THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 869/2023

In the matter between:
DIRK CORNELIS UYS N O FIRST APPELLANT
CARL ALEXANDER GREATOREX N O SECOND APPEL LANT
HESTER SOPHIA UYS N O THIRD APPELLANT
and
NATIONAL CREDIT REGULATOR FIRST RESPONDENT
NATIONAL CONSUMER TRIBUNAL SECOND RESPONDENT

Neutral citation: Uys N O and Others v National Credit Regulator and Another
(869/2023 ) [202 5] ZASCA 34 (1 April 2025)
Coram: MOKGOHLOA ADP , WEINER and KATHREE -SETILOANE JJA
and MUSI and WINDELL AJJA
Heard : 21 February 2025
Delivered : This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the Supreme Court of
Appeal website, and by release to SAFLII. The date and time for hand -down is
deemed to be 11h00 on 1 April 2 025.

2

Summary: National Credit Act 34 of 2005 (NCA) – impugned transactions –
whether the impugned transactions constitute credit agreements as defined by
s 8(1)(b) read with s 8(4) (f) of the NCA – whether the impugned transactions were
simulated and intended to avoid the provisions of the NCA.


ORDER


On appeal from: Gauteng Division of the High Court, Pretoria (Potterill,
Mbongwe and Kumalo JJ, sitting as a court of appeal ):

1 The appeal succeeds with costs including the costs of two counsel where
so employed.
2 The order of the full court is set aside and replaced with the following:
‘1 The judgment and order of the second respondent is set aside.
2 The first respondent is ordered to pay the costs of the appeal
including costs occasioned by the employment of two counsel.’


JUDGMENT


Weiner JA (Mokgohloa ADP and Kathree -Setiloane J A and M usi and
Windell AJJA concurring ):

Background
[1] On 21 May 2018, a Mr Seabi laid a complaint with the first respondent,
the National Credit Regulator (the Regulator), concerning possible
contraventions of the National Credit Act 34 of 2005 (NCA) by a company known
as Loans Acceptable Funding (Pty) Ltd (LAF), which was a registered credit
provider. The Regulator initiated an investigation into the conduct of LAF and
3

found that it had been acting as an agent and/or intermediary for the Cornelis
Family Trust (the Trust), of which the appellants are the trustees. Upon
recommendation of the investigator, an investigation was also initiated into the
conduct of the Trust.

[2] During its investigation , the Regulator, in assessing the Trust’s business
model, in relation to the complaint, found that the Trust would purchase an
immovable property from third party sellers and simultaneously conclude a lease
with the seller at a monthly rental. The lease agreement provided the seller with
an option to repurchase the property from the Trust , subject to the monthly rental
being timeously paid , and the option being exercised within a period of one year
from the date of the sale and lease agreements. Mr Seabi had concluded a sale
and a lease agreement with the Trust on these terms. The purchase price paid by
the Trust was R210 000 and , in terms of the lease agreement, the monthly amount
payable was R 3 500, which comprised R 2 500 as rental and R1 000 for the option
to re-purchase the property.

[3] Whilst this investigation was being conducted, a Ms Slabbert also laid a
similar complaint with the Regulator. In her case, the purchase price for her
property was R 500 000 and, in terms of the lease agreement the monthly amount
payable was R9 000, which comprised R8 000 as rental and R1 000 for the option
to re-purchase the property.

[4] The two complaints received by the Regulator indicated that both
complainants had owned fully paid-up immovable properties; they were seeking
to obtain cash loans; they had approached third parties to obtain such loans; the
loans were refused, and they were referred by LAF to the Trust for an alternative
solution. Subsequent to n egotiations with the Trust , the sale and lease agreements
4

were concluded. After consulting with the trustees, the Regulator established that the
Trust had concluded similar agreements with six other sellers.1

[5] According to the complainants , they had understood that they were entering
into loan agreements with the Trust and that their properties would serve as
security for the loans obtained. They stated that they did not intend to sell their
properties and contended that the Trust, which was not a registered credit
provid er, had contravened the NCA in various respects .

