THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case No: 1068/2015

In the matter between:

ZEPHAN (PTY) LTD

FIRST APPELLANT
NICOLAS GEORGIOU NO

SECOND APPELLANT
MAUREEN LYNETTE GEORGIOU NO

THIRD APPELLANT
JOE CHEMALY NO

FOURTH APPELLANT
NICOLAS GEORGIOU

FIFTH APPELLANT

and

ANNE-MARIE LEONIE DE LANGE

RESPONDENT

Neutral Citation:
Zephan v De Lange (1068/2015) [2016] ZASCA 195
(2 December 2016).

Coram:

Bosielo, Dambuza and Van der Merwe JJA and Schoeman and

Nicholls AJJA
Heard:

8 November 2016
Delivered:

2 December 2016

Summary:  Summary judgment: in opposing summary judgment application a
defendant must set out in the answering affidavit the facts which, it contends,
constitute a bona fide defence: where all facts pleaded in the particulars of claim
were admitted and no further facts alleged in answering affidavit the bona fide
defence could be determined on the papers: contract: acceptance of a stipulatio
alteri benefit by a third party: the agreement was enforceable against the second
party: business rescue proceedings relating to first party to a stipulatio alteri contract
were irrelevant where the benefit had been accepted the third party.

___________________________________________________________________

ORDER
___________________________________________________________________

On appeal from:    Gauteng Division, Pretoria (Hiemstra AJ sitting as court of first
instance):
The appeal is dismissed with costs including costs consequent upon the employment
of two counsel where applicable.
___________________________________________________________________

JUDGMENT
___________________________________________________________________

Dambuza JA (Bosielo and Van der Merwe JJA and Schoeman and Nicholls
AJJA concurring):

[1] This appeal, with leave of the court a quo, is against a judgment of the
Gauteng Division, Pretoria (Hiemstra AJ) in terms of which summary judgment was
granted against the five appellants, jointly and severally, for R520 000 plus interest.
The issue is whether, in view of the affidavits filed by the appellants in opposition to
the summary judgment application, the court a quo was correct in granting summary
judgment. More specifically, whether the facts set out in the appellants‟ answering
affidavit in opposition to the application for summary disclosed a bona fide defence.

[2] Underlying the action brought by the respondent, Mrs Anne-Marie De Lange,
against the appellants in the court a quo are two agreements. The first is essentially
an agreement of sale or an investment agreement in terms of which Mrs De Lange
bought 1 000 shares in a company known as Highveld Syndication No 21 Ltd (HS
21). The terms of the investment agreement were embodied in a prospectus
registered with the Registrar of Companies and Close Corporations, on 9 February
2009. The prospectus accompanied an offer by HS 21 to the public for subscription
to 1 091 512 ordinary shares with a par value of 100 cents each at an issue price of
100 cents each, plus a linked loan account of R999 per share. The offer opened at
09h00 on 11 May 2009 and closed on 10 August 2009. Although Mrs De Lange‟s

offer to buy shares in HS 21 was made on 18 November 2008, the investment
agreement was only concluded on the issue of the share certificate on 25 June 2009.

[3] In terms of the investment agreement, Mrs De Lange was entitled to sell her
shares after purchasing them, but, at the expiry of five years from the investment
date, she would be compelled to sell them as provided in a second agreement, the
buy-back agreement. Clause 16 of the investment agreement recorded that amongst
the material contracts that HS 21 had already concluded since its incorporation on 5
August 2005, was a head lease agreement and the buy-back agreement, both
concluded with Zelpy 2095 (Pty) Ltd which subsequently changed its name to
Zephan (Pty) Ltd, the first appellant, (Zephan).

[4] The buy-back agreement was concluded on 13 December 2008, which was,
again, prior to the opening date of the share offer. It was concluded between four
parties, namely, HS 21, Zephan, the N Georgiou Trust (the Trust), and Mr Nicolas
Georgiou. In terms of the buy-back agreement Zephan, the Trust and Mr Georgiou,
jointly and severally undertook to buy the shares sold by HS 21 five years after the
investment date.

