THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 615/2016
In the matter between:
AON SOUTH AFRICA (PTY) LTD

APPELLANT
and
CORNÉ VAN DEN HEEVER NO
FIRST RESPONDENT
MARYNA ESTELLE SYMES NO            SECOND RESPONDENT
GLENRAND MIB FINANCIAL SERVICES
(PTY) LTD (IN LIQUIDATION)

THIRD RESPONDENT

Neutral citation: AON South Africa (Pty) Ltd v Van den Heever NO
(615/2016) 2017 ZASCA 66 (30 May 2017)
Coram:
NAVSA, THERON, WALLIS, PETSE and ZONDI JJA
Heard:
19 May 2017
Delivered: 30 May 2017
Summary: Res judicata – requirements – issue estoppel – identity of
interest between plaintiffs in the two actions sufficient to satisfy
requirement of same party – identity of issues and claims in both actions

ORDER

On appeal from:  Gauteng Local Division, Johannesburg of High Court
(Moshidi J, sitting as court of first instance):
(1) The appeal is upheld with costs.
(2)  The order of the high court is set aside and replaced with the
following order:
„(a) The special plea is upheld in relation to claims A, B and C.
(b) Claims A, B and C are dismissed.
(c) The plaintiffs are to pay the defendant‟s costs in relation to
the defence of claims A, B and C including the costs consequent
upon the separate determination of the special plea.‟

JUDGMENT

Wallis JA (Navsa, Theron, Petse and Zondi JJA concurring)

Introduction
[1] This is the second occasion on which the events surrounding the
collapse and liquidation of New Protector Group Holdings (Pty) Ltd
(New Protector) have come before this court.1 Both cases flowed from the
acquisition by New Protector of the business of Protector Group Holdings
(Pty) Ltd (Protector). The Industrial Development Corporation (IDC)
financed that purchase. Prior to its liquidation New Protector paid
Protector some R63 million in discharge of the purchase price of the

1 The first occasion was in Glenrand MIB Financial Services (Pty) Ltd and Others v Van den
Heever NO and others [2012] ZASCA 195; [2013] 1 All SA 511 (SCA), referred to hereafter as the
„previous judgment‟.

business.2 Of that sum, R50 million was paid to Glenrand MIB Financial
Services (Pty) Ltd (Financial Services) as the purchase price of its 65
percent stake in Protector.  That was sold to a company called Freefall
Trading 65 (Pty) Ltd (Freefall), which held a 49 per cent stake in New
Protector.

[2] Financial Services was a wholly owned subsidiary of Glenrand
MIB Ltd (Glenrand) existing solely for the purpose of holding the 65
percent interest in Protector. It used the entire sum of R50 million to
repay an existing indebtedness to Glenrand of some R38 million and a
dividend to Glenrand of some R12 million. Both the previous action and
the present one have been directed at recovering that sum for the ultimate
benefit of New Protector‟s creditors, of which the IDC is by far the
largest. The involvement of the appellant, AON South Africa (Pty) Ltd
(AON), arose because, shortly before the previous action reached finality,
it acquired Glenrand‟s business and assumed liability for any claims
against Glenrand. It accordingly intervened in the previous action and
was the defendant in the present case. Glenrand was deregistered in 2011.

[3] The previous litigation was brought by the liquidators of Protector
and cited both Financial Services and Glenrand as defendants. At the end
of the day, after the appeal to this court, the liquidators succeeded against
Financial Services on the ground of enrichment alone. Within a few
months of the previous judgment Financial Services was liquidated and
its liquidators instituted proceedings against AON. This appeal arises
from a special plea by AON flowing from the fact that the previous

2 We were informed that Protector guaranteed repayment of this loan, thereby giving the IDC a claim
against Protector when that company was liquidated.

litigation against Glenrand, and therefore indirectly against AON, was
resolved in its favour. It contended that it was not open to the present
plaintiffs to commence proceedings in order to pursue what was in
essence the same claim. In legal terms it said that the issues raised by the
present case were resolved in its favour in the previous litigation and are
res judicata as against Financial Services‟ liquidators. The form of res
judicata on which it relies is commonly referred to as issue estoppel. The
special plea was heard separately and dismissed by Moshidi J. This
appeal is with his leave.

The factual background
[4] The background was largely set out in the previous judgment of
this court from which I have borrowed freely. The business of Protector
in the health sector of the economy was markedly different from that of
Glenrand. In 2003 Glenrand decided to dispose of its interest in Protector.
In August 2003 two directors of Protector, Messrs Van Rensburg and
Seelenbinder, indicated an interest in acquiring that interest. They already
held, through Protector Group Management Company (Pty) Ltd (PGMC),
the remaining 35 percent in Protector. On 10 November 2003 the board
of directors of Financial Services adopted a resolution to dispose of that
shareholding by entering into an agreement with „Newco or its nominee‟.
An agreement to that effect was signed on 15 December 2003. The
signatory on behalf of the purchaser was Mr Van Rensburg. The price
payable to Financial Services was R 50 million and Glenrand was to be
released from a suretyship obligation on behalf of Protector.

