THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case number : 410/04
Reportable

In the matter between :

HITLER ADOLF KLOKOW

APPELLANT

and

MICHAEL BOYTON SULLIVAN

RESPONDENT

CORAM :
MPATI DP, CAMERON, BRAND JJA et NKABINDE,

CACHALIA AJJA

HEARD :
6 SEPTEMBER 2005

DELIVERED :
29 SEPTEMBER 2005

Summary:  Contract – Legality – facts need not always specifically be pleaded before
court will relax the rule in pari delicto potior est conditio defendentis.
- Pleadings not to be approached in an overly technical and formalistic way.
________________________________________________________________

JUDGMENT

CACHALIA AJA/

CACHALIA AJA:
[1] The Appellant claims repayment of a sum of R250 000 being part of the
purchase price for a liquor-licenced business, which was paid to the Respondent
pursuant to the conclusion of an agreement of sale. The agreement was illegal
and void for want of compliance with the requirements of the Liquor Act, 27 of
1989 (‘the Act’). It will be convenient to refer to the parties as they were cited
in the court of first instance, as plaintiff and defendant respectively.

[2] On 4 September 2000 the parties entered into a written agreement in
terms of which the plaintiff was to acquire, from the defendant, a business that
provided ‘adult entertainment’, which included the sale of liquor to its patrons.
Pursuant thereto the plaintiff paid to the defendant an amount of R250 000,
which represented half of the agreed purchase price of R500 000. The plaintiff
took possession of the business on 5 September 2000. However, on 18 October
2000, for reasons not relevant to this appeal, the plaintiff returned the business
to the defendant and issued summons against him for repayment of the
R250 000.1

[3] The matter originally came before Hartzenberg J in Transvaal Provincial

1 The plaintiff sued for an amount of R700 000 and R489 956 96, alternatively R250 000. It is only the latter
amount that is relevant in this appeal.

Division where the plaintiff was successful. He refused the defendant leave to
appeal. Leave was then granted by this court to the full court. That court (per De
Villiers J; Patel J and Jooste AJ concurring) upheld the defendant’s appeal. The
plaintiff now comes on further appeal, again with special leave of this court.

[4] In the plaintiff’s amended particulars of claim, several causes of action
are pleaded. Only one of those is relevant for a determination of this appeal. The
plaintiff alleges that the defendant, as holder of the liquor licence, concluded the
agreement permitting the plaintiff to procure a controlling interest in the
business without obtaining the necessary permission of the Chairperson of the
Liquor Board (‘the Chairperson’). This omission, the plaintiff avers, constituted
a contravention of Section 38(1) of the Act, which provides:
‘The holder of a licence shall not permit any other person to procure a controlling interest in
the business to which the licence relates, unless the chairperson has, on application by the
holder, granted consent that such a person may procure such an interest in that business.’
(A ‘controlling interest’ in relation to any business or undertaking, ‘means any
interest of whatever nature enabling the holder thereof to exercise, directly or
indirectly, any control whatsoever over the activities or assets of the business or
undertaking…’2) In consequence of this contravention, the plaintiff avers that

2 The definition is provided for in subsection 2(1) of the Act. It provides that “unless the context otherwise
indicates, controlling interest means an interest as defined in section 1 of the Maintenance and Promotion of
Competition Act  96 of 1979. Act 96 of 1979 has been repealed by the Competition Act, 89 of 1998. But
subsection 2(1) has been incorporated by reference into Act 89 of 1998.

the agreement is illegal and void. Accordingly he cancelled the agreement,
returned the business to the defendant and now seeks to recover the amount of
R250 000 that he paid to the defendant in terms of the agreement.3

[5] In resisting the claim, the defendant pleads, inter alia, that regulation 28
as read with section 38(1) of the Act imposed an obligation on the plaintiff,
jointly with the defendant, to make written application for the consent of the
Chairperson. This he did not do.  Regulation 28 provides as follows:
‘28.   Form of application
(1)
The applicant who is the holder of a licence, shall jointly with the applicant who
desires consent to procure a controlling interest in the business to which the licence…
relates…make written application, in duplicate, for such consent, substantially in the form of
Form 9…’