[6] The Regulator approached the second respondent, the National Consumer
Tribunal (the Tribunal). The Regulator contended that the agreements were credit
agreements (the impugned transactions) as defined in the NCA and that the Trust
was not registered as a credit provider . The Trust had thus contravened the
following provisions of the NCA: Section s 40(1)2, 40(3)3 and 40 (4)4, ss 80(1) (a)5,

1Margaretha Jacoba Liebenberg, Amurtham Thyagavathi Govender, Fatima Fredricks, Hendrick Mashao Matome,
Marvin Charl Ross & Chantal Lavinia Roos, Coenraad Andries Chrisstoffol van der Berg.
2 40. Registration of credit providers:
(1) A person must apply to be reg istered as a credit provider if the total principal debt owed to that credit provider
under all outstanding credit agreements, other than incidental credit agreements, exceeds the threshold prescribed
in terms of section 42(1).
3 A person who is required in terms of subsection (1) to be registered as a credit provider, but who is not so
registered, must not offer, make available or extend credit, enter into a credit agreement or agree to do any of
those things.
4 A credit agreement entered into by a credit provider who is required to be registered in terms of subsection (1)
but who is not so registered is an unlawful agreement and void to the extent provided for in section 89.
5 80 Reckless credit:
(1) A credit agreement is reckless if, at the time that the agreement was made, or at the time when the amount
approved in terms of the agreement is increased, other than an increase in terms of section 119 (4) -
(a) The credit provider failed to conduct an assessment as required by section 81 (2), irrespective of what the
outcome of such an assessment might have concluded at the time .
5

81(2)6 and 81(3)7, ss 89(2) (d)8, 90(1)(2) (a)9 and regulation 23A.10 The Regulator
sought interdictory relief against the Trust and a declaration that the agreements
were void and fell to be set aside. The Regulator relied upon the version of the
complainants that they understood that they were obtaining a loan, as against the
security of the ir immov able property. The Trust on the other hand, contended that
the complainants were well aware that they were signing a sale agreement, and a
lease agreement, which contained the option for them to repurchase the ir
properties from the Trust after a period of 12 months.

[7] The Regulator also sought an order for the appointment of an independent
auditor to investigate all similar agreements entered into by the Trust within the
previous five years. The purpose was to have all such agreements set aside with
refunds to be made to the sellers. On 29 January 2021 , the Tribunal found that the
impugned transactions constituted unlawful credit agreements. It made the
following orders:

6 81 Prevention of reckless credit
(2) A credit provider must not enter into a credit agreement without first taking reasonable steps to assess -
(a) the proposed consumer's -
(i) general understanding and appreciation of the risks and costs of the proposed credit, and of the rights and
obligations of a consumer under a credit agreement;
(ii) debt re -payment history as a consumer under credit agreements;
(iii) existing financial means, prospects and obligations; and
(b) whether there is a reasonable basis to conclude that any commercial purpose may prove to be successful, if
the consumer has such a purpose for applying for that credit agreement.
7 A credit provider must not enter into a reckless credit agreement with a prospective consumer.
8 89 Unlawful credit agreements
(2) Subject to subsections (3) and (4), a credit agreement is unlawful if -
(d) at the time the agreement was made, the credit provider was unregistered and this Act requires that credit
provider to be registered; or
990 Unlawful provisions of credit agreement
(1) A credit agreement must not contain an unlawful provision.
(2) A provision of a credit agreement is unlawful if -
(a) its general purpose or effect is to -
(i) defeat the purposes or policies of this Act
10 Regulation 23A
Criteria to conduct affordability assessment
Application
(1) These Regulations apply to -
(a) current, prospective and joint consumers;
(b) all credit providers; and
(c) all credit agreements to which this Act applies, subject to Regulation 2.
6