[5] On 4 March 2004 Messrs Van Rensburg and Seelenbinder
purported to nominate Freefall as the purchaser in terms of this
agreement. The previous judgment held that this nomination was

ineffective to create any obligation on the part of Freefall to pay the
agreed purchase price for Financial Services stake in Protector, because
the agreement itself was invalid and unenforceable.3 Nonetheless it held
that the payment of R50 million to Financial Services was made on the
footing that it was in discharge of the purchase price payable by Freefall
to Financial Services under the invalid agreement.

[6] Messrs Van Rensburg and Seelenbinder lacked the resources to
purchase Financial Services‟ interest in Protector. They approached the
IDC for a loan. The loan was approved on 25 November 2003 on
condition that the transaction would be structured as a black
empowerment transaction. That led, early in 2004, to the creation of New
Protector, an entity in which Freefall would have a 49 percent stake, with
the remaining 51 percent to be held by a black empowerment partner.
Thereafter New Protector purchased the business of Protector as a going
concern. This sale required the approval of the Competition Commission.
On 5 March 2004, before that approval was obtained, the IDC released a
little over R69 million to New Protector. From these funds an amount of
R50 million was paid into the trust account of a firm of attorneys, to be
held by it pending such approval and, on approval, to be paid to Financial
Services.

[7] On 15 March 2004, after Competition Commission approval was
obtained, the attorneys paid the R50 million, plus accrued interest of
nearly R1 million, into Glenrand‟s bank account. Apparently Financial
Services did not have its own bank account. Its books of account showed
an historic indebtedness to Glenrand of a little over R38 million, incurred

3 Previous judgment paras 29 and 31.

when it acquired the 65 per cent stake in Protector. This indebtedness was
set off against the R50 million. On 13 June 2005 Financial Services
declared a dividend of nearly R12 million in favour of Glenrand and once
again this was discharged by set-off. The historical debt and the dividend
together totalled exactly R50 million. That amount, plus the interest
accruing on it while it was held in trust, accordingly ended up in the
hands of Glenrand. No underlying transaction has been identified
justifying Glenrand in retaining the accrued interest as against Financial
Services and this will need to be dealt with separately. For the present it
can be ignored.

[8] The picture that emerges is that the IDC lent money to New
Protector and R50 million of that money found its way by the route
described above to Glenrand. The intermediaries, in the form of New
Protector, Protector and Freefall, were all insolvent and unable to pay
their debts when the business of New Protector failed in the second half
of 2004.4 Financial Services was a shell company with no assets after its
disposal of its interest in Protector. Realistically the only prospect of
recovering this R50 million was if liability could be laid at the door of
Glenrand. That is what the liquidators of Protector set out to do in the
first case and it is what the liquidators of Financial Services are seeking
to do in this case.

4 It was provisionally liquidated on 2 September 2004. The principal reason for this was the loss of its
main money-generative contract as a medical scheme administrator. See Phodiclinics (Pty) Ltd and
Others and Protector Group Medical Services (Pty) Ltd (in Liquidation) and  Others [2007] ZACT 17
paras 54 to 66.

The previous litigation
[9] The liquidators of Protector brought an action against Financial
Services, Glenrand, Freefall, Messrs Mansfield and Harpur, two of the
directors of Glenrand, and Messrs Seelenbinder and Van Rensburg.
During the course of the litigation Freefall was deregistered and Mr
Seelenbinder sequestrated, but that did not affect the issues canvassed at
the trial. Claims were advanced against Financial Services and Glenrand
on five grounds and there was a separate claim against the four
individuals. These aimed primarily at the recovery of the R50 million, but
under some heads the claim was for the full amount of slightly more than
R69 million released to New Protector by the IDC on 5 March 2004.

[10]  Claim A sought to recover from Financial Services and Glenrand,
together with all the other defendants, an amount of over R63 million,
made up of three disbursements from the sum paid to Protector by New
Protector and emanating from the IDC loan. The largest disbursement
was the R50 million paid to Financial Services. It was alleged that
Protector:
„in collusion with the Defendants conceived a scheme whereby, out of the funds paid
to [Protector] for the sale of its business to [New Protector] … [Financial Services]
would be paid R50 000 000,00 …‟
The pleading alleged that the scheme was implemented and that, as a
result, Financial Services, alternatively Glenrand, received R50 million. It
claimed that the scheme fell within s 31(1) of the Insolvency Act 24 of
1936 (the Insolvency Act), which provides that:
„After the sequestration of a debtor‟s estate the court may set aside any transaction
entered into by the debtor before the sequestration, whereby he, in collusion with
another person, disposed of property belonging to him in a manner which had the
effect of prejudicing his creditors or of preferring one of his creditors above another.‟

Claim E was based on the same alleged scheme. The relevant allegation
was that the scheme had been „conceived and implemented with the
intention of defrauding the general body of [Protector‟s] creditors‟.

[11]  Claim B was a claim that Financial Services, alternatively
Glenrand, intentionally and unlawfully appropriated the amount of
R50 million upon its transfer from the attorneys to Glenrand‟s bank
account. In substance it was a claim that they stole the money. Like
claims A and E, it involved allegations of dishonesty against Financial
Services and Glenrand. The individuals allegedly responsible for such
dishonesty were their co-defendants, Messrs Mansfield and Harpur, who
were directors of all three companies involved in these allegations,
namely, Financial Services, Glenrand and Protector. They had resigned as
directors of Protector after the sale of the business of Protector to New
Protector was approved on 2 March 2004 and before the IDC released
part of the loan to New Protector.

