THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 799/2016
In the matter between:
MORAITIS INVESTMENTS (PTY) LTD          FIRST APPELLANT
APOSTOLOS MORAITIS NO
(as trustee of the Moraitis Trust)

SECOND APPELLANT
ANTHANASIOS MORAITIS NO
(as trustee of the Moraitis Trust)

THIRD APPELLANT
CHRISTOS MORAITIS NO
(as trustee of the Moraitis Trust)

FOURTH APPELLANT
APOSTOLOS MORAITIS

FIFTH APPELLANT
and
MONTIC DAIRY (PTY) LTD

FIRST RESPONDENT
MONTIC TRANSPORT (PTY) LTD
SECOND RESPONDENT
EMONTIC INVESTMENTS (PTY) LTD      THIRD RESPONDENT
MONTIC ASSETS (PTY) LTD

FOURTH RESPONDENT
HUNTERS PROPERTIES (PTY) LTD        FIFTH RESPONDENT
TROPICA FOODS (PTY) LTD

SIXTH RESPONDENT
TROPICA INVESTMENTS (PTY) LTD SEVENTH RESPONDENT
KARL KEBERT NO
(as trustee of the Karl Kebert Trust)
EIGHTH RESPONDENT
MICHAEL SEGAL NO

(as trustee of the Karl Kebert Trust)
NINTH RESPONDENT
SOLLY GROSS NO
(as trustee of the Karl Kebert Trust)
TENTH RESPONDENT
APOSTOLOS MORAITIS NO
(as trustee of the Karl Kebert Trust)     ELEVENTH RESPONDENT
KARL KEBERT NO
(as executor of the late Julie Lamer)      TWELFTH RESPONDENT
KARL KEBERT

THIRTEENTH RESPONDENT
THE SHERIFF,
JOHANNESBURG

FOURTEENTH RESPONDENT
Neutral citation: Moraitis Investments (Pty) Ltd v Montic Dairy (Pty)
Ltd (799/2016) [2017] ZASCA 54 (18 May 2017)
Coram:
LEACH, TSHIQI, WALLIS and SALDULKER JJA and
FOURIE AJA
Heard:
8 May 2017
Delivered: 18 May 2017
Summary: Settlement agreement – order of court – grounds for
rescinding order – lack of authority to conclude settlement agreement –
failure to prove lack of authority – ss 75, 112 and 115 of the Companies
Act 71 of 2008 – principle of unanimous assent

ORDER

On appeal from: Gauteng Division, Johannesburg of the High Court
(Matojane J, Hawyes AJ concurring, Moshidi J dissenting):
The appeal is dismissed with costs.

JUDGMENT

Wallis JA (Leach, Tshiqi and Saldulker JJA and Fourie AJA
concurring)
[1] An agreement of settlement, especially one made an order of court,
is usually a sign that the hostilities between the litigants have ended. In
this case it led to a new front being opened in the conflict between the
parties. The fresh bone of contention was the authority to conclude the
settlement agreement. The appellants contended that the fifth appellant,
Mr Apostolos Moraitis (Mr Moraitis), was not authorised to conclude the
settlement agreement by either the first appellant, Moraitis Investments
(Pty) Ltd (Moraitis Investments), or the Moraitis Trust. The trust is
represented in the present litigation by Mr Moraitis and his two brothers,
the trustees of the trust and in that capacity the second to fourth
appellants. They accordingly brought proceedings against all the other
parties to the settlement agreement seeking to have it, and the order
making it an order of court, set aside. The application succeeded at first
instance, but an appeal to the full court of the Gauteng Division,
Johannesburg of the High Court (Matojane J, with Hawyes AJ concurring
and Moshidi J dissenting) overturned that decision and dismissed the
application. This further appeal is with the special leave of this court.

The background
[2] The principal actors in this drama were Mr Moraitis and the
thirteenth respondent, Mr Karl Kebert. For many years they were engaged
in business together. The main business was a dairy business conducted
through a company, Montic Dairy (Pty) Ltd (Montic), the first
respondent. Other companies were formed to hold properties and engage
in other activities related to the dairy business. These are the second to
sixth respondents. As is customary, Mr Moraitis and Mr Kebert held their
respective interests indirectly. In Mr Moraitis‟ case, the vehicle was the
Moraitis Trust of which he and his daughters were the capital
beneficiaries. The Moraitis Trust was the sole shareholder of Moraitis
Investments, which held a 20 percent stake in each of the first, second,
fourth, fifth and sixth respondents and a 25 per cent stake in the third
respondent.

[3] Mr Kebert held his interests in the companies through the Karl
Kebert Trust (the Kebert Trust),1 which is represented in this appeal by
the eighth to eleventh respondents. The Kebert Trust owned 100 per cent
of the shares in Tropica Investments (Pty) Limited (Tropica Investments)
the seventh respondent, which in turn was the owner of the balance of the
shares in the first, second, third, fourth, fifth and sixth respondents.