‘55.1 The Trust is interdicted from entering into any further credit transactions with consumers
or operating as a credit provider while it is not registered as a credit provider;
55.2 All the credit transactions entered into between consumers and the Trust are declared
reckless. All the consumer’s obligations in terms of these agreements are set aside. All the
consumers are to be reimbursed with all payments made to the Trust in terms of those
transactions;
55.3 The Trust is interdicted from proceeding with any current civil proceedings against
consumers under the credit agreements. The Trust must rescind any judgments obtained against
any consumers under those agreements.
55.4 The Tribunal further orders that the Respondents [the trustees] appoint an independent
auditor at its own cost within 30 days of the issuing of this judgment. The auditor must be
registered as a Chartered Accountant. The auditor must determine whether any further credit
transactions (besides the six transactions identified) were concluded within the last five years.
All the amounts paid by any consumers under those credit agreements must be reimbursed. If
the Trust sold any property (which was the subject of a credit agreement), the sale value must
be reimbursed to the relevant co nsumer (this includes the amount paid by Mr Seabi to buy -
back his property). The auditor must provide a comprehensive report, regarding the consumers
identified and the refunded amounts, to the NCR within 120 days of this judgment being issued;
55.5 The Respondent [the Trust]is to pay an administrative fine of R200 000.000 into the
National Revenue fund within 30 days of this judgment being issued. . .’

[8] The Trust , aggrieved by the findings of the Tribunal, appealed to the full
court of the Gauteng Division of the High Court, Pretoria (the full court) against
the whole of the judgment and order of the Tribunal. The full court confirmed the
findings of the Tribunal, but set aside and replaced paras 55.2 and 55.4 of the
Tribunal’s order. Its order reads as follows:
‘26.1 The findings of the Tribunal are confirmed.
26.2 The sanctions in paragraphs 55.1, 55.3, 55.5 and 55.6 are confirmed .
26.3 The sanction in paragraph 55.2 is set aside an d replaced with the following:
“The six credit transactions referred to in the papers entered into between consumers and the
Trust are declared reckless. All the consumer’s obligations in terms of these agreements are set
aside. All the consumers are to be reimbursed with all payments made to the Trust in terms of
7

those transactions. The auditor is to in his/her report set out comprehensively what amounts
are to be repaid to the consumers.”
‘26.4 The sanction in paragraph 55.4 is set aside and replaced with the following:
“The Tribunal further orders that the Respondents [The trustees] appoint an independent
auditor at its own cost within 30 days of the issuing of this judgment. The auditor must be
registered as a Chartered Accountant. The auditor must investigate whether any further similar
transactions (besides the six transactions identified) were concluded within the last five years
from the date of the Tribunal’s finding. The auditor must within 120 days sub mit a
comprehensive report regarding such transactions and the amounts that could be reimbursed to
the Regulator for assessment and referral to the Tribunal for a decision as to whether such
transactions constituted reckless credit and whether reimbursement would be just and
equitable. ”’

[9] Leave to appeal to this Court was granted by the full court on 10 August
2023 . The primary issue to be considered is whether the impugned transactions
constitute credit agreements as defined in s 8(1)( b) read with s 8(4)( f) of the NCA,
and secondly whether they were disguised or simulated agreements, which were
concluded on such terms so as to avoid the provisions of the NCA.

The legislative regime
[10] Section 8(1) (b) of the NCA , provides as follows:
‘Credit agreements
(1) Subject to subsection (2), an agreement constitutes a credit agreement for the purposes of
this Act if it is -
….
(b) a credit transaction, as described in subsection (4) .’
Whereas s 8(4)(f), provides as follows:
‘(4) An agreement, irrespective of its form but not including an agreement contemplated in
subsection (2), constitutes a credit transaction if it is -
….
(f) any other agreement, other than a credit facility or credit guarantee, in terms of which
payment of an amount owed by on e person to another is deferred, and any charge, fee or interest
8

is payable to the credit provider in respect of -
(i) the agreement; or
(ii) the amount that has been deferred.’