[12] Claim C was based upon the proposition that payment of the sum
of R50 million to Financial Services, alternatively Glenrand, was not due
to either of them; was made at the expense of Protector; and resulted in
one or other of them, in the alternative, being enriched. Lastly, so far as
Financial Services and Glenrand were concerned claim D was based on
s 26(1) of the Insolvency Act. It was alleged that the payment of the
amount of R50 million to Financial Services, alternatively Glenrand, was
a disposition by Protector of its property made without value and
therefore recoverable by the liquidators of Protector. The further claim F
was brought only against the four directors. It alleged a breach of their
fiduciary duties to Protector, such breach being constituted by the alleged
collusive scheme.

[13] In sum therefore, claims A, E and F were all based on the existence
of a scheme that the liquidators of Protector contended was dishonest.
The alleged scheme was said to be the brainchild of the four directors.
Claim B was also based on dishonesty by the directors in the form of a
theft of the money paid by New Protector to Protector. Only the
enrichment claim and the claim under s 26(1) of the Insolvency Act were
not founded on the dishonest conduct of the directors.

[14] A lengthy trial ensued before Monama J. Senior counsel appeared
on behalf of the liquidators and two senior counsel appeared together on
behalf of the defendants other than Van Rensburg, that is, Financial
Services, Glenrand, and Messrs Mansfield and Harpur. By arrangement
with these defendants Van Rensburg was not represented and testified for
the liquidators. These defendants made common cause in their defence to
the litigation. At the end of the trial claims A and E were abandoned by
Protector‟s liquidators and they indicated that they were not seeking
judgment against Glenrand. Notwithstanding that concession, Monama J
entered judgment against Financial Services and Glenrand jointly and
severally for repayment of the R50 million plus the interest accrued on
that amount while the attorneys held it in trust. He did so on the basis that
claims B (misappropriation of money), C (unjust enrichment) and D
(disposition without value) were well founded. He also upheld claim F
against the four directors personally.

[15] Prior to the appeal from that judgment the liquidators of Protector
abandoned the judgment against Glenrand in its entirety. Nonetheless the
present appellant, which had by then assumed Glenrand‟s liabilities and
intervened in the proceedings, appeared in order to seek an order for
costs. The appeal by Financial Services on the misappropriation claim

and the disposition without value were upheld, but the judgment against
Financial Services was sustained on the grounds of unjust enrichment. As
mentioned above, this was based on a finding that the contract in terms of
which Freefall purchased Financial Services‟ stake in Protector was
invalid and unenforceable. The appeal against the judgment on claim F
also succeeded.

[16] When dealing with the misappropriation claim this court made a
clear finding that there was no intention to defraud the creditors of
Protector. In the light of that finding it was conceded that claim F, the
claim that the directors had breached their fiduciary duties by colluding in
the conception and implementation of the alleged scheme, also had to fail
and the appeal against the judgment on this claim was upheld. In sum
therefore, this court held on the basis of the full record of the trial, in
which both Mr Harpur and Mr Mansfield gave evidence, that the
liquidators of Protector had failed to prove the existence of a scheme as
alleged or any dishonesty on the part of the directors.

The present litigation
[17] Financial Services was liquidated after the previous judgment was
delivered. Although different individuals were appointed as liquidators to
those appointed for Protector, they came from the same company, D & T
Trust (Pty) Ltd, and the litigation they instituted was clearly driven by the
creditors of Protector. The sole target of the action was AON by virtue of
its having assumed the obligations of Glenrand. The claims being
advanced were statutory claims arising under the Insolvency Act‟s
provisions for attacking dispositions by insolvents. It is unclear on what
basis AON can be pursued on these claims, but as no point has been taken
in that regard I will assume, notwithstanding certain reservations, that

AON‟s assumption of liability for the obligations of Glenrand included
the claims as formulated in these proceedings.5

[18] Turning to the pleadings the liquidators of Financial Services seek
to recover the full amount of R50 million, plus the interest that accrued
on it while it was in the attorneys‟ trust account, but they divide the claim
into three separate components, namely the set-off component, the
dividend and the interest. In all three instances the claim commences with
the allegation that the entire amount of R50 million plus interest
constituted property of Financial Services. In respect of the set-off of
Financial Services historic debt of approximately R38 million, reliance is
placed on s 30(1) of the Insolvency Act, which reads:
„If a debtor made a disposition of his property at a time when his liabilities exceeded
his assets, with the intention of preferring one of his creditors above another, and his
estate is thereafter sequestrated, the court may set aside the disposition.‟
In order to pursue this claim successfully the liquidators of Financial
Services will need to prove that Financial Services contemplated
liquidation and intended to prefer Glenrand over their other creditors, by
permitting the amount of R50 million to be paid into Glenrand‟s bank
account, so that set-off would occur by operation of law.6

[19] In regard to the dividend paid to Glenrand the liquidators of
Financial Services adopt a twofold approach. They contend that the