[4] In 2006 Mr Moraitis and Mr Kebert fell out. Litigation ensued
before what was then the North Gauteng High Court. Moraitis
Investments and the Moraitis Trust sought the liquidation of the six
companies in which Moraitis Investments held shares, alternatively an

1 In some places in the papers this is referred to as the Karl Kebert Family Trust but it is unnecessary to
resolve this discrepancy.

order that the shares owned by Moraitis Investments be purchased by the
respondents. They alleged that winding up the companies would be just
and equitable, or that a purchase order would put an end to the deadlock
between Mr Moraitis and Mr Kebert. On 19 October 2007, Sapire AJ
made an order, pursuant to an agreement between the parties to that
litigation, that Tropica Investments and the Kebert Trust, to which he
referred compendiously as the Kebert Group, would purchase the shares
owned by Moraitis Investments in the various companies. The parties
agreed, and Sapire AJ ordered, that an independent third party, acting as a
valuer, would determine the purchase price of the shares and loan
accounts. Ernst & Young Advisory Services Limited (Ernst & Young)
was appointed to undertake the valuation. Its valuation, which would
have involved the payment of a little over R5 million to Moraitis
Investments, satisfied no-one. The companies whose shares were to be
valued, together with Tropica Investments and the Kebert Trust,
commenced proceedings to set aside the valuation and have a far lower
valuation substituted for it. Moraitis Investments and the Moraitis Trust
opposed those proceedings and it was suggested that in truth there had
been an under-valuation.

[5] While these latter proceedings were ongoing, Mr Kebert, in his
capacity as the executor in his late mother‟s estate, commenced an action
in the then South Gauteng High Court against Mr Moraitis personally. He
sought payment of a substantial sum in respect of the purchase price of
his late mother‟s interest in the company owning the Exotica Hotel on the
island of Zakynthos. He alleged that his mother and Mr Moraitis had
jointly developed the hotel, which was being run by the latter‟s children,
and that prior to her death she had agreed to transfer her interest to Mr
Moraitis for €500 000. The overall picture is of litigious hostilities

extending over a broad front involving all of the parties to the present
proceedings and being conducted simultaneously in the Pretoria and
Johannesburg courts.

[6] When the dispute regarding the hotel was set down for hearing the
parties engaged in intensive negotiation, instigated by Mr Moraitis‟
attorney, leading to the drafting and signature of the settlement
agreement. The agreement recorded that it was in settlement of case
number 2009/52206, being the litigation over the hotel, and also of the
two cases in the North Gauteng High Court, namely case number
41065/2006 (the liquidation application) and case number 23631/2010
(the valuation dispute). It reflected all of the parties to the current
litigation as parties to the settlement, but there were only two signatories,
namely Mr Moraitis and Mr Kebert. Each signed on behalf of all the
various entities falling on their own side of the fence. Of importance for
present purposes is that Mr Moraitis signed on behalf of Moraitis
Investments and the Moraitis Trust. Both he and Mr Kebert warranted
that they were duly authorised to sign on behalf of the trusts and
companies whom they purported to represent. The settlement agreement
was then made an order of court by Mojapelo DJP.

[7] The settlement provided for the shares held by Moraitis
Investments in the first to sixth respondents to be transferred to Mr
Kebert or his nominee against payment to Mr Moraitis of R600 000. On
behalf of his mother‟s estate and himself Mr Kebert abandoned any
claims in relation to the hotel. The agreement was partially implemented
in the sense that a payment of R600 000 due to Mr Moraitis was made.
Problems surfaced when transfer was demanded of the shares held by
Moraitis Investments in the six companies.

[8] On 30 September 2013 the present proceedings were launched in
the South Gauteng High Court2 with a view to having both the settlement
agreement and the order of court set aside. The principal contention in
regard to the invalidity of the settlement agreement was that Mr Moraitis
had not been authorised by the Moraitis Trust and Moraitis Investments
to conclude it on their behalves and that it was therefore invalid and
unenforceable against them. The relevant allegations were made by Mr
Moraitis on behalf of both Moraitis Investments and the Moraitis Trust,
without a trace of embarrassment or an explanation of the basis on which
he had originally warranted his authority to act on their behalves.
Alternative arguments that he advanced were that the agreement involved
the disposal of the whole of the business of Moraitis Investments and that
he and Mr Kebert had personal interests in the transaction. As such he
invoked ss 75, 112 and 115 of the Companies Act 71 of 2008 (the
Companies Act) to contend that the agreement was unlawful and void. In
regard to the order making the agreement an order of court, he contended
that once it was shown that the agreement was invalid or unenforceable
for any of these reasons the court order fell to be set aside.

The law
[9] The focus of the original judgment by Windell J and those
delivered in the full court fell on the issue of Mr Moraitis‟ authority to
execute the settlement agreement on behalf of the Moraitis Trust and
Moraitis Investments. That was not surprising, because the application
and the argument was premised on the proposition that by virtue of the
claimed lack of authority the settlement agreement itself was void and

2 This was a misnomer as by then the court had become the Gauteng, Johannesburg Division of the
High Court.

unenforceable. Building on that it was contended that it followed a
fortiori that the consent order had to be set aside. The points raised in
terms of the Companies Act were hardly addressed.