[5] Mrs De Lange‟s investment agreement was one amongst many similar
agreements in terms of which individual investors invested inter alia in the HS 21 and
Highveld Syndication No 22 Limited (HS 22) (the HS companies). These companies
conducted the business of property syndication. The head lease and the buy-back
agreement were advertised as „insurance‟ for the investment as it provided investors
with peace of mind in the knowledge that their money was safe and was assured of
guaranteed yields. The investors would earn 12.5 per cent income per annum on
their investment, from the date of investment. All costs, including commissions were
paid for by the promoter.

[6] In respect of Mrs De Lange‟s investment agreement, the five year term had
expired. She then became one of 46 investors who instituted action against the
appellants seeking performance by them in terms of the buy-back agreement. The
aggregate amount claimed in the 46 actions is R29 955 000. When the appellants
filed notices of their intention to defend the claims, the 46 plaintiffs applied for

summary judgment. In the court a quo the parties agreed that a judgment in Mrs De
Lange‟s case would be determinative of the issues in all other cases.

[7] In opposing Mrs De Lange‟s application for summary judgment, the appellants
advanced, broadly, two defences. The first was that the buy-back agreement created
no contractual nexus between Mrs De Lange and the appellants and therefore there
was no basis for her claim for specific performance against the appellants. The
argument was that, for enforceability the buy-back agreement had to create benefits
and obligations for both parties thereto. In this instance it did not – it only consisted
of an undertaking by the appellants to the HS companies that they would buy the
appellants‟ shares. But the HS companies could not enforce that obligation, so it was
argued. Regarding enforceability, the appellants also contended that for the
agreement to be enforceable by Mrs De Lange against them, it would have had to
manifest an intention that the HS companies be replaced by Mrs De Lange in the
buy-back agreement. The second defence was that, even if the buy-back agreement
could be regarded as a proper basis for Mrs De Lange‟s claim, that agreement had
been superseded by the pending business rescue of the HS companies. The
contention was that because the majority of the shareholders in the HS companies
had voted in favour of a business rescue plan (BRP) which restructured the rights
that they had prior to the passing thereof, in favour of the rights set out in the
business plan, the buy-back agreement had become unenforceable.

[8] In granting summary judgment the court a quo found that there was no reason
why the HS companies would not have been able to enforce the agreement as they
would have been obliged to repurchase the shares if the appellants did not honour
their obligations under the buy-back agreement. The court also found that when Mrs
De Lange accepted the benefit, HS 21 was relieved of its obligation to repurchase
the shares and was replaced by Zephan and/or the appellants in respect thereof.
The court also dismissed a rather belated argument of unenforceability by the
appellants based on the fact that the buy-back agreement had not yet come into
existence when Mrs De Lange accepted the benefit. As to the defence relating to
restructuring of the shareholders‟ rights through the BRP, the court a quo found that
the BRP could not be a novation or waiver of rights under the buy-back agreement. It

had not been signed by the parties to the buy-back agreement as provided for in the
non-variation clause contained in the buy-back agreement.

[9] In this court the appellants‟ argument was essentially a revamp of the
defences raised in the court a quo. Broadly, the appellants‟ three-pronged argument
before us was that firstly, the buy-back benefit could not be validly accepted before it
was created. This related to the fact that according to them, the sale of shares was
concluded on 18 November 2008, prior to the conclusion of the buy-back agreement
on 13 December 2008. The second submission was that, in the light of the contents
of the appellants‟ affidavit resisting summary judgment, the elements essential for
establishing stipulatio alteri could be impugned by further evidence. Therefore the
court a quo should have refused summary judgment so that such further evidence
could be led at trial. The third argument was that the finding of the court a quo, that
the BRP did not restructure Mrs De Lange‟s rights under the buy-back agreement
was wrong.