5 The relevant sections provide for a court to set aside the disposition. The right to approach a court for
the setting aside of the disposition vests in the first instance in the liquidator. Such claims arise on
liquidation and have the effect of creating an indebtedness where none previously existed. See Duet
and Magnum Financial Services CC (in liquidation) v Koster [2010] ZASCA 34; 2010 (4) SA 499
(SCA) paras 11-13. By the time any such right arose in this case and inhered in the liquidators,
Glenrand had been deregistered. AON is a separate legal entity to Glenrand and it played no part in the
transactions giving rise to this litigation. Hence my reservations. It is unclear whether the provisions of
s 116(6)(b) and (7)(b) of the Companies Act 71 of 2008 operate to impose liability on AON in respect
of dispositions, but that is not the case pleaded.
6 Pretorius NO v Stock Owners’ Co-operative Co Ltd 1959 (4) SA 462 (A) at 471B-472G; Cooper and
Another NNO v Merchant Trade Finance Ltd 2000 (3) SA 1009 (SCA) paras 6-16.

payment was made with an intention to prefer Glenrand and falls to be set
aside under s 30(1) of the Insolvency Act. To that extent the basis for the
claim is the same as that in respect of the set-off amount. But they also
contend that the payment was made pursuant to a collusive scheme
conceived with the intention of defrauding and prejudicing Financial
Services‟ creditors. Here the liquidators rely on s 31(1) of the Insolvency
Act. Collusion in this context means an agreement between two or more
parties that has a fraudulent purpose.7 It is a conniving together of the
insolvent and another to practise a fraud on the insolvent‟s other
creditors.8

[20] The last claim by the liquidators of Financial Services is to recover
the interest that accumulated on the sum of R50 million while it was held
in the attorneys‟ trust account, during the period when the sale of
business from Protector to New Protector was awaiting Competition
Commission approval. This claim is not made in terms of the provisions
of the Insolvency Act, but on the simple basis that the interest accrued in
favour of Financial Services and neither the set-off in relation to its
historic indebtedness to Glenrand, nor the payment of the dividend
affected it. Accordingly it remained Financial Services money, albeit that
it was being held on its behalf in Glenrand‟s bank account.

[21] The special plea is that the liquidators of Financial Services are not
entitled to pursue these claims against AON in the light of the previous
judgment. It proceeds as follows. In the previous litigation the substantial
issue was the recovery from Financial Services and Glenrand of the

7 Meyer NO v Transvaal Lewendehawe Koöperasie Bpk 1982 (4) SA 746 (A) 771C-D.
8 Finn’s Trustee v Prior 1919 EDL 133 at 137 approved in Gert de Jager (Edms) Bpk v Jones NO en
McHardy NO 1964 (3) SA 325 (A) 331A.

capital amount of R50 million and the interest accrued thereon. Financial
Services and Glenrand made common cause in that litigation. The
judgment granted against Glenrand in the high court was abandoned prior
to the appeal to this court. The appeal to this court dismissed all claims
based on dishonesty. In those circumstances and by reason of:
 considerations of public policy;
 the principles of fairness and particularly that AON should not be
exposed to a second trial;
 the fact that the same sum of money paid in the same
circumstances is in issue;
 the facts, evidence and the underlying cause of the claim being, by
and large, similar to the facts, evidence and underlying cause of the
first action; and
 the question of the payment of the money having previously been
definitively disposed of;
AON contends that the liquidators of Financial Services are precluded
by the exceptio res judicata vel litis finitae, or issue estoppel, from
pursuing the present proceedings.

The exceptio rei judicata
[22]  As mentioned earlier the plea of res judicata in this case takes the
attenuated form commonly referred to as issue estoppel. Res judicata
deals with the situation where the same parties are in dispute over the
same cause of action and the same relief,9 and in the form of issue
estoppel arises:

9 National Sorghum Breweries (Pty) Ltd (t/a Vivo African Breweries) v International Liquor
Distributors (Pty) Ltd [2000] ZASCA 70; 2001 (2) SA 232 (SCA) para 2 (per Olivier JA); Prinsloo NO
and Others v Goldex 15 (Pty) Ltd [2012] ZASCA 28;2014 (5) SA 297 (SCA) (Goldex) para 23.

„Where the decision set up as a res judicata necessarily involves a judicial
determination of some question of law or issue of fact, in the sense that the decision
could not have been legitimately or rationally pronounced by the tribunal without at
the same time, and in the same breath, so to speak, determining that question or issue
in a particular way, such determination, though not declared on the face of the
recorded decision, is deemed to constitute an integral part of it as effectively as if it
had been made so in express terms …‟ 10

[23] Although initially controversial that decision has subsequently
been endorsed by this court as falling within the realm of res judicata.11
The current state of the law was summarised by Scott JA in the following
passage:12
„Following the decision in Boshoff v Union Government 1932 TPD 345 the ambit of
the exceptio res judicata has over the years been extended by the relaxation in
appropriate cases of the common-law requirements that the relief claimed and the
cause of action be the same (eadem res and eadem petendi causa) in both the case in
question and the earlier judgment. Where the circumstances justify the relaxation of
these requirements those that remain are that the parties must be the same (idem
actor) and that the same issue (eadem quastio) must arise. Broadly stated, the latter
involves an enquiry whether an issue of fact or law was an essential element of the
judgment on which reliance is placed. Where the plea of res judicata is raised in the
absence of a commonality of cause of action and relief claimed it has become
commonplace to adopt the terminology of English law and to speak of issue estoppel.
But, as was stressed by Botha JA in Kommissaris van Binnelandse Inkomste v Absa
Bank Bpk 1995 (1) SA 653 (A) at 669D, 670J-671B, this is not to be construed as
implying an abandonment of the principles of the common law in favour of those of
English law; the defence remains one of res judicata. The recognition of the defence
in such cases will however require careful scrutiny. Each case will depend on its own
facts and any extension of the defence will be on a case-by-case basis … Relevant