[10]  In my view that was not the correct starting point for the enquiry,
because it ignored the existence of the order making the agreement an
order of court. Whilst terse the order was clear. It read:
„The Agreement of Settlement signed and dated 05 September 2013 is made an order
of court.‟
For so long as that order stood it could not be disregarded. The fact that it
was a consent order is neither here nor there. Such an order has exactly
the same standing and qualities as any other court order. It is res judicata
as between the parties in regard to the matters covered thereby.3 The
Constitutional Court has repeatedly said that court orders may not be
ignored. To do so is inconsistent with s 165(5) of the Constitution, which
provides that an order issued by a court binds all people to whom it
applies.4 The necessary starting point in this case was therefore whether
the grounds advanced by the applicants justified the rescission of the
consent judgment. If they did not then it had to stand and questions of the
enforceability of the settlement agreement became academic.

[11] The heads of argument did not address the grounds for the
rescission of a judgment in any detail, so the parties were afforded an

3 Eke v Parsons 2016 (3) SA 37 (CC) paras 29-31; Provincial Government North West and Another v
Tsoga Developers CC and Others [2016] ZACC 9; 2016 (5) BCLR 687 (CC) para 47.
4 Department of Transport and Others v Tasima (Pty) Ltd [2016] ZACC 39; 2017 (2) SA 622 (CC)
paras 177-183. There is a narrow exception where a court makes an order that is on its face beyond its
powers, as with the order to appoint a specific individual as a provisional liquidator that was in issue in
Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO and Others [2011]
ZASCA 238; 2012 (3) SA 325 (SCA). That order was invalid as the power to appoint a provisional
liquidator was exclusively vested in the Master and accordingly the Master could not be held to be in
contempt by declining to make the appointment. See Tasima para 197 and Provincial Government
North West v Tsoga Developers CC and Others [2016] ZACC 9; 2016 (5) BCLR 687 (CC) para 50.

opportunity to deliver supplementary heads. Those delivered on behalf of
the appellants were dismissive of the court‟s concerns in this regard,
describing them as not germane to the appeal, beyond raising the
possibility that Mr Moraitis may have perpetrated a fraud. This was a
surprising contention, coming as it did, from counsel representing him. It
is unusual for a lawyer to charge their client with fraud. In this case the
even more surprising implication was that in bringing the application Mr
Moraitis was seeking to rely on his own fraud. The supplementary heads
delivered on behalf of the respondents submitted that absence of authority
did not fall within the narrow grounds that our courts recognise as
justifying the setting aside of an order of court.

[12] The issue is far more nuanced than the arguments suggest. The
approach differs depending on whether the judgment is a default
judgment or one given in the course of contested proceedings. In the
former case it may be rescinded in terms of either rule 31(2)(b) or rule 42
of the Uniform Rules, or under the common law on good cause shown.5
In contested proceedings the test is more stringent.6 A judgment can be
rescinded at the instance of an innocent party if it was induced by fraud
on the part of the successful litigant, or fraud to which the successful
litigant was party.7 As the cases show, it is only where the fraud – usually
in the form of perjured evidence or concealed documents – can be
brought home to the successful party that restitutio in integrum is granted
and the judgment is set aside. The mere fact that a wrong judgment has
been given on the basis of perjured evidence is not a sufficient basis for
setting aside the judgment. That is a clear indication that once a judgment

5 De Wet and Others v Western Bank Ltd 1979 (2) SA 1031 (A).
6 Ibid at 1041B-E.
7 Makings v Makings 1958 (1) SA 338 (A); Rowe v Rowe 1997 (4) SA 160 (SCA) at 166G-J.

has been given it is not lightly set aside, and De Villiers JA said as much
in Schierhout.8

[13] Apart from fraud the only other basis recognised in our case law as
empowering a court to set aside its own order is justus error.9 In
Childerley, where this was discussed in detail, De Villiers JP said that
„non-fraudulent misrepresentation is not a ground for setting aside a
judgment‟ and that its only relevance might be to explain how an alleged
error came about. Although a non-fraudulent misrepresentation, if
material, might provide a ground for avoiding a contract,10 it does not
provide a ground for rescission of a judgment. The scope for error as a
ground for vitiating a contract is narrow and the position is the same in
regard to setting aside a court order.11 Cases of justus error were said to
be „relatively rare and exceptional‟.12 Childerley was considered and
discussed by this court in De Wet13 without any suggestion that the
principles it laid down were incorrect.

[14] The same issue arose indirectly before this court in Gollach and
Gomperts.14 I say indirectly because the case was not concerned with a
judgment, but with the avoidance of an agreement of compromise (a
transactio) on the basis of non-disclosure. The judgment repays careful
consideration. The general principles were stated as follows:15

8 Schierhout v Minister of Justice 1927 AD 94 at 98.
9 Childerley Estate Stores v Standard Bank of South Africa Ltd 1924 OPD 163 (Childerley).
10 GB Bradfield Christie’s Law of Contract in South Africa 7 ed (2016) para 7.1, p 315-6.
11 Childerley at 165 and 168.
12 Childerley at 166.
13 De Wet fn 5 ante.
14 Gollach & Gomperts (1967)(Pty) Ltd v Universal Mills & Produce Co (Pty) Ltd 1978 (1) SA 914
(A) at 922F-H (Gollach and Gomperts).
15 Gollach and Gomperts at 922B-E.

