THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

REPORTABLE
Case No:  243/11

In the matter between:

NICOLAAS MARTHINUS PRINSLOO NO

FIRST APPELLANT
JOHANNA JACOBA DE BRUIN NO

SECOND APPELLANT
NICOLAAS MARTHINUS PRINSLOO

THIRD APPELLANT

v

GOLDEX 15 (PTY) LTD

FIRST RESPONDENT
JACOBUS WYNAND SCHEEPERS

SECOND RESPONDENT

Neutral citation:
Prinsloo NO v Goldex 15 (243/11) [2012] ZASCA 28 (28
March 2012).

Coram:
Brand JA, Cachalia JA, Mhlantla JA, Wallis JA et
Boruchowitz AJA
Heard:

14 March 2011
Delivered:

28 March 2011

Summary:
Plea of exceptio rei iudicata in the form of issue
estoppel ─ not allowed where prospect that it would
deprive defendant of fair hearing in subsequent
proceedings.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from:   North Gauteng High Court, Pretoria (Pretorius J sitting as
court of first instance) it is ordered that:
(a)
The appeal is upheld with costs.
(b)
The order of the court a quo is set aside and replaced with the following:
‘The defendants’ plea of res iudicata in the form of issue estoppel is
dismissed with costs.’
________________________________________________________________

JUDGMENT
________________________________________________________________

BRAND JA (CACHALIA JA, MHLANTLA JA, WALLIS JA ET BORUCHOWITZ
AJA CONCURRING):

[1] The respondents instituted an action against the appellants in the North
Gauteng High Court for damages allegedly resulting from a fraudulent
misrepresentation made in connection with the sale of a farm. The appellants
denied the allegations of fraud on which the respondents rested their claim. The
respondents thereupon raised a plea of res iudicata in the form of what has
become known as issue estoppel. When the matter came before Pretorius J in
the court a quo, the parties sought and obtained an order from her that the
special defence of res iudicata should be dealt with at the outset and before the
hearing of any evidence. At the end of these preliminary proceedings, Pretorius J
upheld the plea of res iudicata with costs. The present appeal against that
judgment is with the leave of the court a quo.

[2] The appeal therefore turns on the question whether, in the light of the
facts and circumstances of this case, the plea of res iudicata was rightly upheld.

For present purposes those facts and circumstances are not in dispute. Shorn of
unnecessary detail, they are as follows. The first two appellants, Mr N M Prinsloo
and Ms J J de Bruin NNO, appear in their representative capacities as trustees of
the NM Prinsloo trust. The third appellant is the same Mr Prinsloo, this time in his
personal capacity. The first respondent, Goldex 15 (Pty) Ltd, is a company of
which the second respondent, Mr J W Scheepers, is the sole director and
shareholder. For the sake of convenience, I shall refer to the trust represented by
the first two appellants as ‘the trust’; to the third appellant as ‘Prinsloo’; to the
appellants jointly as ‘the appellants’; to the first respondent as ‘Goldex’; to the
second respondent as ‘Scheepers’; and to the respondents jointly as ‘the
respondents’.

[3] Pursuant to a written deed of sale entered into on 4 October 2004, the
trust sold the farm Rykdom in the Limpopo province to Goldex for R2,6 million.
During the negotiations preceding the sale, the trust was represented by Prinsloo
and Goldex by Scheepers. During February 2005 Scheepers purported to cancel
the sale on behalf of Goldex, essentially on the basis of fraudulent
representations allegedly made by Prinsloo on behalf of the trust during the
negotiations preceding the sale.