10 Boshoff v Union Government 1932 TPD 345 at 350-351 citing Spencer-Bower‟s Res Judicata.
11 Kommissaris van Binnelandse Inkomste v ABSA Bank Bpk  [1994] ZASCA 144; 1995 (1) SA 653
(A) at 669F-G.
12 Smith v Porritt & others [2007] ZASCA 19; 2008 (6) SA 303 (SCA) para 10.

considerations will include questions of equity and fairness not only to the parties
themselves but also to others. As pointed out by De Villiers CJ as long ago as 1893 in
Bertram v Wood (1893) 10 SC 177 at 180, “unless carefully circumscribed, [the
defence of res judicata] is capable of producing great hardship and even positive
injustice to individuals”.‟

[24]  The high court held that the special plea failed on all three aspects
of the defence of res judicata. It said that the parties were different
because the plaintiffs in this case are the liquidators of Financial Services,
whereas in the previous case the plaintiffs were the liquidators of
Protector. As regards the causes of action it compared the relevant facts
on which the claims in each case were based and held that they were
entirely different. It is unclear on what basis it thought that the relief
claimed was different, as it gave no explanation for that conclusion.

Discussion
[25]  It is correct that there is a technical distinction between the
plaintiffs in the present action and the plaintiffs in the previous action, but
that is a matter of form not substance. The liquidators of Protector are the
persons who sought and obtained the liquidation of Financial Services
and they did so on the basis of the judgment they obtained in the previous
action. As matters stand at present they are the only creditor of Financial
Services.13 The sole purpose of the litigation is to recover the amount of
R50 million, in order that it can be distributed to Protector on the winding
up of Financial Services. To all intents and purposes the liquidators of
Financial Services are merely surrogates for the liquidators of Protector.

13 There is a notional possibility, if this action succeeded, that AON might be able to prove a late claim
for the historic debt that Financial Services owed to Glenrand but it was not suggested that this affected
the position.

The fact that the liquidators of both companies are employees of the same
firm of professional liquidators lends emphasis to this point.

[26] As far as the defendants in the two actions are concerned, Glenrand
(in whose shoes AON stands) was a defendant in the previous action. It is
true that at the end of the trial no relief was sought against it but that
cannot matter, especially as the trial judge disregarded that and granted
judgment against it. It was a party to the previous appeal, if only for the
purpose of obtaining an order for costs, the judgment having been
abandoned. The same attorneys and counsel represented it and Financial
Services in that case. That emphasises the commercial reality that there
was a complete identity of interests between it and Financial Services,
both in the transactions that gave rise to that litigation and in the litigation
itself. Financial Services was a special purpose vehicle that existed solely
for the purpose of holding Glenrand‟s 65 per cent interest in Protector.
The individuals whose conduct was examined in the previous case were
directors of both Glenrand and Financial Services. In those circumstances
it seems to me that there was a complete identity of interests between
them and it would be artificial to say that findings against or in favour of
Financial Services in the previous case would not be binding upon
Glenrand.

[27] I do not think that this involves any significant development of the
law in this regard. Res judicata has always been available as a defence
against the privies of parties to earlier litigation. Voet‟s description of
those who are the same parties for the purposes of res judicata goes well
beyond those who are privies in the strict sense of deriving their rights

from a party to the original litigation.14 In addition the joint stock
company and similar entities, enjoying limited liability, were unknown to
Voet, and the concepts he employed must be adapted to our modern
commercial world. In Goldex15 Brand JA said:
„In this case Prinsloo not only represented the trust, he was the controlling mind of
that entity. It would therefore surprise me if the controlling mind were not bound by
an earlier decision that he committed fraud, while the mindless body of the trust was
held bound by that finding.‟
Likewise the sole member of a close corporation has been held to be the
privy of the corporation itself.16 In the present case Glenrand, through its
directors Messrs Mansfield and Harpur, was the controlling mind of
Financial Services. It would be extremely surprising then to learn that,
after a trial where the evidence of those two men had been heard,
Glenrand could, in subsequent litigation, dispute findings made against
Financial Services. In Caesarstone17 I adverted to this type of situation
and said:
„Subject to the person concerned having had a fair opportunity to participate in the
initial litigation, where the relevant issue was litigated and decided, there seems to me
to be something odd in permitting that person to demand that the issue be litigated all
over again with the same witnesses and the same evidence in the hope of a different
outcome, merely because there is some difference in the identity of the other litigating
party.‟
I conclude that the approach of the trial judge was incorrect. It focussed
too much on the fact that the plaintiffs in the two actions were liquidators
of two separate companies and insufficiently on the fact that there was a