„A transactio, whether extra-judicial or embodied in an order of Court,16 has the
effect of res judicata. …It is obvious that, like any other contract (and like any order
of Court), a transactio may be set aside on the ground that it was fraudulently
obtained. There is authority to the effect that it may also be set aside on the ground of
mistake, where the error is justus.‟
The judgment then referred to Childerley and the refusal to accept that a
judgment could be set aside on the grounds of justus error induced by a
non-fraudulent misrepresentation. It continued as follows:
„The matter then before the Court was an action to set aside a judgment delivered in a
defended case. Concerning judgments entered by consent, the learned JUDGE-
PRESIDENT accepted that they could, “under certain circumstances”, be set aside
“on the ground of just error”. It appears to me that a transactio is most closely
equivalent to a consent judgment. Such a judgment could be successfully attacked on
the very grounds which would justify rescission of the agreement to consent to
judgment. I am not aware of any reason why justus error should not be a good ground
for setting aside such a consent judgment, and therefore also an agreement of
compromise, provided that such error vitiated true consent and did not merely relate
to motive or to the merits of a dispute which it was the very purpose of the parties to
compromise.‟ (Emphasis added.)

[15]  The appellants seized upon the passage highlighted in the above
quotation to contend that it provided authority for the broad proposition
that any ground justifying the avoidance of a contract would also provide
grounds for setting aside a consent judgment granted pursuant to an
agreement of compromise. In my view that inverts what Miller JA was
saying, by reading that sentence without regard to what preceded it.
Miller JA had dealt with the grounds on which a court could set aside a
judgment, and identified fraud and, in limited circumstances, justus error

16 An extra-judicial transactio is an agreement of compromise between the parties that is not made an
order of court. It is said to have the effect of res judicata because, like a judgment, it finally disposes of
the disputes that are the subject of the compromise. They may not be resuscitated, in the same way as a
court order precludes the parties from resuscitating their dispute.

as providing such grounds. He then drew an analogy between a consent
judgment and a transactio and said that the grounds upon which a
judgment could be attacked were the very grounds justifying rescission of
the agreement to consent to judgment. As he had just dealt in detail with
the grounds for setting aside a consent judgment, it can hardly be thought
that he was intending to say that there were other unspecified grounds, or
that any grounds existing at common law for avoiding an agreement
would also provide a basis for rescinding a consent judgment granted
pursuant to that agreement. That would have involved over-ruling what
had been said in Childerley in the passage he had cited without criticism.
His judgment cannot be taken to say anything more than that fraud and
justus error, where sufficient to set aside a judgment, would also be
sufficient to set aside a compromise that gave rise to that judgment.

[16] Counsel for the respondents, Mr Symon SC, very properly drew
our attention to the judgment of Van Zyl J in Kruisenga,17 where he said
that:
„The principle is that when a judgment is not passed on the merits of a dispute … but
rather derives its existence from an agreement, its continued existence is subject to the
validity of the agreement.‟
There are two difficulties with this statement. First, the distinction it
draws, between judgments „not passed on the merits of a dispute‟ and
other judgments, lacks any foundation in our jurisprudence. There is no
difference in law between an order granted in the case of a default
judgment; an order pursuant to a settlement prior to the conclusion of
opposed proceedings; or the order in a judgment pronounced at the end of
a trial or opposed application. As the Constitutional Court has said it is an

17 MEC for Economic Affairs, Environment and Tourism v Kruisenga and Another 2008 (6) SA 264
(Ck) para 53 (Kruisenga).

order „like any other‟.18 Second, the proposition is over-broad and
inconsistent with the authorities discussed above. Were it correct a
material, but non-fraudulent, misrepresentation justifying rescission of
the agreement of compromise would also justify the rescission of the
judgment granted pursuant to that compromise, but that is not the case. Its
defect lies in approaching the question from the direction of the
agreement instead of from the direction of the judgment. The latter is the
correct approach, because the judgment operates as res judicata and
precludes a claim based on the agreement.19 Unless and until the
judgment has been set aside, there can be no question of attacking the
compromise agreement. It follows that the necessary starting point for the
enquiry must be whether there are grounds upon which to seek rescission
of the court order. Only then can there be any issue regarding the
rescission of the compromise.

[17] Insofar as the appellants rely upon the provisions of ss 75, 112 and
115 of the Companies Act they must therefore bring their case within the
scope of the principles set out above. In regard to their contentions based
on Mr Moraitis‟ alleged lack of authority to conclude the settlement
agreement on behalf of Moraitis Investments and the Moraitis Trust
another principle comes into play. This is that the court can only grant a
consent judgment if the parties to the litigation consented to the court
granting it. If they did not do so, but the court is misled into thinking that
they did, the judgment must be set aside.20 This is something different
from avoiding a contract on the grounds of fraud, duress,
misrepresentation or the like. In those cases the injured party has an

18 Eke v Parsons supra fn 3, para 29.
19 Eke v Parsons and Tsoga Developers CC supra, fn 3.
20 Kruisenga, supra, para 54.

election to abide by the agreement. When one is concerned with an
absence of authority to conclude the agreement in the first place, that is
not a matter of avoiding the agreement, but of advancing a contention that
no agreement came into existence.