[11] Section 8(2) (b) of the NCA, provides as follows:
‘(2) An agreement, irrespective of its form , is not a credit agreement if it is -
(b) a lease of immovable property ;’ (Emphasis added.)
In terms of s 2 of the NCA, its provisions are to be interpreted ‘in a manner that
gives effect to the purposes set out in section 3.’
Section 3 of the NCA describes its main purposes , which are:
‘…to promote and advance the social and economic welfare of South Africans, promote a fair,
transparent, competitive, sustainable, responsible, efficient, effective and accessible credit
market and industry, and to protect consumers, by -
(a) promoting the development of a credit market that is accessible to all South Africans, and
in particular to those who have historically been unable to access credit under sustainable
market conditions;
(b) ensuring consistent treatment of different credit products and different credit providers;
(c) promoting responsibility in the credit market …’

[12] The Trust contended that the Regulator ignored the circumstances under
which each of the individuals to the impugned transactions required finance. The
complainants were in some kind of financial distress and could not get loans
through conventional credit providers. Mr Seabi required funding to make
payments for his motor vehicle and his children's private boarding school fees.
He signed the Deed of Sale and arranged bridging finance to obtain a loan pending
the transfer of the property. Ms Slabbert was ex perienced in property transactions
and required funds to purchase a flat that was up for auction the following week.
She was well versed on the nature of the transactions involved in a sale agreement
as opposed to an agreement of loan, and had, according to her, written a book on
the NCA.

9

[13] The Trust contended that M r Seabi and Ms Slabbert could not have
intended to disguise the transactions that they considered to be loan agreements
as sale and lease agreements when, according to them, they did not believe that
the transactions they were concluding purported to be sale and lease agreements.
Thus , the Trust submitted, the common intention of the parties to disguise the true
nature of the agreements is absent. If the version of the complainants is accepted,
then there was clearly no intention on the part of the complainants to disguise the
transaction s.

[14] The Trust provided comprehensive details in its answering affidavit in
relation to the negotiations it had with both Mr Seabi and Ms Slabbert leading up
to the sale and transfer of their respective properties. This evidence was not
disputed. In each case, the properties sold to the Trust were transferred to and
registered in to the name of the Trust. The transfers were enabled by conveyancers
who required Mr Seabi's and Ms Slabbert's full participation in the transfer
process . This would have included submitting the title deed of the property to be
transferred and obtaining their signatures for the relevant transfer documents .

[15] The Regulator contended that there are several features of the impugned
transactions that are convoluted and peculiar, and which make no commercial
sense unless the impugned transactions were credit agreements in disguise,
namely:
(a) None of the lease agreements require payment of a deposit ;
(b) The sale agreements do not make provision for any suspensive conditions
for the manner and time within which to secure finance for the purchase price of
the property ;
(c) The purchase price of the property was far below the market value of the
property and corresponded to the amount the seller wished to borrow from the
Trust ;
10

(d) The risk did not pass to the Trust and the sellers retained possession of the
property and had to keep the property insured ;
(e) The Trust used advertising materials that offered consolidated loans for
homeowners to attract customers ;
(f) There was no justification for the lease of the properties or the calculation
of rental apart from the amount allegedly 'borrowed' from the Trust ;
(g) A comparison of the impugned transactions to a genuine sale agreement
reveal s striking differences, in particular, differences relating to payment clauses
and estate agent commission clauses .

[16] According to the Trust, each one of these 'features' of the impugned
transactions have an appropriate explanation:
a) It is not unusual for a deposit not to be included when the purpose of a
deposit is generally to provide security for damages to the leased property and/or
security for outstanding rental owed in respect of the leased property. If the lessor
was satisfied that a lessee w ould not damage the property and/or w ould pay rental
on time, a lessor may conclude that no deposit was necessary. The sellers of the
propert ies were already in occupation thereof and it would be unusual to require
a deposit in such circumst ances;
b) The transactions were structured as cash sales and thus there was no reason
to include any suspensive conditions;
c) In relation to the purchase price being substantially below the market value
of the property:
i) There was no corroborating evidence of the true market value of any of the
properties ;
ii) The Regulator relied upon the unsigned and disputed letter from an estate
agent attached to Ms Slabbert's complaint ;
iii) There were sound commercial reasons why the Trust would purchase
properties below market value, and why a seller would be prepared to sell their
11