14 Johannes Voet The Selective Voet being the Commentary on the Pandects (Gane‟s translation, 1957) 44.2.5, vol
6 at 558.  He included a principal and agent; the pledgor and pledgee in relation to the right to
possession of the thing pledged; two joint and several debtors or creditors in relation to a claim to a
thing, and a surety and the principal debtor as falling within the concept of „the same parties‟ for the
purposes of res judicata.
15 Prinsloo & others v Goldex supra para 15.
16 MAN Truck & Bus (SA) (Pty) Ltd v Dusbus Leasing CC and Others 2004 (1) SA 454 (W) paras 38-39.
17 Caesarstone Sdot-Yam Ltd v The World of Marble and Granite 2000 CC and Others [2013] ZASCA
129; 2013 (6) SA 499 (SCA) para 43.

complete identity of interests between the two sets of liquidators and a
similar identity of interests between the defendants in both actions.

[28]  In fairness to counsel for the respondents I did not understand him
to challenge this approach. His focus lay on the next issue, namely
whether the decision in the previous case involved a finding on an issue
that would be determinative of the outcome of the present case. That
turned largely on the following two paragraphs from the previous
judgment dealing with the misappropriation claim:
„The IDC knew that Glenrand MIB was selling its 65 per cent shareholding in
Protector and the IDC intended, when its board approved the financing on 25
November 2003, that the proceeds of the loan would be applied towards settling the
purchase price of the sale of shares of Glenrand MIB and PGMC. The IDC‟s
recognition that the proceeds of the loan would immediately be applied towards
paying for Glenrand MIB‟s shares in Protector, was in full knowledge of the IDC‟s
decision that ultimately the business of Protector would be located in a new vehicle,
which would represent a consortium led by a BEE shareholder.
There is no evidence to suggest that the IDC, and all the other relevant parties, in
agreeing or arranging that the proceeds of the loan should be paid to the shareholders
of Protector, intended to defraud the creditors of Protector. The common intention of
Glenrand MIB, the IDC, and of Seelenbinder and Van Rensburg, was that the money
should be applied to discharge Freefall‟s indebtedness arising from the sale of shares
by Glenrand MIB and PGMC. In the circumstances, the respondents have not made
out a case for dishonesty on the part of Harpur and Mansfield [the two relevant
directors of Glenrand and Financial Services]. It was not established that, in arranging
that part of the proceeds of the IDC loan be paid to Financial Services, they had the
subjective intention to steal the money. It follows that the claim of theft cannot be
sustained.‟
The existence of a collusive scheme was not canvassed separately in the
High Court judgment from which this appeal lay because judgment was
not sought or granted on claims A and E. But this reasoning is entirely

inconsistent with the existence of such a scheme. Counsel very properly
accepted that the effect of the abandonment of these claims was that they
stood on the same footing as if they had been dismissed.

[29]  Starting with the claim to recover the dividend on the basis that it
was paid pursuant to a collusive transaction between Financial Services
and Glenrand, that case requires the liquidators to prove that the decision
by Glenrand, as the sole shareholder of Financial Services, to declare a
dividend was the product of a fraudulent agreement between the two
companies, represented by Messrs Mansfield and Harpur, directed at
defrauding the other creditors of Financial Services. Bearing in mind that
Financial Services was not a trading entity it had no other creditors save,
for the purposes of this argument, Protector in respect of its enrichment
claim. So any collusive arrangement had to be one dishonestly
determined with a view to defeating that enrichment claim.

[30] Such a claim is entirely inconsistent with the findings by this court
in the previous judgment. Two findings in particular are important. The
first is that all the parties to the payment by Protector to Financial
Services were aware of the payment and intended that it be made in
precisely the manner that in fact occurred. A finding in the present
litigation that Messrs Mansfield and Harpur were aware of the existence
of an enrichment claim by Protector to recover the payment made by it to
Financial Services would fly in the face of that. The second, and even
more important finding, was that there was no evidence of an intention to
defraud the creditors of Protector and no evidence of dishonesty on the
part of Messrs Mansfield and Harpur. If they were not dishonest in
securing that Protector paid Financial Services R50 million, they could
not possibly have been dishonest in securing that Financial Services,

itself merely a vehicle for holding Glenrand‟s interest in Protector, paid
that amount by lawful means to Glenrand.

[31] Counsel sought to circumvent this difficulty by compartmentalising
(as he put it) the period leading up to the payment to Financial Services
and the subsequent period when the set-off occurred and the dividend was
paid. In so doing he sought to contend that although the previous
judgment effectively rejected the notion that the payment to Financial
Services was a product of the fraudulent and collusive scheme originally
pleaded, there remained scope for a different collusive scheme conceived
and concluded at a later stage. He placed the dividing line between the
compartments at 5 March 2004 when the IDC released the funds to New
Protector. However, nothing occurring between that date and 22 June
2004, when payment was made to Glenrand, warranted drawing a line at
the earlier date. Indeed, until the latter date, the absence of Competition
Commission approval for the sale of Protector‟s business to New
Protector meant that Financial Services had no claim to the R50 million.
The enrichment claim could only arise once payment was made on 22
June 2004.