[10] It was not in dispute before the court a quo that Mrs De Lange‟s claim fell
within the rubric of claims in respect of which a court may grant summary judgement.
The issue was whether the appellants had tendered a bona fide defence. Rule 32 (3)
of the Uniform Rules of Court provides that a defendant seeking to avoid summary
judgment may satisfy the court by affidavit, that he has a bona fide defence to the
action. It is trite that the word „satisfy does not mean prove‟.1 What is required is that
in his affidavit the defendant sets out facts which, if proved at trial, will constitute an
answer to the plaintiff‟s claim.2

[11] The facts set out in the appellants‟ affidavit are not in dispute. Essentially they
are a presentation of the terms of the agreements. Having set out „material
background facts‟ in the answering affidavit, the appellants specifically stated that:
„11. The defendants do not deny:
11.1
The plaintiff‟s acquisition and ownership of the shares in the relevant Highveld
Syndication Company, as pleaded.

11.2
The identity and citation of the defendants.

1 D E van Loggerenberg and E Bertelsmann; Erasmus Superior Court Practice, (2015) at D1-409, and
the authorities cited therein.
2 Ibid.

11.3
The Court‟s jurisdiction to adjudicate upon the plaintiff‟s claim.
11.4
The registration by the then Registrar of Companies and Close Corporations
of the prospectus in respect of the relevant Highveld Syndication Company, or
the terms of the prospectus as quoted in the plaintiff‟s particulars of claim.
11.5
The conclusion and terms of the buy-back agreement relied upon by the
plaintiff and attached as an annexure to the plaintiff’s particulars of claim.‟ (My
emphasis.)

[12] Nowhere in the answering affidavits do the appellants allege, as the basis of
their defences, facts that are not contained in the buy-back agreement. All their
defences are legal points founded on the agreed terms of the buy-back agreement
and the contents of the BRP. In this sense the appellants disclosed the nature and
grounds of their defence. If there were any facts that could disclose a further defence
it was incumbent upon them to disclose such facts. It would have been wrong for the
court to consider, without any basis, whether there could be other facts which could
disclose a further defence. Such approach would defeat the purpose of the Rule.
The inquiry in the court a quo was limited to considering whether the legal
conclusions advanced by the appellants as their bona fide defence, based on the
terms of the buy-back agreement, constituted a defence good in law.3 The appellants
did not even attempt to suggest what such further evidence or facts could be. Their
contention that, in the light of the contents of their affidavit resisting summary
judgment, the elements essential for establishing a stipulatio alteri could be
impugned, is without merit.

[13] The defence that the buy-back agreement was unenforceable, because it was
concluded about a month after Mrs De Lange accepted the benefit flowing from it,
cannot constitute a defence good in law. The offer made by Mrs de Lange could not
have been accepted prior to the opening of the share offer on 11 May 2009. All that
happened on 18 November 2008 was that Mrs De Lange made an offer. In the
particulars of claim Mrs De Lange pleaded that her application was accepted and
share certificate no HFS 212 4500 was issued to her and in so doing she accepted
the benefit. The share certificate is dated 25 June 2009. It is incorrect therefore to
say that the benefit was accepted before it came into existence.

3 Maharaj v Barclays National Bank Ltd 1976 (1) SA 418 (A).

[14] It is clear from the terms of the buy-back agreement that it was intended to
benefit Mrs De Lange and other shareholders and that on adoption thereof they
became party to the contract. (See Joel Melamen & Hurwitz Incorporated v Clevelant
Estates (Pty) Ltd; Joel Melamen & Hurwitz Incorporated v Vorner Investments (Pty)
Ltd 1984 (3) SA 155 (A).)