property for a discounted price. Where a cash sale is certain, and the seller is in
urgent need of funds, and is not willing to delay the sale of their property to obtain
an uncertain higher price, or where the seller is given an option to re -purchase the
property, and where a purchaser is prepared to allow the seller to remain in
occupation after the sale, such benefits have a monetary value that could justify
a reduced purchase price.
d) Risk in the property did pass to the Trust. There was an agreement
containing all the material terms and there were no unfulfilled suspensive
condition s;
e) The Trust denied that they utilised any advertising materials to attract
customers and do not employ any agents on its behal f;
f) There was nothing peculiar in requiring a lessee or a seller of property who
is remaining in occupation thereof to pay the homeowner insurance premium.
All of these factors , the Trust submitted, compel one to arrive at the conclusion
that there was no intention on the part of both parties to simulate the transactions.

Legal Principles
[17] The proper approach to interpretation of contracts has been well
established by this Court. In the oft -quoted matter of Natal Joint Municipal
Pension Fund v Endumeni Municipality ,11 the process of interpretation was
defined as : ‘. . .[t]he process of attributing meaning to the words used in a document… having
regard to the context provided by reading the particular provision or provisions in the light of
the document as a whole and the circumstances attendant upon its coming into existence …
Whatever the nature of the document consideration must be given to the language used in the
light of the ordinary rules of grammar and syntax; the context in which the provision appears;
the apparent purpose to which it is directed and the material known to those res ponsible for its
production. Where more than one meaning is possible each possibility must be weighed in the

11 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA).
12

light of all these factors.’12

[18] In Zandberg v Van Zyl ,13 this Court stated :
‘Now, as a general rule, the parties to a contract express themselves in language calculated
without subterfuge or concealment to embody the agreement at which they have arrived. They
intend the contract to be exactly what it purports; and the shape which it assumes is what they
meant it should have. Not infrequently, however (either to secure some advantage which
otherwise the law would not give, or to escape some disability which otherwise the law would
impose), the parties to a transaction endeavour to c onceal its real character. They call it by a
name, or give it a shape, intended not to express but to disguise its true nature. And when a
Court is asked to decide any rights under such an agreement, it can only do so by giving effect
to what the transacti on really is ; not what in form it purports to be. The maxim then applies
plus valet quod agitur quam quod simulate concipitur . . . The Court must be satisfied that there
is a real intention, definitely ascertainable, which differs from the simulated intent ion. For if
the parties in fact mean that a contract shall have effect in accordance with its tenor, the
circumstances that the same object might have been attained in another way will not necessarily
make the arrangement other than it purports to be. The inquiry, therefore, is in each case one
of fact, for the right solution of which no general rule can be laid down .’14[emphasis added]

[19] There is nothing impermissible about arranging one’s affairs so as to evade
the provisions of the NCA. As held in Commissioner of Customs and Excise v
Randles Brothers and Hudson Ltd15
‘A transaction is not necessarily a disguised one because it is devised for the purpose of evading
the prohibition in the Act. . . A transaction devised for that purpose, if the parties honestly
intend it to have effect according to its tenor, is interpreted by the Courts according to its tenor,
and then the only question is whether, so interpreted, it falls within or without the prohibition.
…
A disguised transaction in the sense in which the words are used above is something