[32] If there is to be a compartmentalisation, the defining line between
the two must be drawn as at 22 June 2004, the date on which Financial
Services was paid. In regard to the period after that date the dividend was
paid over nearly a year later on 13 June 2005. The allegation in the
particulars of claim in the present litigation was that, in the intervening
period, the leading individual behind the BEE partner in New Protector
approached Mr Harpur and accused Financial Services of having stolen
the purchase price of R50 Million. This caused Mr Harpur to enquire
from Mr Seelenbinder how the funds flowed from Protector into the

attorneys‟ trust account. The plaintiffs allege that, in the light of the
explanation he received, Mr Harpur became aware that Financial Services
had no entitlement to the payment of the R50 Million, alternatively he
became aware that Protector had a claim to recoup this amount. That
formed the basis for the allegation that the payment of the dividend was
part of a collusive scheme „conceived with the intention of defrauding
and prejudicing‟ Financial Services‟ creditors, in other words, Protector.

[33]    There are overwhelming difficulties confronting this argument.
It sought to excise a component of the claims of collusion and dishonesty
made in the first action and to characterise it as a separate collusive
transaction. It aimed at revisiting issues already dealt with in the previous
case and was inconsistent with the findings in the previous judgment.
Financial Services had contended in relation to the enrichment claim that
it had bona fide disgorged the R50 million by way of the set-off and
payment of the dividend. In rebuttal the liquidators of Protector referred
to the approach to Mr Harpur, the allegation that the money had been
stolen and Mr Harpur‟s enquiry to Mr Seelenbinder in regard to the flow
of funds. The manner in which this court dealt with that evidence refutes
the claim of collusion that the present plaintiffs seek to advance.

[34] The present claim depends upon a finding that Mr Harpur knew
when the dividend was paid that Protector was entitled to its repayment
by Financial Services. That is inconsistent with the finding this court
made in relation to this evidence. It highlighted the fact that in Mr
Seelenbinder‟s explanation it emerged that the funds advanced to New
Protector and paid to Protector had been routed via a firm of accountants
in Namibia which paid the R50 million into the attorneys‟ trust account.
The reason given for adopting this course was a concern that otherwise

the payment might have involved a contravention of s 38 of the
Companies Act 61 of 1973. Mr Harpur testified that he thought there was
nothing untoward in this and disputed the suggestion that he must have
known that something was amiss and that Financial Services was not
entitled to retain the money.

[35] This evidence was not rejected. The previous judgment accepted
that there was no evidence of dishonesty on the part of Mr Harpur in
receiving payment of the R50 million. On this issue it held that, as an
experienced CEO of the company, he „should have been alerted to a
possible contravention of s 38 of the Companies Act‟ and „should have
investigated the validity of Seelenbinder‟s claim that this had been
averted by directing the funds through Namibia‟. Its conclusion, in
rejecting the defence of non-enrichment, was that “Financial Services and
Harpur should have been aware that Financial Services had been enriched
sine causa at the expense of Protector‟. That is inconsistent with a finding
that Mr Harpur was in fact aware that Protector had a valid enrichment
claim against Financial Services.

[36] The collusion case that the liquidators of Financial Services now
seek to run would involve a reconsideration of this very evidence. The
court would be required to find that Mr Harpur knew, as a matter of fact,
that the payments were made in circumstances amounting to a
contravention of s 38 and that he deliberately thereafter secured the
declaration and payment of the dividend in order to defeat Protector‟s
enrichment claim. That would be inconsistent with the findings in the
previous case. To achieve that result the trial court would have to hear the
evidence of the same witness, Mr Harpur, and conclude that he was lying

if he repeated his previous testimony. That is precisely the situation that
the recognition of the defence of res judicata is intended to prevent.

[37] The
compartmentalisation argument also underpinned the
contention that the statutory claims to set aside both the set-off and the
payment of the dividend as undue preferences were not defeated by
reliance on res judicata in the form of issue estoppel. To recapitulate,
those claims required proof of the intention to prefer, as shown by proof
that liquidation was contemplated and that the payment in question was
made with the intention to prefer Glenrand over Protector. But central to
such a case was the proposition that Glenrand, through Mr Harpur, was
aware of the existence of Protector‟s enrichment claim. A finding to that
effect would be inconsistent with the findings made by this court in the
previous judgment.

[38] Even on its own terms therefore the compartmentalisation
argument cannot succeed. But its own terms are entirely artificial and
contrary to the evidence that led this court to hold, in the passages cited in
[28] above, that all the parties were aware of the payments to be made
using the funds provided by the IDC and in particular were aware that the
price of R50 million that Financial Services required for its 65 per cent
stake in Protector would be paid from these funds. The previous judgment
held that Messrs Harpur and Mansfield were not guilty of fraud in
relation to that payment and were not dishonest. The reason is not far to
seek. It was that the transaction originated in the decision by Glenrand to
dispose of its interest in Protector. Central to that decision was that
Financial Services would no longer serve any purpose. Retaining the
proceeds of the sale in its books, but not its bank account because it had
none, would serve no useful or conceivable purpose.

