THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 934/2017
In the matter between:

EWAN RONALD SIMMONDS N O
(in his capacity as the executor of the estate
of the late John Owen Brankin)                                                            APPELLANT

and

GRANVILLE ESSAFRAU
FIRST RESPONDENT
KOSTA BABICH
SECOND RESPONDENT
GILLIAN LEE
THIRD RESPONDENT
ROBERT CAPPER
FOURTH RESPONDENT
BURCHELLS BUSH LODGE SHAREBLOCK LIMITED
FIFTH RESPONDENT

IN RE:

JOHN OWEN BRANKIN
APPELLANT

and

GRANVILLE ESSAFRAU
FIRST RESPONDENT
KOSTA BABICH
SECOND RESPONDENT
GILLIAN LEE
THIRD RESPONDENT
ROBERT CAPPER
FOURTH RESPONDENT
BURCHELLS BUSH LODGE SHAREBLOCK LIMITED
FIFTH RESPONDENT

Neutral citation:       Ewan Ronald Simmonds N O v Granville Essafrau & others
(934/2017) [2018] ZASCA 113 (14 September 2018)

Coram:
Ponnan, Tshiqi and Swain JJA and Mothle and Nicholls AJJA

Heard:
27 August 2018

Delivered:
14 September 2018

Summary:  Motion proceedings – vindication of shares – no common cause facts to
establish ownership – appeal dismissed.

ORDER

On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Msimang AJ, sitting as court of first instance):

Ewan Ronald Simmonds N O is substituted as the appellant for John Owen
Brankin in these proceedings.
The name of the appellant wherever it occurs in the appeal under case number
9334/2017 is amended to read Ewan Ronald Simmonds N O.
The appeal is dismissed with costs, such costs to include the costs of two
counsel.

JUDGMENT

Swain JA (Ponnan and Tshiqi JJA and Mothle and Nicholls AJJA concurring):
[1] This appeal concerns the vindication of shares by the appellant, Mr Ewan
Simmonds N O the executor of the estate of the late Mr John Brankin (the
deceased). The shares are held by the first respondent, Mr Granville Essafrau, the
second respondent, Mr Kosta Babich, the third respondent, Ms Gillian Lee and the
fourth respondent, Mr Robert Capper (hereafter collectively referred to as the
respondents), in the fifth respondent, Burchells Bush Lodge Shareblock Ltd
(Burchells). Proceedings instituted by the deceased before the Gauteng Local
Division of the High Court, Johannesburg were unsuccessful, the application being
dismissed with costs.  Leave to appeal to this Court was thereafter granted by the
court a quo, but in the interim the deceased passed away. An order was therefore
sought at the hearing of the appeal to substitute the appellant, in his capacity as the
executor of the estate of the deceased, for the deceased, in these proceedings.

[2] The relief sought before the court a quo was for an order declaring the
deceased the lawful owner of the class 'A' shares (the shares) in Burchells, which
were registered in the names of the respondents. Orders were also sought directing
the first, second and third respondents to transfer and deliver the shares to the
deceased and that Burchells cancel their registration in the respondents’ names and
issue to the deceased a share certificate recording that the deceased was the holder
of all 5500 shares. Certain of the relief was not sought against the fourth respondent
as he had agreed prior to the launch of the proceedings, to transfer his shares to the
deceased.
[3] The deceased alleged that he was the registered owner of the shares and
that during 2005 he transferred some of the shares to the respondents as directors
of Burchells, for no value. Before the court a quo, the deceased challenged the
validity of his transfer of the shares to the respondents on a number of grounds, only
one of which was persisted in on appeal. This was that the transfer of the shares to
the respondents in Karos Lodge Shareblock Ltd (Karos Lodge), (which had changed
its name to Burchells), which were previously owned by Karos Leisure (Pty) Ltd
(Karos Leisure), were invalid as they had been effected in contravention of Article 9
of the articles of association of Karos Lodge. The relevant portion of this article
states that:
'No share may be transferred except simultaneously with and to the same transferee as the
whole of the other shares included in the same share block. . . .'
The deceased therefore submitted that Article 9 required all of the shares to be
transferred simultaneously to one transferee, with the result that the transfers to the
respondents were void and should be set aside.
[4] However, a more fundamental obstacle lay in the path of the deceased. This
was whether the essential requirement that the deceased was the owner of the
shares before he purportedly transferred them to the respondents was established
on the facts. The correct approach to the assessment of evidence in motion
proceedings was described in National Director of Public Prosecutions v Zuma
[2009] ZASCA 1; 2009 (1) SACR 361 (SCA) paras 26 and 27, by Harms JA as
follows:

'Motion proceedings, unless concerned with interim relief, are all about the resolution of legal
issues based on common cause facts. Unless the circumstances are special they cannot be
used to resolve factual issues because they are not designed to determine probabilities. It is
well established under the Plascon-Evans rule that where in motion proceedings disputes of
fact arise on the affidavits, a final order can be granted only if the facts averred in the
applicant's (Mr Zuma’s) affidavits, which have been admitted by the respondent (the NDPP),
together with the facts alleged by the latter, justify such order. It may be different if the
respondent’s version consists of bald or uncreditworthy denials, raises fictitious disputes of
fact, is palpably implausible, far-fetched or so clearly untenable that the court is justified in
rejecting them merely on the papers. The court below did not have regard to these
propositions and instead decided the case on probabilities without rejecting the NDPP’S
version.
. . . In motion proceedings the question of onus does not arise and the approach set out in
the preceding paragraph governs irrespective of where the legal or evidential onus lies. . . .'
[5] As will be seen, the founding affidavit of the deceased contains contradictory
statements as to how he came to acquire ownership of the shares in the first place.
The problem is compounded by contradictory admissions and statements on this
issue by the respondents in their answering affidavit.
[6] Initially the deceased claimed ownership of the shares, on the basis that the
liquidator of Karos Leisure had sold them to him, in terms of a sale agreement
annexed to the founding affidavit, marked ‘FA1’. This was despite there being no
indication in the sale agreement, that the liquidator was a party to the agreement.
The deceased described his acquisition of the shares as follows:
'The "A" shares were all initially owned by Karos Leisure (Pty) Limited, which formed part of
the Karos Group. The "A" shares entitled Karos, as the owner of the property, and as the
developer, to develop the property and build 45 timeshare chalets. In fact only 30 chalets
were built. As Karos was placed under a winding-up order, the ownership of all its class "A"
shares vested in the liquidator. (The liquidator subsequently sold all the "A" shares to me.)
This was in terms of the sale agreement dated 13 August 2003 and which has been
attached, marked "FA1". Karos Leisure ceded its "A" shares to International Bank of South
Africa Limited whose name was changed to Boundary Finance ("Boundary Finance").'

[7] However, later in his founding affidavit the deceased claimed that the shares
had been sold to him by Boundary Finance, to whom the shares had been pledged
as security for a loan made to Karos Leisure, by Boundary Finance. He described
the way in which he acquired the shares as follows:
'Arising from a bona fide and reasonable error on my part and on the part of Boundary
Financing and without due regard being had to article 9 of the articles of association of the
Fifth Respondent, Boundary Finance sold and transferred the 5400 issued class "A" shares
with a par value of R1,00 per share, to myself, for a purchase price of 1 cent per share being
R55,00. Attached marked "FA2" is a copy of the articles. I deal later with the legal
implications of article 9.
Karos (represented by its liquidator, Mr Moses) was the owner of the "A" shares and the
remaining "B" shares in Karos Shareblock, which had not been sold. All these shares were
pledged together to the mortgagee, Boundary Financing Ltd ("Boundary Financing")
(formerly known as International Bank of Southern Africa Limited) as security for a loan
which Karos had obtained from Boundary Financing. Karos also passed a mortgage bond
over its immovable property in favour of Boundary Financing.'
[8] The confusion was compounded when the deceased later in his affidavit,
reverted to his initial claim that he had acquired the shares in terms of clause 6.2 of
the sale agreement:
'Arising from clause 6.2 of the agreement of sale ("FA1") I acquired and became the
registered owner of all the class "A" shares held by Karos (in liquidation) the developer of the
property. A share certificate was issued to me, by the then company secretary of the Fifth
Respondent, Mr Nick Wellman in respect of my 5500 shares. I do not have a copy of the
share certificate. Mr Wellman subsequently committed suicide and all the documents relating
to my holding of the "A" shares which were in his possession, could not be found and have
still not been found. I had the share certificate in respect of all the class "A" shares. I was the
registered owner of 5500 of the issued "A" shares.
As I was the registered owner of 5500 issued "A" shares, during 2005, I transferred, for no
value, the "A" shares to the then directors of the Fifth Respondent. . . .'
[9] However, an examination of the provisions of clause 6.2 of the agreement of
sale relied upon by the deceased, only serves to increase the confusion. The clause
provides as follows:

'6.2   Boundary, KKS and KLS shall procure the transfer to John Brankin of all of the Karos
Leisure A shares (in respect of both KKS and KLS) at a price of R0,01 per share and
undertake to take all reasonable steps that may be necessary to effect delivery and transfer
of such shares within 60 (sixty) days after the signature date.'
In other words, Boundary Finance and 'KKS', being Karos Kruger Shareblock Ltd
and 'KLS', being Karos Lodge, were to 'procure the transfer' to the deceased of the
shares in Karos Lodge, by taking 'all reasonable steps that may be necessary to
effect delivery and transfer of such shares', within 60 days of signature of the
agreement. No explanation is furnished by the deceased to establish the legal
entitlement of these entities to transfer ownership in the shares to him, nor does he
describe the legal steps which enabled them to 'procure’ the transfer and delivery of
the shares to him.
[10] The contradictions in the founding affidavit of the manner in which the
deceased acquired ownership of the shares are manifest. It is uncertain whether
they were purchased by the deceased from the liquidator of Karos Leisure, or
whether he purchased them from Boundary Finance, or whether he purchased them
following procurement by Boundary Finance, Karos Kruger Shareblock Ltd and
Karos Lodge.
[11] The contradictory allegations by the deceased and the resultant confusion as
to how he acquired ownership of the shares, had the result that the important legal
consequences of the pledge of the shares to Boundary Finance, as security for a
loan which Boundary Finance had granted to Karos Leisure, were overlooked. The
legal consequences of a pledge of shares as security for due performance of
obligations by the holder of such shares, is described by H S Cilliers et al, Corporate
Law, 3 ed (2000) at 292 para 18.23, in the following terms:
'If cession of shares as with a pledge of shares is intended, the analogy of the law of pledge
is to the effect that the pledgor remains owner of the shares while the pledgee has to keep
the share certificate and a signed blank transfer form in his possession to protect his real
right in the rights of action deriving from the shares serving as security. If the pledgor
defaults, the pledgee has to obtain a court order before he can realise his security unless
informal execution (parate executie) has been agreed to by the pledgor.'