[4] In reaction to Goldex’s purported cancellation of the sale, the trust brought
an urgent application in the North Gauteng High Court for an order compelling
Goldex to take transfer of Rykdom against payment of the agreed purchase
price. The answering affidavit on behalf of Goldex was deposed to by Scheepers.
In broad outline, the alleged fraudulent misrepresentation he relied upon for
cancellation of the sale amounted to the following. Prior to the sale, so
Scheepers said, he made it clear to Prinsloo that he would not be interested in
buying the farm if any claim had been lodged against it in terms of the Restitution
of Land Rights Act, 22 of 1994, referred to for the sake of brevity, simply as ‘land
claims’. Prinsloo thereupon gave him the assurance that he was not aware of any
such claim. So important was this representation, Scheepers contended, that the

parties specifically stipulated in clause 18 of the deed of sale, that the seller was
not aware of any land claim against the property. Contrary to these assurances,
so Scheepers said, it transpired after the sale that a land claim had indeed been
lodged in respect of Rykdom by the Mapela community. Moreover, so Scheepers
contended, the circumstances were such that Prinsloo must have been aware of
this claim at the time and that his misrepresentation was therefore fraudulently
made.

[5] In the replying affidavit by Prinsloo on behalf of the trust, he admitted that
he gave Scheepers the assurance that there was no land claim against Rykdom
and that this assurance subsequently proved to be erroneous. He denied,
however, that he was aware of the land claim which had indeed been lodged
against Rykdom when he gave Scheepers the assurance to the contrary. In the
absence of fraud, so Prinsloo contended, Goldex was bound by an express
provision in the deed of sale, not to rely on any representation by the seller with
regard to the property sold which turned out to be untrue.

[6] In the event, the urgent application was dismissed by Webster J. In the
course of his judgement he formulated the dispute for determination, as he saw
it, thus:
‘The issue between the parties is whether [Prinsloo] is guilty of having made a material
fraudulent misrepresentation to the director of [Goldex] that no valid land claim had been
made or was pending in relation to the property, when the agreement of sale was
entered into by the parties.’

[7] In determining that issue, Webster J subjected the affidavits before him to
a detailed analysis. This led him to the following finding:
‘It is my considered view that [Prinsloo], when he entered into a written agreement of
sale of the farm did so in the full knowledge that the farm was the subject of a land claim
and that he deliberately withheld this information from Scheepers, the representative of
[Goldex].’

[8] Following upon the dismissal of its urgent application, the trust
unsuccessfully sought leave from Webster J to appeal against his judgment. A
subsequent application by the trust to this court for leave to appeal, met with the
same fate. This marked the end of the trust’s endeavour to compel specific
performance of the sale. However, as it turned out, it did not mark the end of
litigation resulting from the sale. What then followed was the action by the
respondents against the appellants for damages which eventually gave rise to
this appeal.

[9] As I have indicated by way of introduction, the action by the respondents
against the appellants, jointly and severally, was for delictual damages allegedly
suffered by both Goldex and Scheepers as a result of Prinsloo’s fraudulent
misrepresentation on behalf of the trust. In their particulars of claim the
appellants again relied on the allegation that, during the course of negotiations
preceding the sale, Prinsloo represented to Scheepers that he was unaware of
any land claim in respect of Rykdom, which representation turned out to be false
in that, at the time, Prinsloo was indeed aware of the existence of such claim.
These allegations were denied by the respondents in their plea. This gave rise to
a replication by the respondents that, in the light of the earlier judgment by
Webster J, the appellants were estopped from denying these allegations by the
exceptio rei iudicata. This contention, as we now know, was upheld by Pretorius
J in the court a quo. Hence the crisp issue on appeal is confined to whether that
decision should be endorsed by this court.