[39] From the outset the entire transaction was posited on Glenrand
receiving the proceeds of the disposal. In the first instance they would be
used to recoup the initial cost of the investment in Protector, as reflected
in Financial Services‟ historical indebtedness to Glenrand. Set-off
occurred the moment the funds arrived in Glenrand‟s bank account. There
could be no question of compartmentalisation in that situation as the
argument based on it depended upon events subsequent to the receipt of
the funds. As far as the dividend was concerned this was nothing more
than the mechanism whereby receipt of the balance of the proceeds by
Glenrand would be reflected in the books of account of Financial
Services as having passed to Glenrand. The notion that it occurred in
consequence of a collusive agreement between Financial Services and
Glenrand is wholly inconsistent with the factual findings underpinning
the previous judgment.

[40] My conclusion is that the claims advanced in these proceedings by
the liquidators of Financial Services involve the reconsideration of the
very evidence and issues that were the subject of determination in the
previous action. Insofar as the relief was concerned it was not suggested
that it was not the same in both actions. Both were directed at recovering
from Glenrand the R50 million paid to Financial Services as the price for
its 65 per cent stake in Protector. With respect, the court below erred in
holding otherwise by looking mechanically at the elements of the causes
of action in the two cases, instead of examining the issues that had been
determined in the previous case and comparing them with the issues that
would need to be determined if the present case went to trial.

[41] The elements of res judicata in the form of issue estoppel were
accordingly satisfied and the special plea should have been upheld.

During the course of argument it was pointed out to counsel that the
special plea could not have any application to the claim in respect of the
interest that accrued on the sum of R50 million while it was held in the
trust account of the attorneys pending the decision by the Competition
Commission. For some reason, possibly oversight, neither the set-off nor
the dividend included this amount. It accordingly remained an amount to
which Financial Services was entitled, albeit that it was held in
Glenrand‟s bank account. Whether AON has some other ground for
resisting this claim is not an issue for determination in this appeal and
must be left for the further conduct of the proceedings.

Result
[42] The appeal must succeed and the order made by the high court
must be set aside. It will be replaced by a suitable order upholding the
special plea in regard to claims A, B and C, but not D. The costs of the
appeal and the determination of the special plea must follow the result.

[43] I make the following order:
(1) The appeal is upheld with costs.
(2) The order of the high court is set aside and replaced with the
following order:
„(a) The special plea is upheld in relation to claims A, B and C.
(b) Claims A, B and C are dismissed.
(c) The plaintiffs are to pay the defendant‟s costs in relation to
the defence of claims A, B and C including the costs consequent
upon the separate determination of the special plea.‟

M J D WALLIS
JUDGE OF APPEAL

Appearances

For appellant:
R Stockwell SC
Instructed by:
Fluxmans Inc, Johannesburg;

Lovius Block Attorneys, Bloemfontein

For respondent:
P F Rossouw SC
Instructed by:
De Vries Inc, Sandton;
Matsepes Inc, 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:
30 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.
AON South Africa (Pty) Ltd v Van den Heever NO

The SCA today upheld an appeal by AON South Africa (Pty) Ltd
against a decision by the Gauteng Local Division, Johannesburg
dismissing a special plea. The litigation flowed from the collapse and
liquidation of New Protector Holdings (Pty) Ltd (New Protector), which
had bought the business of Protector Group Holdings (Pty) Ltd
(Protector) with the assistance of a loan from the IDC. The loan had been
used by New Protector to pay the purchase price of the business of
Protector. In turn Protector used R50 million of the money lent to it to
pay Glenrand MIB Financial Services (Pty) Ltd (Financial Services) for
its 65 % stake in Protector. Financial Services was a wholly owned
subsidiary of Glenrand MIB Ltd (Glenrand). AON’s involvement arose
because it purchased Glenrand’s business after the events giving rise to
the litigation.

In previous litigation brought by the liquidators of Protector
against Glenrand, Financial Services and two directors of both
companies, the SCA had held that there was no dishonesty involved in
the underlying transactions and that all parties to the transaction,
including the IDS, were aware of the use to which the funds lent by the

IDC were to be put. It upheld an enrichment claim by Protector against
Financial Services on the basis that the contract under which Financial
services had sold its interest in Protector was invalid. On the basis of this
claim the liquidators of Protector sought and obtained the liquidation of
Financial Services and commenced the present litigation against AON.

The claims advanced against AON sought to recover the sum of
R50 million paid to Financial Services that had been the subject of the
previous litigation. This amount had been used by Financial Services to
discharge a loan given to it by Glenrand when it acquired the stake in
Protector and to pay a dividend to Glenrand. The claims were based on
allegations that the discharge of this debt and the payment of the dividend
were undue preferences in terms of the Insolvency Act in that they had
been paid when Glenrand was aware that Financial Services was not
entitled to be paid the R50 million and in contemplation of Financial
services liquidation, with the intention of preferring Glenrand over
Protector. Alternatively it was alleged that the dividend was paid as part
of a collusive scheme to prefer Glenrand over Protector.

The SCA upheld the special plea of res judicata on the basis that
these contentions had been fully explored in the previous case and the
factual findings made by the court were inconsistent with them. It is a
principle of law that there must be finality to litigation and where the
same issue has been determined in litigation between the same parties, or
persons with whom they have an identity of interest, those issues may not
be reopened in subsequent litigation. Here the issues were the same, the
subject matter of the claim – the sum of R50 million – was the same and
there was a complete identity of interest between the parties. Accordingly
the special plea of res judicata was upheld.