12 Ibid para 18.
13 Zandberg v Van Zyl (Zandberg ) 1910 AD 302 .
14 Ibid at 309; Skjelbreds Rede ri A/S and Others v Hartless (Pty) Ltd 1982 (2) SA 710 (A) at 733A -E; Roshcon
(Pty) Ltd v Anchor Auto Body Builders CC [2014] ZASCA 40; [2014] 2 All SA 654 (SCA); 2014 (4) SA 319
(SCA) paras 35 -37.
15 Commissioner of Customs and Excise v Randles Brothers and Hudson Ltd (Randles Brothers) 1941 AD 369 .
13

different. In essence it is a dishonest transaction: dishonest, in as much as the parties to it do
not really intend it to have, inter partes the legal effect which its terms convey to the outside
world. The purpose of the disguise is to deceive by concealing what is the real agreement or
transaction between the parties. The parties wish to hide the fact that their real agreement or
transaction falls within the prohibition or is subject to the tax. . . Such a transaction is said to
be in fraudem legis and is interpreted by the Courts in accordance with what is found to be
the real agreement or transaction between the parties.’16

[20] In Roshcon (Pty) Ltd v Anchor Auto Bodybuilders CC (Roshcon) ,17 Wallis
JA explained:
‘On the other hand the law permits people to arrange their contractual or business affairs so as
to obtain a benefit for themselves that a different arrangement would not permit or so as to
avoid a prohibition that the law imposes. That principle was laid d own in Dadoo Ltd and others
v Krugersdorp Municipal Council , where Innes CJ said:
“. . . parties may genuinely arrange their transactions so as to remain outside [a statute’s]
provisions. Such a procedure is, in the nature of things, perfectly legitimate.” ’18

[21] This brings me to the simulation argument. Wallis JA in Roshcon, stated
as follows:
‘Whether a particular transaction is a simulated transaction is therefore a question of its
genuineness. If it is genuine the court will give effect to it and, if not, the court will give effect
to the underlying transaction that it conceals. And whether it is genuine will depend on a
consideration of all the facts and circumstances surrounding t he transaction.’19

[22] In CSARS v NWK Ltd,20 Lewis JA held that:
“In my view the test to determine simulation cannot simply be whether there is an intention to
give effect to a contract in accordance with its terms. Invariably where parties structure a

16 Ibid at 395 -396.
17 Roshcon (Pty) Ltd v Anchor Auto Body Builders CC [2014] ZASCA 40; [2014] 2 All SA 654 (SCA); 2014 (4)
SA 319 (SCA) .
18 Ibid para 26 .
19 Ibid para 27.
20 Commissioner for the South African Revenue Service v NWK Ltd (NWK) ZASCA 168; 2011 (2) SA 67
(SCA); [2011] 2 All SA 347 (SCA); 73 SATC 55.
14

transaction to achieve an objective other than the one ostensibly achieved they will intend to
give effect to the transaction on the terms agreed. The test should thus go further, and require
an examination of the commercial sense of the transaction: of it s real substance and purpose.
If the purpose of the transaction is only to achieve an object that allows the evasion of tax, or
of a peremptory law, then it will be regarded as simulated. And the mere fact that parties do
perform in terms of the contract d oes not show that it is not simulated: the charade of
performance is generally meant to give credence to their simulation.”21

[23] Wallis JA explained in Roshcon that Lewis JA’s judgment in NWK had
been misinterpreted. He referred to Lewis JA’s statement that ‘ (i)f the purpose of
the transaction is only to achieve an object that allows the evasion of tax, or of a
peremptory law, then it will be regarded as simulated .’ This statement had been
interpreted to mean that any and all contractual arrangements that enable the
parties to avoid tax or the operation of some law would be seen as simulated. This
was contrary to the position establi shed in Zandberg (referenced above) that:
“The inquiry, therefore, is in each case one of fact, for the right solution of which no general
rule can be laid down”.22

[24] Both Wallis JA in Roshcon and Lewis JA (in Sasol Oil Proprietary Limited
v The Commissioner for the South African Revenue Service )23found that the
judgment in NWK did not change the law. As Lewis JA stated:
‘. . . .[I]t pointed out merely that in order to establish simulation one could not look only at the
terms of the disputed transaction. And it suggested that simulation was to be established not
only by considering the terms of the transactions but also th e probabilities and the context in
which they were concluded.’24