[15] In the preamble the buy- back agreement states that:
„WHEREAS the FIRST party had its shares marketed at R1.00 per share with a
linked loan account of R999.00 by means of a public placing, and
WHEREAS the SECOND, THIRD & FOURTH parties jointly and severally had given
an undertaking to the FIRST party to repurchase all of the shares sold by the FIRST
party five years after the investment had been made by the original purchaser; and
NOW THEREFORE WITNESSES:
The SECOND, THIRD & FOURTH PARTY, jointly and severally, hereby
irrevocably undertakes to repurchase all of the shares sold by the FIRST
party to the original purchasers of the shares five years after the individual
initial purchase dates (herein after referred to as the “Repurchase date” at
R1.00 per share with a link loan account of R999.00.‟

[16] The buy-back agreement is a simple nine clause agreement in which all the
terms relate to the buy-back clause (clause 1). It sets out expressly that the second,
third and fourth parties (Zephan, the Trust and Mr Georgiou) undertook to the first
party, HS 21, to buy Mrs De Lange‟s shares at the expiry of the five year period. As
stated above they confirmed that „the conclusion and terms of the buy-back
agreement relied on by the plaintiff and attached as an annexure to the particulars of
claim’. Mrs De Lange accepted this benefit and was therefore bound to look to the
appellants for performance of the obligation. The five year term from the purchase
date having expired, Mrs De Lange‟s claim for the appellants to perform in discharge
of this obligation was properly made. Contrary to the submission by counsel for the
appellants, this obligation was not conditional upon anything else.

[17] Regarding the defence that the rights of the shareholders had been
restructured in the business rescue plan, the common cause background was that in
2008 the Governor of the Reserve Bank had, in terms of the South African Reserve

Bank Act 90 of 1989, directed that Pickvest Syndications (Pty) Ltd, which had
promoted the offer issued by the HS companies, be investigated on suspicion of
having conducted the business of a bank. Zephan then cancelled the head lease
agreement referred to above. This led or contributed to the HS companies
experiencing financial difficulties. In 2010 the HS companies were placed under
business rescue. The business rescue plan was signed and published on 30
November 2011. It reveals that prior thereto, on 21 September 2011, the first
meeting of the creditors of the HS companies took place and the business rescue
practitioner formed the view that the rescue plan would yield a better return than
liquidation. Orthotouch Limited, of which Mr Georgiou was a director, was to buy the
HS companies‟ properties. A further consultation with creditors was due to be
convened in terms of s 150 of the Companies Act 71 of 2008 and the offer was to be
considered in terms of s 152 of the Companies Act. There is no evidence that such a
meeting did take place.

[18] In the part on which the appellants rely, the business plan provides that the
fixed interest of 12.5 per cent per annum would now be reduced 6.00 per cent per
annum during the first year, 6.25 per cent per annum during the second year, 6,50
per cent per annum in the third year, 6,75 per cent per annum in the fourth year and
7.00 per cent per annum in the fifth year. It further states that:
„The effect of this business plan upon shareholders is that the owners of the linked units on
the fifth anniversary of the acceptance of the offer and adoption of this plan, against payment
to them of the amount of their investment shall transfer to Orthotouch all their shares and
cede to Orthotouch all their claims in and against the companies.‟

[19] The BRP relates only to the restructuring of the business of the HS
companies and not the appellants. When the HS companies went into business
rescue the appellants were the primary carriers of the obligation to buy back Mrs De
Lange‟s shares. The fact that the HS companies might have been in business rescue
was irrelevant to the appellants‟ discharge of their obligations under the buy-back
agreement. Neither was the fact that she had accepted payments of the reduced
annual interest. Such interest was never part of the buy-back agreement. There
could be no basis for a finding that Mrs De Lange had compromised her rights under
the buy-back agreement.

[20] In the result, the appeal is dismissed with costs including costs consequent
upon the employment of two counsel where applicable.

________________________
N DAMBUZA
JUDGE OF APPEAL

APPEARANCES:

For the Appellant:

P F Rossouw SC and M Mostert
Instructed by:
Kyriacou Incorporated, Melrose North
c/o E G Cooper Majiedt Inc, Bloemfontein

For the Respondent:

A P Joubert SC and L Bolt
Instructed by:
Le Grange Attorneys, Pretoria
c/o Symington & De Kok, Bloemfontein