[18] There are several cases that make this point, but I need only refer
to two. In De Vos v Calitz and De Villiers21 Ms de Vos was sued in the
magistrates‟ court. She was urged by her legal adviser to settle, but was
adamant that she would not do so. Her attorney, after a conversation with
her brother, whom he bona fide believed was authorised to give
instructions on her behalf, accepted a settlement proffered by the other
side that provided for judgment to be granted against Ms De Vos by
consent. Before the magistrate could be approached, Ms de Vos learned
of the agreement and repudiated it on the grounds of her attorney‟s lack
of authority. Although this was conveyed to the magistrate, judgment was
nonetheless entered against her. The judgment was set aside on appeal, on
the grounds of the attorney‟s lack of authority, but the court made it clear
that it could have been rescinded on the same grounds.

[19] The other case, Washaya v Washaya,22 also involved a legal
practitioner agreeing to a consent order without any authority from his
client to do so. The legal practitioner said that he had settled the case on
his own initiative in the belief that his client would thereafter ratify what
he had done. After referring to earlier decisions, commencing with De
Vos, the court held that the order had to be rescinded, saying that:
„To my mind that ends the matter. … It is clear, in terms of these precedents, common
sense and justice that once a Court is not satisfied that a party consented to  judgment

21 De Vos v Calitz and De Villiers 1916 CPD 465.
22 Washaya v Washaya 1990 (4) SA 41 (ZH) at 45E-G.

then that party is entitled to restitutio in integrum. Put differently, had the Court
granting the judgment been aware that the party had not consented it would not have
acceded to the request that it enter judgment. The judgment must therefore be set
aside.‟

[20] A gloss has subsequently been placed upon this proposition that,
while lack of authority is the preponderant factor, on its own it may not
suffice unless there is a reasonable explanation for the circumstances in
which the consent judgment came to be entered.23 There is merit in this
because the court is being asked to set aside its decision in circumstances
where it is functus officio. However, in the light of my conclusion on the
facts it is unnecessary to express a final view on this. The case can be
disposed of in relation to Mr Moraitis‟ authority to represent the Moraitis
Trust and Moraitis Investments on the basis that the central proposition
that a court may not grant an order making a settlement agreement an
order of court, unless the parties to the agreement consent thereto, is
correct.24

Authority
[21]  The appellants‟ primary case was that Mr Moraitis had no
authority to enter into the compromise on behalf of Moraitis Investments
and the Moraitis Trust and no authority to agree to that compromise
agreement being made an order of court. Counsel for the appellants
correctly accepted that the onus rested on his clients to establish the lack
of authority on which they relied. He rested his argument principally on a

23 Georgias and Another v Standard Chartered Finance Zimbabwe Ltd 2000 (1) SA 126 (ZS) at 132B-
D; Ntlabezo and Others v MEC for Education, Culture and Sport, Eastern Cape 2001 (2) SA 1073
(Tk H) at 1081B-E.
24 The judgment on appeal in Kruisenga, whilst not directly in point, is consistent with this conclusion.
MEC for Economic Afffairs, Environment and Tourism, Eastern Cape v Kruizenga an Another [2010]
ZASCA 58; 2010 (4) SA 122 (SCA) para 7.

lack of authority to represent the Moraitis Trust and, accordingly, I will
deal with that first and with the position of Moraitis Investments
thereafter.

[22] In the founding affidavit Mr Moraitis canvassed the terms of the
trust deed under which the Moraitis Trust was constituted. The trust was
established in 1997 and the original trustees were Mr Moraitis and his
brothers. Clause 6.1 prohibited the conclusion of any agreement or
transaction to which a trustee or their spouse was a party, or in which
they had an interest, unless there was at least one disinterested trustee in
office and that trustee, or the majority of disinterested trustees, voted in
favour of entering into the transaction or agreement. The trustees were
authorised to conduct their business as they thought fit (Clause 6.3.2) and
were entitled to delegate any of their powers to committees consisting of
one or more trustees (Clause 6.5).

[23] The legal principles on which the appellants rely are trite. Unless
the trust deed otherwise provides the trustees must act jointly. They may
however authorise a third party, including one of their number, to act on
their behalf and conclude agreements that bind the trust.25 In reliance on
those principles Mr Moraitis dealt with the issue of authority, so far as it
concerned the Moraitis Trust, in the following terms:
„At the time that I signed the settlement agreement, neither the third nor the fourth
applicants in their capacities as the trustees of the Moraitis Trust, had authorised me
to conclude the settlement agreement on their behalf, in their capacities as trustees of
the Moraitis Trust. Nor had we had a meeting of trustees to discuss settlement of all
the pending litigation by any one trustee on behalf of the Trust. …

25 Nieuwoudt and Another v Vrystaat Mielies (Edms) Bpk 2004 (3) SA 486 (SCA) paras 20 and 23;
Thorpe and Others v Trittenwein and Another 2007 (2) SA 172 (SCA) para 9.

I am advised that in order for the settlement agreement to be valid and enforceable as
against the Moraitis Trust, it was necessary for all three trustees to sign the settlement
agreement jointly, in their capacity as trustees, alternatively it was necessary for the
third and fourth applicants to have authorised me to conclude the agreement on behalf
of the trustees representing the Trust.‟
The third and fourth appellants deposed to brief confirmatory affidavits,
saying only that they had read the affidavit of Mr Moraitis and each of
them confirmed „the contents thereof applicable to me, and to me in my
capacity as trustee of the Moraitis Trust and to the Moraitis Trust‟.