[6] Accordingly, the defendant pleads that the plaintiff is precluded from
recovering the amount claimed, as ‘both he and the Plaintiff were in pari
delicto’. The plaintiff did not file a replication.
The proceedings before Hartzenberg J

[7] When the matter came before Hartzenberg J, the parties elected not to

3 The plaintiff also alleges that he was induced to enter into the agreement as a result of certain fraudulent
misrepresentations that were made by the defendant. The defendant in his plea denies this. This issue is not
relevant for the purposes of deciding the present appeal.

lead any evidence at that stage. Counsel for the plaintiff, with the acquiescence
of the defendant’s legal representative, requested the court to record two
admissions on his behalf: that neither party had complied with regulation 28,4
and that the defendant had handed to the plaintiff a blank pro forma document
(Form 16) on 24 August 2000, prior to the agreement being signed. This
document is titled: ‘Appointment in terms of section 39(1) or 39(2) of a natural
person to manage and be responsible for the business to which the licence
relates’. It is issued in terms of Regulation 95, which provides that:
‘a person other than a natural person who is holder of a licence, shall in terms of section
39(1), and a natural person shall in terms of section 39(2) appoint a natural person to manage
and be responsible for the business, substantially in the form of form 16…
Sections 39(1) and (2) of the Act provides as follows:
‘(1)
A person other than a natural person shall not conduct any business under a licence
unless a natural person who permanently resides in the Republic and who is not disqualified
in terms of section 25 to hold a licence, is appointed by him or her in the prescribed manner
to manage and be responsible for its business.
(2)
A natural person who is the holder of a licence may in the prescribed manner appoint
another natural person who permanently resides in the Republic and who is not disqualified
in terms of section 25 to hold a licence, to manage and be responsible for the business to
which the first-mentioned licence relates.’

4 See para [4] above.

[8] Counsel for both parties thereupon requested the court to adjudicate four
issues separately in terms of the provisions of Rule 33(4).
• Whether section 38(1) of the Act was of application to the agreement;
• If the answer to that question is positive, whether non-compliance with
the section renders the agreement void;
• If the answer to second question is positive, whether any portion of the
agreement is severable from the remainder of the agreement;
• Whether the plaintiff had made out a case for the repayment of the
amount of R250 000.

[9] It was agreed between the parties’ legal representatives that these issues
were to be decided, ‘as on exception’, on the basis of the factual averments that
were made in the plaintiff’s particulars of claim, together with the facts that
plaintiff had admitted.  The learned judge answered the first, second and final
questions in the affirmative, and to the third, he answered No. Each question
was therefore decided in favour of the plaintiff. In so deciding, Hartzenberg J
concluded that the rule ‘in pari delicto potior est conditio defendentis’ (‘the par
delictum rule’) relied upon by the defendant to defeat the plaintiff’s claim, did
not arise. The basis of this conclusion, so he reasoned, was that S 38(1) placed a
burden to secure the consent of the Chairperson for the procurement of
controlling interest by an applicant on the holder of the licence only, the

defendant in this case. He therefore attributed blame for the failure to obtain the
consent before the signing of the agreement on the defendant alone.
The Proceedings in the full court

[10] When the matter came before the full court, it was rightly conceded that
Hartzenberg J had decided the first two questions correctly. The concession was
made because it was common cause that no consent had been obtained for the
plaintiff to acquire a controlling interest in the business as required by section
38(1). This rendered the agreement illegal. Section 148, which had been
overlooked, disposed of the second question (whether the agreement was void).
Section 148 provides: ‘a contract which contains a provision whereby a person
purports to relinquish or forgo a right, privilege, obligation or liability in terms
of this Act, shall be void’. The agreement was thus illegal and void. The issue of
the severability of any part of the agreement fell away.

[11] The only remaining question that the full court was required to decide
was reformulated as follows:
Whether the plaintiff has made out a cause of action for the repayment of the amount of
R250 000…’
The full court also approached the matter ‘as on an exception’. There are two
questions to be answered in this appeal. The first is whether the full court was
correct in finding that the conduct of the parties was equally morally

reprehensible; and if so, whether it was correct in finding an insufficient factual
basis to sustain a cause of action.