[10] The expression ‘res iudicata’ literally means that the matter has already
been decided. The gist of the plea is that the matter or question raised by the
other side had been finally adjudicated upon in proceedings between the parties
and that it therefore cannot be raised again. According to Voet 42.1.1, the
exceptio was available at common law if it were shown that the judgment in the
earlier case was given in a dispute between the same parties, for the same relief
on the same ground or on the same cause (idem actor, idem res et eadem causa

petendi (see eg National Sorghum Breweries Ltd (t/a Vivo African Breweries) v
International Liquor Distributors (Pty) Ltd 2001 (2) SA 232 (SCA) at 239F-H and
the cases there cited). In time, the requirements were, however, relaxed in
situations which give rise to what became known as issue estoppel. This is
explained as follows by Scott JA in Smith v Porritt 2008 (6) SA 303 (SCA) para
10:
‘Following the decision in Boshoff v Union Government 1932 TPD 345 the ambit of the
exceptio res iudicata 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 quaestio) must arise. Broadly stated, the latter involves an inquiry whether
an issue of fact or law was an essential element of the judgment on which reliance is
placed. Where the plea of res iudicata is raised in the absence of a communality 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,
667J-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
iudicata. 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 (Kommissaris van Binnelandse Inkomste v Absa (supra) at
67E-F). Relevant considerations will include questions of equity and fairness, not only to
the parties themselves but also to others. . . . ‘

[11] In this case it is clear that the relief claimed by the trust in its urgent
application was different from the relief claimed by the respondents in the action
under consideration. In a sense, the one can be said to be the converse of the
other. While the application by the trust presupposed the validity of the sale, the
present action is based on the supposition that the sale no longer existed. Yet,
the pertinent issue decided by Webster J is virtually the same as in this action,
namely: did Prinsloo know there was a land claim against Rykdom when he gave

Scheepers the assurance to the contrary? As I see it, this gives rise to a classic
case of potential issue estoppel in the same mould as in Boshoff v Union
Government (supra) where the concept of issue estoppel was introduced by that
name into our case law for the first time. What Greenberg J held in that case was
essentially that the plaintiff’s claim for damages arising from the alleged wrongful
cancellation of a lease was precluded by an earlier finding in a successful
application by the defendant for the plaintiff’s ejectment, that the lease had been
validly cancelled.

[12] The appellants’ argument as to why the plea of res iudicata in the form of
issue estoppel was wrongly upheld in this case, was essentially twofold. First,
they contended that the ‘same persons’ requirement had not been met in that
neither Prinsloo nor Scheepers were parties in the urgent application
proceedings. Secondly, they relied on the proposition that it was unnecessary
and inappropriate for Webster J to make findings of fraud on the basis of
disputed allegations in motion proceedings, in order to dispose of the application.
In the circumstances, so the appellants contended, it would be unjust and unfair
to hold them bound by these unnecessary and inappropriate findings in the
present case. I propose to deal with these two arguments in turn.

[13] As to the first argument, it appears that even at common law, the ‘same
persons’ requirement was not taken literally to mean only the identical individuals
concerned in both proceedings. As pointed out by this court in Amalgamated
Engineering Union v Minister of Labour 1949 (3) SA 637 (A) at 654:
‘. . . Voet (44.2.5) . . . gives a list of parties who are regarded in law as being the same
for the purpose of the rule that res iudicata can be pleaded only when the parties to the
previous suit have been the same as in the present one. He mentions, inter alios, a
deceased and his heir, principal and agent, a person under curatorship and his curator,
a pupil and his tutor . . . ‘
(See also Joubert (ed) the Law of South Africa Vol 9 2ed para 637 and the cases
there cited.)

[14] Based on these authorities it was held in Man Truck & Bus SA (Pty) Ltd v
Dusbus Leasing CC 2004 (1) SA 454 (W) para 39 that the sole member and
controlling mind of a close corporation is bound by a decision in earlier
proceedings against the close corporation. Relying on Mann Truck & Bus SA, in
turn, the court a quo held Prinsloo bound to Webster J’s decision against the
trust. The appellants’ argument that the court a quo had erred in doing so rested
mainly on the proposition that persons litigating in their personal capacity are not
bound by earlier decisions against them when they were acting as
representatives of another.