[24] In the heads of argument it was submitted that this was not
disputed. That submission was incorrect. In his answering affidavit, Mr
Kebert drew attention to the warranty contained in the settlement
agreement, which stated that:
„Moraitis warrants that he is authorised to enter into this settlement agreement on
behalf of his Trust (as Trustee) and Moraitis Investments (Pty) Ltd and that Moraitis
Investments (Pty) Ltd and his Trust have authorised Moraitis to enter into this
settlement agreement on their behalf.‟
He said that Mr Moraitis should be held to this warranty and that „his
denial of authority (such as it is) must be rejected‟. Earlier he said that the
assertion that Mr Moraitis was not authorised to represent the Moraitis
Trust was „false and unsubstantiated and should be rejected‟. In the light
of that unequivocal statement it is hard to see on what basis it could be
contended that it was undisputed that Mr Moraitis lacked authority to
represent the Moraitis Trust. The real question was whether there was a
bona fide dispute about his authority. If there were, in the absence of a
reference to oral evidence, which was not sought, the appellants would
have failed to discharge the onus. This was because the application of the
Plascon-Evans rule meant that the case had to be determined on the
version of the respondents.

[25] The respondents were not party to the internal workings of the
Moraitis Trust. In order to avoid the conclusion that Mr Kebert‟s denials
were bare denials that could be disregarded they had to make their case in
the third category of a dispute of facts referred to in the well-known
passage from the Room Hire case,26 namely where the respondent has no
direct knowledge of the facts stated by the applicant, but denies them and
gives evidence to show that the version of the applicant is untruthful or
unreliable. And in that situation less evidence will suffice to raise a
dispute of fact.27 That is what Mr Kebert set out to do.

[26] Mr Kebert explained in his original answering affidavit that the
Moraitis Trust was a vehicle created by Mr Moraitis to hold the shares in
Moraitis Investments and that Mr Moraitis was the governing mind
behind the trust and decided all matters on its behalf. He said that
throughout their lengthy business association Mr Moraitis had never
required the permission of the remaining trustees in regard to any
business decision. All of these allegations attracted bare denials from Mr
Moraitis in his replying affidavit, who brushed them off by saying that he
had already dealt with them. He had not done so and as statements of fact
they stood unrebutted.

[27] Mr Kebert went further in a supplementary answering affidavit by
providing information regarding the manner in which Mr Moraitis dealt
with the various cases in which they were involved. Starting with the
liquidation application, he pointed out that the attorney representing

26 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163.
27 Gericke v Sack 1978 (1) SA 821 (A) at 827D-G.

Moratis Investments and the Moraitis Trust was a Mr Ioullanou. He was
also the attorney representing those entities in the litigation concerning
the valuation by Ernst & Young, and Mr Moraitis in the litigation over
the hotel. As such he had presumably been responsible for preparing
affidavits and was involved in the settlement negotiations and the drafting
of the settlement agreement, including the warranty of authority.

[28] Turning to the founding affidavit in the liquidation proceedings,
Mr Moraitis deposed to it in his capacity as a director of Moraitis
Investments and as a trustee of the Moraitis Trust. He attached resolutions
to this effect executed on the same day as the affidavit was sworn, and
reflecting decisions by Moraitis Investments and the Moraitis Trust taken
in Johannesburg. Both resolutions were signed by Mr Moraitis.
Accepting, as we must, that these statements by Mr Moraitis correctly
reflected his authority, there needed to be an explanation of the manner in
which that authority was conferred upon him. There was none.

[29] On the merits, in the founding affidavit in the liquidation
application, Mr Moraitis explained the background to his business
relationship with Mr Kebert and the nature of that relationship. He
described it as being akin to a partnership. Its business was conducted „as
a group‟. Their relationship extended beyond a commercial one to one as
friends. The emphasis throughout was that the businesses were in truth
those of Mr Moraitis and Mr Kebert and the companies and trusts merely
vehicles through which they were pursuing their own interests. The
manner in which they were conducted indicated to any observer that Mr
Moraitis and Mr Kebert had been vested with the relevant authority to
represent the trusts and companies in business dealings. Although Mr

Moraitis delivered a supplementary replying affidavit in regard to this
material he did not deal with the substance of the factual allegations.

[30] The liquidation proceedings eventually came before Sapire AJ and
the parties agreed on an order in terms of which the interest of Moraitis
Investments in the various companies would be purchased by either
Tropica or the Kebert Trust. This was the alternative relief that had been
sought in the application. Far from disavowing this settlement and the
resultant order by Sapire AJ, the appellants all wish to pursue it, because
the relief they seek in these proceedings would revive the litigation over
the Ernst & Young valuation and the implementation of Sapire AJ‟s
order. Accordingly the conclusion of the settlement and the agreement to
have it made an order of court were authorised by the Moraitis Trust and
Moraitis Investments. They were represented by Mr Moraitis and their
attorney was Mr Ioullanou, who were also responsible for the conclusion
of the settlement agreement that is in issue here. Yet there is not a jot or
tittle of evidence to indicate on what basis the conclusion of the earlier
settlement agreement and the consent to Sapire AJ‟s order was any
different from the settlement agreement and order in issue in this case. If
the earlier settlement agreement was authorised, valid and binding that
must hold true for the latter one, in the absence of evidence showing that
the circumstances in which they were concluded were different.