[12] On the basis of the facts before it, the full court concluded that the parties
were in pari delicto (equally morally guilty). This conclusion was based on its
finding that the agreement contemplated a contravention of section 38(1) and
was void in terms of section 148. The finding was underpinned by the fact that
the defendant had handed a blank form 16 to the plaintiff before the agreement
was signed. The full court inferred that this was probably a subterfuge for the
plaintiff to take control of the business by utilising the existing licence. It said
that the inference was also supported by the fact that neither party had taken any
steps to obtain the necessary consent of the Chairperson in accordance with the
procedure provided for in regulation 28.

[13] The full court rejected an argument advanced on behalf of the plaintiff
that as s 159(b)5 of the Act penalises only the holder of a licence for a
contravention of s 38(1) of the Act, the par delictum rule was, for that reason,
not applicable to him. The argument, which was pursued zealously in this court

5Section 159 reads as follows:
‘ Offences by holders of licences in general
The holder of a licence who─
(b) contravenes section 38(1);
shall be guilty of an offence.’

as well, is misconceived. The par delictum rule is concerned with the moral
guilt of contracting parties, not their criminal liability. Whether or not the
plaintiff is also prima facie liable for prosecution under the Act, albeit as an
accomplice as found by the full court, has no direct bearing on the question of
his moral turpitude.

[14] Apart from this argument, plaintiff’s counsel made no other submissions
to impugn the finding by the full court that the parties were in pari delicto. Nor
can I find any reason to interfere with it.  I therefore proceed to deal with the
second question, whether the plaintiff nevertheless has a cause of action.

[15] The fact that the matter was decided on exception has two consequences.
The first is that the plaintiff is confined to the facts alleged in the particulars of
claim and the further agreed facts. The second is that the defendant is required
to show that on every possible interpretation that can reasonably be attached to
the particulars of claim, and the further facts, no cause of action is disclosed.6

[16] Having decided that the parties were in pari delicto, the full court
approached the matter on the basis that it was then incumbent upon the plaintiff
to have pleaded ‘further facts’ to show that justice and public policy required

6 First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA 960 (SCA) para 6.

the relaxation of the par delictum rule to prevent the defendant being unjustly
enriched at his expense. It concluded that as no further facts had been pleaded,
the par delictum rule operated against the plaintiff. This was because its
operation placed the defendant in a stronger position. Consequently, so it
reasoned, the plaintiff had not established a cause of action for the repayment of
the money. It accordingly reversed Hartzenberg J’s order.

[17] Before dealing with the facts germane to this issue, a brief explanation of
the genesis and application of the par delictum rule is necessary. Before the now
famous decision in Jajbhay v Cassim in 1939,7 a party seeking to extricate
himself from the consequences of an illegal or immoral contract had to
demonstrate that he had come to court with clean hands. The ‘clean hands
doctrine’ derived from English law, is similar in effect to the Roman law maxim
in pari delicto potior est conditio defendentis, which operated as an absolute bar
to the grant of relief to the plaintiff.8 As a general rule, a plaintiff who was
found to be in pari delicto was hence unable to recover any money paid or
property handed over to a defendant pursuant to it; and if a plaintiff based his
case on such a contract in formulating his pleading, he would fail on this basis
alone.9

7 1939 AD 537.
8 Brandt v Bergstedt 1917 CPD 344.
9 See Christie The Law of Contract in South Africa 4 ed p 459-465.

[18] In Jajbhay v Cassim, this court, while affirming the principle underlying
the par delictum rule ─ that courts must discourage illegal transactions ─
nevertheless recognised that its strict enforcement may sometimes cause
inequitable results between parties to an illegal contract. To prevent inequities,
therefore, it thus enunciated the principle that the rule must be relaxed where it
is necessary to prevent injustice or to promote public policy.10  One such
instance where the rule would be subordinated to ‘the overriding consideration
of public policy’ was where the defendant would be unjustly enriched at the
plaintiff’s expense. The approach that commended itself in Jajbhay was that:
‘…(W)here public policy is not foreseeably affected by a grant or a refusal of the relief
claimed…a Court of law might well decide in favour of doing justice between the individuals
concerned and so prevent unjust enrichment.’11

[19] Since Jajbhay courts have frequently relaxed the protection afforded to
defendants by the par delictum rule on grounds of public policy.12 In this matter
however the full court considered itself unable to come to the plaintiff’s
assistance because, in its view, he had failed to plead ‘further facts’ to justify
the relaxation of the rule. The full court’s main source of authority for this