[15] The general proposition relied upon by the appellants appears to be
supported by authority (see eg Shokkos v Lampert 1963 (3) SA 421 (W) at 426
(A); LAWSA, op cit para 639; Spencer Bower and Handley Res Iudicata 4ed para
9.22). But, in my view, these authorities do not contemplate the situation that
arose in this case. 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. But, be that as it may.
In the view that I hold on the appellants’ further argument based on fairness and
equity, I find it unnecessary to decide this issue which, in any event, relates to
Prinsloo only. I therefore proceed on the assumption that Prinsloo’s position with
regard to the application of issue estoppel is no different from that of the trust.

[16] The appellants’ argument that the application of issue estoppel in these
proceedings would result in unfairness and inequity derives from two hypotheses.
First, that it was not necessary for Webster J to arrive at any final decision as to
whether or not Prinsloo committed fraud in order to dismiss the trust’s application
to compel specific performance. Secondly, that Webster J could not and should
not have decided the disputed issue of whether fraud was committed on motion
proceedings without the benefits inherent in the hearing of oral evidence,
including discovery of documents, cross-examination of witnesses and so forth.

[17] I think both these propositions are well supported by authority. As to the
first, the trite position is that, as a general rule and save in exceptional
circumstances, disputes of fact arising on affidavit cannot be finally determined
on the papers. The concomitant rule is that in the event of material factual
disputes arising on affidavit in motion proceedings, the applicant can only
succeed in those exceptional circumstances where the respondent’s version of
the disputed facts can safely be rejected on the papers as farfetched or
untenable (see eg the oft quoted passage in Plascon-Evans Paints Ltd v Van
Riebeeck Paints (Pty) Ltd 1984 (3) SA 620 (A) at 634E-635C). The dispute of
fact that arose in the motion proceedings before Webster J fell outside the ambit
of the exceptional circumstances envisaged by the authorities. The allegations of
fraud against Prinsloo which Goldex raised in answer to the application by the
trust, could hardly be described as so farfetched or untenable that they could be
rejected on the papers and it was not suggested that they should. The application
for final relief by the trust was therefore doomed to fail. On that basis and that
basis alone Webster J was bound to dismiss the application with costs. That is
obviously also why this court refused the trust’s application for leave to appeal.
Appeals are not aimed at the reasoning but at the order of the lower court.
Whether or not the court of appeal agrees with the lower court’s reasoning is
therefore of no consequence, if the result would remain the same (see eg
Western Johannesburg Rent Board v Ursula Mansions (Pty) Ltd 1948 (3) SA 353
(A) at 355).

[18] This brings me to the appellants’ second proposition: that it was
inappropriate and unwise for Webster J to find Prinsloo guilty of fraud purely on
the basis of allegations against him on affidavit, which he disputed on feasible
grounds. This proposition emanates from the same considerations as the
previous one. The appellants were also entitled to have their version approached
with caution on the basis that it could only be rejected if it was clearly untenable,
which it was not. What rendered a final rejection of the appellants’ version in
principle even more unwise and inappropriate was, of course, that as the

respondent’s version could not be rejected out of hand, the application was in
any event bound to fail.

[19] I therefore agree with the appellants’ contention that Webster J should not
have made a finding of fraud against Prinsloo on the basis of untested
allegations against him on motion papers that were denied on grounds that could
not be described as farfetched or untenable. The reasons why he should not
have done so, derive not only from common sense, but from many years of
collective judicial experience. They were thus formulated in Sewmungal and
another NNO v Regent Cinema 1977 (1) SA 814 (N) at 819A-C:
‘In approaching this particular type of problem [of factual disputes arising on affidavit] it is
not wrong for a court at the outset to have some regard to the realities of litigation. What
appears to be a good case on paper may become less impressive after the deponents to
the affidavits have been cross-examined. Conversely, what appears to be an improbable
case on the affidavits, may turn out to be less improbable or even probable in relation to
a particular witness after he had been seen and heard by a court. An incautious answer
in cross-examination may change the whole complexion of a case.’