[31] Coming to the circumstances in which the settlement was
concluded, the evidence shows that the initiative came from Mr Moraitis‟
legal representative in the hotel dispute. This was Mr Ioullanou, who was
the attorney for both Moraitis Investments and the Moraitis Trust, in the
liquidation application and the dispute over the Ernst & Young valuation.
He was the person who, on their behalf, concluded the agreement with

Ernst & Young. As the attorney he was aware that the settlement
agreement was intended to be comprehensive and cover all the disputes
between the parties in all the existing litigation. He must have been aware
of the terms of the settlement agreement signed by Mr Moraitis and the
warranty of authority that it contained on behalf of his clients. Yet there is
no affidavit from him explaining on what basis he permitted his one
client, Mr Moraitis, to say that he had authority to represent his other
clients, Moraitis Investments and the Moraitis Trust, if that was not in
fact true. All that we have is a letter addressed to Mr Moraitis‟ current
attorney saying that his office and counsel did not at any stage contact the
third and fourth appellants to discuss the settlement negotiations and
settlement agreement. Like the affidavits the letter is a carefully worded
statement that avoids dealing with the facts. It is entirely consistent with
there being no need for any such discussion, because he was aware that
Mr Moraitis was already authorised to enter into settlement negotiations
and a settlement agreement on behalf of the Moraitis Trust.

[32] This is a substantial body of evidence that casts doubt on the claim
that Mr Moraitis was not authorised by his co-trustees to negotiate a
settlement of the disputes in which they and he were embroiled, and to
cause the resultant agreement to be made an order of court. It is plain that
he was the driving force behind all the litigation and acted on behalf of
the Moraitis Trust and Moraitis Investments in instituting, conducting
and, in the case of the liquidation application, settling the litigation. He is
equally the driving force behind the present litigation. Accepting that his
actions in all these matters were duly authorised by his co-trustees the
inevitable question is how that authority was conferred in those instances
and what difference there was between them and the present one. There is
nothing to indicate that there was any difference.

[33] The issue can be summed up in a single stark question. In
executing the settlement agreement Mr Moraitis said expressly that he
was authorised to represent „his‟ trust. In his affidavit he said that he was
not so authorised. Why should we believe that he was lying when he
signed the settlement agreement, but telling the truth in his affidavit?
Counsel was unable to provide an answer to that question. That brings us
back to the point at which this analysis commenced, namely that the onus
rested on the Moraitis Trust to prove that Mr Moraitis lacked the
authority to conclude the settlement agreement on its behalf and to agree
to its being made an order of court. In the absence of any attempt to
explain the workings of the trust or how issues of authorisation had been
dealt with in the past, or any of the matters highlighted by Mr Kebert, that
onus was not discharged.

[34] At the risk of being accused of heaping Pelion upon Ossa, there is
merit in the criticism that the statements by Mr Moraitis are, in the
absence of a full explanation of precisely how the trust operated and how
the relevant decisions were taken, assertions of a legal conclusion rather
than factual evidence in regard to authority. The question whether a
person was authorised to act on behalf of another is ordinarily a question
of fact involving the drawing of inferences or conclusions from primary
facts in the context of legal principle. Lord Wright said in his speech
in Caswell v Powell Duffryn Associated Collieries Ltd:28
„Inference must be carefully distinguished from conjecture or speculation.  There can
be no inference unless there are objective facts from which to infer the other facts
which it is sought to establish … But if there are no positive proved facts from which

28 Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 (HL); ([1939] 3 All ER 722) at
733E – F.

the inference can be made, the method of inference fails and what is left is mere
speculation or conjecture.‟
The absence of any information concerning the process followed when
these different pieces of litigation were instituted and conducted and the
extent of the knowledge of the trustees concerning them, as well as the
general manner of conducting the business of the trust, leads to the
conclusion that there is an absence of facts from which to draw the
inference that the claims by Mr Moraitis to have lacked authority in this
specific instance are correct.

[35] The situation of Moraitis Investments can be dealt with fairly
simply. Authority to represent it could emanate from two sources. There
could be a decision by its sole shareholder, the Moraitis Trust, that it
should conclude the agreement, or there could be a decision taken by its
two directors, Mr Moraitis and Mr Kebert. In order to succeed in
establishing its case Moraitis Investments had to prove that neither source
of authority was present when the settlement agreement was concluded. It
did not discharge that onus on either ground. The same evidence that
indicated that Mr Moraitis had authority to represent the Moraitis Trust
served to indicate that he had authority to represent the trust in its
capacity as sole shareholder of Moraitis Investments in concluding the
settlement agreement. In addition he and Mr Kebert were the two
directors of Moraitis Investments. The suggestion that, because he did not
say, when signing the agreement, that he was doing so in that capacity,
Mr Kebert‟s manifest agreement to the settlement agreement can be
disregarded, is without merit. The agreement did not need to be signed by
both directors in order to bind the company. It sufficed if it was signed by
one of them with the authority of the other. If Mr Moraitis lacked
authority Mr Kebert would have known and intervened. The only

inference from his not doing so was that he confirmed that Mr Moraitis
had the authority that he warranted he had, to represent Moraitis
Investments in concluding the settlement agreement. The objection of
lack of authority in this regard must be rejected.