10 per Watermeyer JA at 550; cf Stratford CJ (with whom De Wet JA concurred) at 544 and Tindall JA at 558.
11 Per Stratford CJ at p 545.
12 See Christie The Law of Contract in South Africa  4 ed p 461 and the cases cited there.

assertion is the tentative suggestion by the learned author Christie to the effect
that:
‘the weight of authority seems to be that (the plaintiff) must plead facts upon which he seeks
relief on the grounds of public policy or injustice’,13
and the four cases cited by him (Msibi v Sadheo 1946 NPD 787; Mamoojee v
Akoo 1947 (4) SA 733 (N) 739; Warren and De Ville v Cacouris 1951 (2) SA
574 (T) 577E; Courtney-Clarke v Bassingthwaighte 1991 (1) SA 684 (Nm)
697I-698A).

[20] Msibi v Sadheo was a claim for ejectment. The plaintiff, in his particulars
of claim, sought the ejectment of the lessee from his property in the magistrate’s
court. The defendant resisted the relief claimed on the basis of the illegality of
the lease. To this plea, the plaintiff filed no reply. The magistrate ruled in favour
of the plaintiff. On appeal it was contended on behalf of the defendant that
neither the illegality of the lease, nor the equal participation therein of the
parties, nor any considerations of public policy had been put in issue in the
pleadings. In upholding the plaintiff’s claim for ejectment, the court did not
consider the way the pleadings had been framed as an impediment to the grant
of relief on the grounds of public policy. In so finding, the court said the
following:

13 Christie (supra) p 461.

‘In my view the legality of the lease and the illegal act of the parties in making it was clearly
raised by the plea. By joining issue the plaintiff denied that the lease afforded any defence.
He also denied that he was equally guilty with the defendant and that he, the plaintiff, was not
entitled to an order of ejectment. No doubt it is the case that public policy was not
specifically raised in the case. But, in fact, the defendant raised it for he must be taken to
know, and so must the plaintiff, that it is not every illegal contract which necessarily entails
the rigid penalty that a party to it is unable to obtain any relief whatever from the Court. The
Courts will come to the rescue of one of the parties where such a course is necessary in order
to prevent injustice, or to satisfy the requirements of public policy…(It was ) suggested that
this question of public policy should be specifically raised so that evidence could be led upon
it. But public policy does not rest upon the evidence of any party. It exists as a fact just as
much does air which a man breathes…(T)he magistrate  was perfectly right in having regard
to public policy in deciding whether or not he would make an order in favour of the
plaintiff.’14

[21] In Mamojee v Akoo15 the court explicitly left open the question whether
facts must be pleaded to sustain a claim based on injustice or public policy. It
found that the plaintiff had alleged sufficient facts in his declaration to support
such relief. In Warren and De Ville v Cacouris16, the question was not dealt
with as the matter was decided on the basis that the parties were not in pari
delicto. The relaxation of the par delictum rule was therefore not in issue. In

14 1946 NPD 789-790.
15 1947 (4) SA 733 (N) at 739.
16 1951 (2) SA 574 (T) at 577E.

Courtney-Clarke v Bassingthwaighte17  the plaintiff wished to enforce a contract
which the court had found to be illegal and immoral ex facie.  It did not deal
with an attempt by the plaintiff to extricate himself from the consequences of an
illegal or immoral contract. The relaxation of the par delictum rule, therefore,
did not arise.

[22] These cases thus do not support the view that unless the plaintiff has
specifically pleaded facts upon which he relies for the relaxation of the par
delictum rule on grounds of  injustice or public policy, the court will not assist
him.18

[23] In James v James’ Estate,19 also cited by the full court in support of its
view, the plaintiff sued the defendant for the refund of expenses arising from an
oral agreement. The defendant pleaded the illegality of the agreement. The
plaintiff then excepted to the plea on the basis that no defence was disclosed. In
refusing the exception, the court held that whether the defence prevails depends

