or more but less than R50 000.00, in which case the fee is R250.00. The Court held that, because the tariff only starts at the R5 000.00 threshold, no fee is payable where the gross asset value is below that figure.

In other words, the obligation to pay cannot be implied. If the legislation does not expressly impose a fee below R5 000.00, then none is due.

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Practical Implications

This judgment will matter most in assetless liquidations, especially where a close corporation has ceased trading and there is no realistic prospect of recovering costs from the estate itself.

For members of close corporations, the judgment is reassuring. It confirms that limited liability still means something. Membership, without more, does not automatically expose a person to winding-up costs.

For liquidators and insolvency practitioners, the case is also important. It highlights the risk of accepting appointment in an insolvent estate with no assets and no proved creditors. In those circumstances, unless there is some contractual or statutory basis for recourse against members or others, the costs of the process may simply be irrecoverable. The Court expressly said that liquidators who accept appointment knowing the estate is assetless may have to bear those professional costs themselves.

For advisors, the judgment is a reminder to check the founding statement, any suretyships, and the factual basis for possible personal liability before assuming that members can be called upon to fund a winding-up.

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Final thought

This is a narrow judgment, but an important one. It confirms that the law does not lightly override the separate personality of a close corporation. If members are to be made personally liable in a winding-up, there must be a proper legal basis for doing so. The winding-up process itself does not create that liability.

The Court’s final order reflected exactly that position. It declared that members are not liable to contribute merely by virtue of membership alone unless they have contractually assumed that liability or bound themselves in some other recognised way, and it further declared that no Master’s fee is payable where the gross value of assets is less than R5 000.00.