Sections 112 and 115 of the Companies Act
[36] These provisions govern the disposal by a company of the whole or
greater part of its assets or the undertaking of the business. The appellants
contend that the settlement agreement, involving as it did, the transfer to
Mr Kebert of the interests of Moraitis Investments in the first to sixth
respondents, fell within the ambit of the sections and accordingly could
only be validly effected by way of a special resolution in terms of
s 115(2)(a) of the Companies Act. As no such resolution was taken they
submitted that the transaction was void.

[37] The purpose underpinning the requirements of ss 112 and 115 is to
ensure that the interests and views of all shareholders are taken into
account before the company disposes of the whole or the greater part of
its assets or the undertaking itself. In the case of a special resolution
ss 65(9) and (10) stipulate the majority that must be achieved for such a
resolution to be passed. Where the company only has a single shareholder
these requirements become a mere formality. In those circumstances it
seems to me that the principle of unanimous consent can be invoked in
answer to the appellants‟ contention. That principle, long recognised in
English company law, from which our courts have received much
guidance,29 was accepted as part of our law relating to companies, under

29 R C Beuthin „The Principle of Unanimous Consent‟ (1974) 91 SALJ 2.

both the 1926 and the 1973 Companies Acts.30 I can see nothing in the
current Act to suggest that the principle no longer finds application. The
problems that this court identified in Quadrangle Investments31 and those
identified by Professor Beuthin in his article on the topic32 do not arise
here to preclude the invocation of the principle.

[38] In the present case the Moraitis Trust was itself a party to the
settlement agreement and, for the reasons already given, the appellants
have failed to prove that this was not authorised by the trustees. It cannot
then be said that it did not, by its own agreement to the settlement, agree
to Moraitis Investments becoming a party to the settlement agreement.

Section 75 of the Companies Act
[39] The appellants‟ contention under this head was that both Mr
Moraitis and Mr Kebert had a personal interest in the subject matter of
the settlement agreement and that they had not disclosed those interests at
a meeting of the board of directors in accordance with s 75(6) of the
Companies Act. As I understand the contention it goes further than mere
non-disclosure. Section 75(6)(d) requires a director who has such a
personal interest to withdraw from the meeting and play no role in the
deliberations of the board. It seems to follow that the appellants were
contending that neither Mr Moraitis nor Mr Kebert could be party to a
decision by the board of Moraitis Investments to conclude the settlement
agreement and that it could only be authorised by a members‟ meeting or
the court under s 75(10).

30 Sugden and Others v Beaconhurst Dairies (Pty) Ltd and Others 1962 (3) SA 174 (ECD) at 179H-
181A; Gohlke & Schneider and Another v Westies Minerale (Edms) Bpk and Another 1970 (2) SA 685
(A) at 693E-694E.
31 Quadrangle Investments (Pty) Ltd v Witind Holdings Ltd 1975 (1) 572 (A).
32 Fn 29 ante.

[40] The argument must fail for the same reason as the earlier
arguments about ss 112 and 115 of the Companies Act. It recognised that
the agreement could have been concluded with the authority of the
Moraitis Trust and the appellants have failed to prove that the trust did
not authorise the conclusion of the settlement agreement.

Rule 42 and the common law
[41]   In the heads of argument (although it had not been mentioned in
the founding affidavit) there was a suggestion that Rule 42(1) might avail
the appellants on the basis that the only parties to the litigation in which
the order was made were Mr Moraitis and Mr Kebert in his capacity as
the executor of his mother‟s estate. Accordingly it was suggested that
both Moraitis Investments and the Moraitis Trust were absent when the
order was made. I do not agree. Once it is accepted that it has not been
shown that the Moraitis Trust and Moraitis Investments were not parties
to the settlement agreement, they were bound by the provision in
clause 15 thereof that they consented and agreed to it being made an
order of court. Accordingly, when the agreement was submitted to the
judge for that purpose, counsel was acting for all the parties to the
settlement agreement. The rule cannot be invoked in those circumstances.

Result
[42]  The appeal is dismissed with costs.

M J D WALLIS
JUSTICE OF APPEAL

Appearances

For appellant:
L W De Koning SC
Instructed by:
Mills & Groenewald, Vereeniging;
Phatshoane Henney Attorneys, Bloemfontein.

For respondent:
S Symon SC  (initial heads of argument by C M Eloff
SC)
Instructed by:
Ramsay Webber Inc, Illovo;
Lovius Block Attorneys, Bloemfontein.

Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
18 May 2017
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
Moraitis Investments (Pty) Ltd v Montic Dairy (Pty) Ltd
Moraitis Investments and the Moraitis Trust entered into a settlement
agreement relating to widespread litigation in Gauteng involving a
number of companies and a business relationship between Mr Apostolos
Moraitis and Mr Karl Kebert spanning some thirty years. After the
agreement had been concluded it was made an order of court. When it
came to the implementation of the agreement both Moraitis Investments
and the Moraitis Trust contended that Mr Moraitis had not been
authorised by them to conclude the agreement and they sought an order
setting aside both the agreement and the court order.
The SCA held that a judgment may only be set aside in limited
circumstances, but that if it had been granted in the mistaken belief that
one of the parties had consented to it that was a ground for setting it
aside. However, it was for Moraitis Investments and the Moraitis Trust to
prove that Mr Moraitis lacked the necessary authority and they failed to
do so. Accordingly the appeal was dismissed.