17 1991 (1) SA 684 (Nm) at 697-698A-H. In this matter O’Linn J cited Christie’s suggestion with approval. In
an obiter dictum, the learned judge stated that if the court has a discretion to relax the maxim ‘ex turpi causa
non oritur actio’ on the grounds of public policy, the plaintiff must disclose facts in the pleadings to justify the
exercise of such a discretion in his favour.
18 The full court also cites Harms ‘Amler’s Precedents of Pleadings’ 6 ed p 188 where the learned author states
that once the defendant has alleged and proved that the plaintiff is also in delicto, it is then for the plaintiff to
allege and prove facts that will enable the court to come to his assistance because justice and public policy so
require. Properly understood, this means that once the defendant relies on the par delictum rule in his plea, the
plaintiff must in reply allege a factual basis before the court is able to assist him. Such a reply is obviously not
necessary where the plaintiff has alleged the relevant facts in his declaration (see Mamoojee v Akoo cited in para
[21] of the judgment).
19 1941 EDL 67 at 74-75, 79.

upon the evidence. It further said:
‘…(T)hough the pact will not sustain an action, the Courts, in equity, may look at the results
brought about by such a pact, and in the interest of public policy adjudicate between the
parties according to the requirements of natural justice…’20

[24] From these cases it is apparent that while courts are reluctant to decide
the relaxation of the par delictum rule on public policy grounds on exception,
since the issue is invariably fact-bound, it is also evident that courts have not
adopted an overly technical approach to the pleadings, choosing instead to
examine the results of the agreement at the end of the trial in order to determine
where the equities lie. In general, where public policy considerations do not
favour either party, the par delictum rule will operate against the plaintiff. At
exception stage, however, the par delictum rule will generally defeat a
plaintiff’s claim only in the clearest of cases.

[25] The bare facts relevant to the determination of this appeal are the
following: The parties entered into a written agreement for the purchase of a
business, which contemplated a contravention of the Act. Prima facie they were
therefore in pari delicto.  The plaintiff paid to the defendant an amount of R250
000 towards the purchase price. Six weeks later the business was returned to the

20 James v James’ Estate  1941 EDL 67 at 79.

defendant. The defendant, however, refused to refund the purchase price. The
result was that the defendant retained both the business and the money.

[26] Faced with these facts it is difficult to understand what ‘further facts’ the
plaintiff was required to plead to persuade the full court that the par delictum
rule should be relaxed.  The defendant was left with both the business and
R250 000. The equities clearly supported a return to the status quo. There was
no need, in these circumstances, for the plaintiff specifically to plead the
relaxation of the par delictum rule on grounds of public policy, or that the
defendant had been unjustly enriched. Once it had been alleged that the
defendant was in possession of the business as well as the money (which at
exception stage must be accepted as true), it was he, not the plaintiff, who
needed to show that he had not been enriched.21

[27] The full court’s apparent reliance on the facts of Jajbhay in support of its
approach is also misplaced. The landlord, Jajbhay, sublet a stand to a tenant,
Cassim, in contravention of the relevant regulations, making the sublease
illegal. Despite the tenant having complied with all the terms and conditions of
the sublease, the landlord, without giving notice to the tenant as required by the
terms of the agreement, sought his eviction on the grounds of its illegality. In

21 First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA 960 (SCA) para 31.

dismissing the appeal, the court said that even though the parties had entered
into a forbidden agreement there were no considerations of public policy in
favour of the landlord. Unlike the present matter where the equities favour the
plaintiff, in Jajbhay the equities clearly favoured the tenant (the defendant).

[28] It follows that the full court should not have disposed of the matter on the
technicalities of the pleadings. If the full court had approached the matter from
the point of view of whether, on the existing facts, public policy would best be
served by upholding or rejecting the plaintiff’s claim, it would have concluded
in favour of the plaintiff.22 Even if it was not clear where the equities lay,
because the matter was being decided ‘as on exception’, the defendant was
required to show a clear case that the plaintiff had not disclosed a cause of
action. Far from this being so, the facts demonstrate that the plaintiff had a clear
cause of action.

22 cf Jajbhay v Cassim 1939 AD 537 at 543.

[29] In the result I would uphold the appeal with costs. The order of the full
court is accordingly set aside and is replaced with the following:
‘The appeal is dismissed with costs.’

__________________
A CACHALIA
ACTING JUDGE OF APPEAL

Concur: Mpati DP

Cameron JA

Brand JA

Nkabinde AJA