[20] In answer to these arguments the respondents contended that, even if
Webster J was wrong, that would not preclude them from relying on his finding of
fraud for the purpose of res iudicata. In support of this answer they referred to
African Farms and Townships Ltd v Cape Town Municipality 1963 (2) SA 555 (A)
at 564C-G where Steyn CJ said:
‘Because of the authority with which, in the public interest, judicial decisions are
invested, effect must be given to a final judgment, even if it is erroneous. In regard to res
iudicata the enquiry is not whether the judgment is right or wrong, but simply whether
there is a judgment.  . . . It is quite clear, therefore, that a defendant is entitled to rely
upon res iudicata notwithstanding that the judgment is wrong.’

[21] But as I see it, the respondents’ answer misses the point of the appellants’
objection. Their objection is not only that Webster J was wrong in his finding of
fraud. Their crucial objection is that, because of Webster J’s fundamentally wrong

approach to the matter before him, it would be inequitable and unfair to preclude
them from denying fraud on the part of Prinsloo in this case, through the
application of issue estoppel. The result of doing so, they argued, will be to
deprive them of the opportunity to properly test the allegations of Prinsloo’s
accusers and to have the findings of fraud reconsidered on appeal.

[22] The respondents’ objection must be evaluated with reference to the
principles that govern the defence of res iudicata in general and issue estoppel in
particular. I have already referred to some of these principles. They have in any
event been discussed extensively in a number of reported decisions (see eg
Kommissaris van Binnelandse Inkomste v Absa Bank Bpk 1995 (1) SA 653 (A);
Bafokeng Tribe v Impala Platinum Ltd 1999 (3) SA 517 (BHC); Holtzhausen v
Gore NO 2002 (2) SA 141 (C); Smith v Porritt 2008 (6) SA 303 (SCA)).
Repetition of the discussion will serve little, if any, purpose. Suffice it therefore to
distil from these authorities those principles that I find of pertinent application in
this case.

[23] In our common law the requirements for res iudicata are threefold:
(a) same parties, (b) same cause of action, (c) same relief. The recognition of
what has become known as issue estoppel did not dispense with this threefold
requirement. But our courts have come to realise that rigid adherence to the
requirements referred to in (b) and (c) may result in defeating the whole purpose
of res iudicata. That purpose, so it has been stated, is to prevent the repetition of
law suits between the same parties, the harassment of a defendant by a
multiplicity of actions and the possibility of conflicting decisions by different courts
on the same issue (see eg Evins v Shield Insurance Co Ltd 1980 (2) SA 815 (A)
at 835G). Issue estoppel therefore allows a court to dispense with the two
requirements of same cause of action and same relief, where the same issue has
been finally decided in previous litigation between the same parties.

[24] At the same time, however, our courts have realised that relaxation of the
strict requirements of res iudicata in issue estoppel situations creates the
potential of causing inequity and unfairness that would not arise upon application
of all three requirements. That potential is explained by Lord Reid in Carl-Zeiss-
Stiftung v Rayner and Keeler Ltd (No 2) [1966] 2 All ER 536 (HL) at 554G-H
when he said:
‘The difficulty which I see about issue estoppel is a practical one. Suppose the first case
is one of trifling importance but it involves for one party proof of facts which would be
expensive and troublesome; and that party can see the possibility that the same point
may arise if his opponent later raises a much more important claim. What is he to do?
The second case may never be brought. Must he go to great trouble and expense to
forestall a possible plea of issue estoppel if the second case is brought?’

[25] One can also imagine a situation where a purchaser seeks confirmation of
his or her purported cancellation of the sale in motion proceedings. The seller
may decide that the expensive and time consuming game is not worth the candle
and thus decide not to oppose. But if the purchaser were then to sue for
substantial damages the application of issue estoppel in the second case may
cause clear inequity. The same situation will not arise in the case where all the
requirements of res iudicata are satisfied. In that event the relief sought in both
cases will be the same. The seller will have to decide whether to speak up in the
first case or hold his or her peace in the second.