[12] Clause 6.1 of the agreement of sale makes it clear that a pledge of the
shares was intended. It records that Boundary Finance holds signed, blank share-
transfer forms in relation to the Karos Lodge class 'A' shares. In this manner, the real
right of Boundary Finance in the rights of action deriving from the shares was
protected. Karos Leisure, however, retained ownership of the shares. As pointed out
by Brand JA in Grobler v Oosthuizen [2009] ZASCA 51; 2009 (5) SA 500 (SCA) para
20, in terms of the pledge theory a claim ceded in securitatem debiti automatically
reverts to the cedent once the secured debt is extinguished and in such event a re-
cession by the cessionary is not required. Consequently, if the loan from Boundary
Finance was repaid these rights would automatically revert to Karos Leisure.
Conversely, if Karos Leisure defaulted in repayment of the loan, Boundary Finance
would be entitled to realise the security of the shares by selling them.
[13] The founding affidavit is however silent on the crucial issue of whether the
loan was repaid. Although the fact that Karos Leisure was placed in liquidation
suggests it was not, this is pure speculation. It therefore cannot be determined on
the facts in the founding affidavit whether the liquidator of Karos Leisure, or whether
Boundary Finance, was legally entitled to sell and cede and thereby transfer
ownership of the incorporeal rights in the shares in Karos Lodge, to the deceased.
[14] Consequently, when counsel for the appellant was asked whether the issue
of the deceased’s acquisition of ownership of the shares could be resolved on the
facts, he submitted that ownership of the shares by the deceased was common
cause. In support of this submission he referred to an admission in the answering
affidavit, in response to the allegations in the founding affidavit (as set out in
paragraph 7 supra), in the following terms:
'I admit the allegation that the development shares were sold and transferred to Applicant.'
In the context of the allegations made in paragraph 33 of the founding affidavit, what
was admitted was that Boundary Finance had sold and transferred the shares to the
deceased.
[15] However, this admission must be considered in the context of other
contradictory admissions and allegations made on this issue, in the answering

affidavit. In contradiction to the admission that Boundary Finance sold and
transferred the shares to the deceased, the respondents admitted earlier in their
answering affidavit that it was the liquidator who had in fact done so, in the following
terms:
'It is common cause that the liquidator of Karos sold all development shares in Fifth
Respondent to Applicant in terms of an agreement of sale dated 13 August 2003 and in this
regard reference is made to the contents of annex "FA-1" to the founding affidavit and to the
contents of paragraph 21 of that affidavit.
It is common cause that Applicant became the owner of the development shares which was
registered in his name and in this regard reference is made to the contents of founding
affidavit paragraph 38.'
[16] The admission that it was the liquidator who sold the shares to the deceased
in terms of the sale agreement, is inconsistent with clause 6.2 in which Boundary
Finance, Karos Kruger Shareblock Ltd and Karos Lodge undertook to 'procure’ the
sale, delivery and transfer of the shares to the deceased. It is also inconsistent with
the fact that the liquidator was not a party to the agreement.
[17] The problem of determining precisely what the respondents admitted in
respect of this important issue is further complicated in the answering affidavit, by
the following denial:
'First – Third Respondents and I deny the following allegations wherever they appear in the
founding affidavit:
. . .
That Applicant is the owner of the development shares.’

[18]     Accordingly, it cannot be determined what facts, if any, are common cause
between the parties as to the manner in which the deceased acquired ownership of
the shares in Burchells. A consideration of the probabilities is precluded and the
central legal issue of whether the deceased acquired ownership of the shares,
cannot be determined on the affidavits.

[19] Counsel for the appellant also submitted that the deceased had acquired
ownership of the shares as a result of the performance by Boundary Finance, Karos
Kruger Shareblock Ltd and Karos Lodge, of their obligations in terms of clause 6.2 of
the sale agreement, but that was pure speculation. In any event, for the reasons set
out above the submission is without foundation.
[20] The appeal accordingly fails. I grant the following order:
1   Ewan Ronald Simmonds N O is substituted as the appellant for John Owen
Brankin in these proceedings.
2     The name of the appellant wherever it occurs in the appeal under case number
9334/2017 is amended to read Ewan Ronald Simmonds N O.
3   The appeal is dismissed with costs, such costs to include the costs of two
counsel.

K G B Swain

Judge of Appeal

Appearances:
For the Appellant:

P Pauw and R G Cohen

Instructed by:

Glynnis Cohen Attorney, Johannesburg

Lovius Block Attorneys, Bloemfontein

For the First, Second, Third
and Fifth Respondent:

S J Du Plessis SC and F J Wilke

Instructed by:

Manong Badenhorst Abbott Van Tonder,
Randburg

Phatshoane Henny Attorneys, Bloemfontein