[26] Hence, our courts have been at pains to point out the potential inequity of
the application of issue estoppel in particular circumstances. But the
circumstances in which issue estoppel may conceivably arise are so varied that
its application cannot be governed by fixed principles or even by guidelines. All
this court could therefore do was to repeatedly sound the warning that the
application of issue estoppel should be considered on a case-by-case basis and
that deviation from the threefold requirements of res iudicata should not be
allowed when it is likely to give rise to potentially unfair consequences in the
subsequent proceedings (see eg Kommissaris van Binnelandse Inkomste v Absa

Bank Bpk 1995 (1) SA 653 (A) at 676B-E; Smith v Porritt supra 2008 (6) SA 303
(SCA) para 10. That, I believe, is also consistent with the guarantee of a fair
hearing in s 34 of our Constitution.

[27] In this light I agree with the appellants’ contention that the court a quo
erred in allowing the plea of res iudicata in the form of issue estoppel in this case.
In the proceedings before Webster J the allegations of fraud against Prinsloo
were clearly not properly investigated. Consequently, his finding of fraud on
motion papers was clearly inappropriate. But, because of the rules pertaining to
motion proceedings, he happened to be right in dismissing the application before
him. In the result his inappropriate findings of fraud had not been tested on
appeal. In these circumstances I believe it would be patently inequitable and
unfair to hold the appellants bound to those inappropriate findings in the present
proceedings.

[28] In the result:
(a)
The appeal is upheld with costs.
(b)
The order of the court a quo is set aside and replaced with the following:
‘The defendants’ plea of res iudicata in the form of issue estoppel is dismissed
with costs.’

_____________________
F D J BRAND
JUDGE OF APPEAL

Appearances:

For Appellant:

H F Oosthuizen

Instructed by:

Bernhard van der Hoven, Pretoria

Rosendorff Reitz Barry, Bloemfontein

For Respondent:

A B Rossouw SC (with him J H A Saunders)

Instructed by:

Van Zyl Le Roux Inc, Pretoria

Honey Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

28 March 2012

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form
part of the judgment.

Prinsloo NO v Goldex 15  (243/2011) [2012] ZASCA 28 (28 March 2012)

The Supreme Court of Appeal (SCA) upheld an appeal against an order made
by the North Gauteng High Court, Pretoria. The proceedings which gave rise
to this appeal was preceded by an urgent application, by way of motion
proceedings, by the appellants for an order compelling the respondents to
take transfer of the property against payment of the agreed purchase price.
Webster J dismissed that application and found that the third appellant was
guilty of having made a material fraudulent misrepresentation to the
respondents, that no valid land claim had been made or was pending in
relation to the property.
The respondents then instituted action against the appellants in the court a
quo
for
damages
allegedly
resulting
from
the
same
fraudulent
misrepresentation. The appellants denied the allegations of fraud on which
the respondents rested their claim. The respondents thereupon raised a plea
that the appellants were estopped from denying these allegations by the
exceptio rei iudicata, as this issue had already been decided by Webster J.
Pretorius J upheld the plea of res iudicata with costs. The appellant appealed
against this decision to the SCA
The SCA found that, in the proceedings before Webster J, the allegations of
fraud against the appellants were not properly investigated. Consequently, his
finding of fraud on the papers alone was clearly inappropriate. But, because of
the rules pertaining to motion proceedings, he happened to be right in
dismissing the application before him. Therefore the SCA held that it would be
patently inequitable and unfair to hold the appellants bound to those
inappropriate findings in the present proceedings.

For these reasons the SCA made the following order:
(a)
The appeal is upheld with costs
(b)
The order of the court a quo is set aside and replaced with the
following:
‘The defendants’ plea of res iudicata in the form of issue estoppel is dismissed
with costs.’