21 Ibid para 55 .
22 Op cit fn 17 para 35.
23 Sasol Oil Proprietary Limited v The Commissioner for the South African Revenue Service (Sasol) [2018]
ZASCA 153; [2019] 1 All SA 106 (SCA); 81 SATC 117 para 59; 2018 JDR 1953 (SCA).
24 Ibid para 59 .
15

[25] Wallis JA concluded in Roshcon that ‘[t]he position remains that the court
examines the transaction as a whole, including all surrounding circumstances, any unusual
features of the transaction and the manner in which the parties intend to implement it, before
determining in any particular case whether a transaction is simulated. ’25 To succeed in
proving a simulation, the parties must have intended when entering into the
agreements of sale and lease to do so ‘on terms other than those set out in the
scheme.’26

[26] In CIR v Conhage (Pty) Ltd27 Hefer JA confirmed that ‘a taxpayer must
show on a balance of probabilities that the agreements reflect the actual intention
of the parties. . . ’28 The facts in Conhage are very similar to those in the present
case. The reasoning and conclusion of this Court there is, therefore , of great
assistance in dealing with the present matter. Conhage (formerly Tycon) required
capital to expand its business. Firstcorp Merchant Bank Ltd (FirstCorp) agreed to
make funds available through the conclusion of sale and leaseback agreements.
The parties were aware that certain tax benefits would result from those
agreements and they were concluded. In terms thereof, Tycon sold some of its
equipment to Firstcorp . It then leased the equipm ent from Firstcorp for a set time
with an option to renew. The Commissioner contended that the sale and leaseback
agreements were simulated and were loans. The Commissioner disputed Tycon ’s
right to deduct the rentals paid in terms of the leaseback agreements as
expenditure in the production of income under s 11(a) of the Income Tax Act. He
submitted that, despite the form of the agreements, Tycon did not , in fact, sell its
equipment and lease it back, but took a loan in the amount of the purchase price
from Firstcorp. The Commissioner conceded that the parties had not acted in

25 Op cit fn 17 para 37.
26 Commissioner, South African Revenue Service v Bosch & Another [2014] ZASCA 171; 2015 (2) SA 174
(SCA); [2015] 1 All SA 1 (SCA); 77 SATC 61 para 41 .
27 Commissioner for Inland Revenue v Conhage (Pty) Ltd (formerly Tycon (Pty) Ltd) (Conhage )[1999] ZASCA
64; 1999 (4) SA 1149 (SCA) .
28 Op cit fn 23 para 54.
16

fraudem legis by deliberately disguising their transactions. The Commissioner
argued that the agreements should not be applied according to their tenor as:
‘. . .although Tycon and Firstcorp might honestly have believed that it would be sufficient to
go through the formality of concluding that kind of agreement in order to procure tax benefits
for themselves, they had no real intention to enter into agreements of s ale and leaseback.’29

[27] The question posed in Conhage was what did the parties genuinely intend.
Did they genuinely intend ownership of the equipment to pass upon conclusion
of the agreement s? If not, the agreements would have been simulat ed and
concluded in order to unlawfully evade tax. The evidence demonstrated that the
parties did intend to conclude the sale and leaseback agreements , and intended to
pass tran sfer of the equipment and acted in terms of the agreements. This was not
contradicted by the Commissioner. Tycon contended that it was not unusual for
certain provisions to be specified in a sale and leaseback agreement which are not
typical in a usual contract of sale or lease .

[28] These facts align with those in the present case. For the Court to determine
the real intention of the parties and whether an agreement is simulated, it must
first be satisfied, on the available and admissible evidence, that there was some
unexpressed or tacit agreement between the parties , which was not reflected in
the agreement. In the case of a simulated agreement, such as that contended for
by the Regulator in the present matter , the parties to the impugned transactions
must have agreed to and intended two things, namely that (i) their transaction is
in reality a loan agreement and (ii) they will either frame or disguise their
transaction to appear to be a sale and leaseback agreement .30 ‘The court must
make a finding of a real intention, definitely ascertainable which differs from the
simulated intention found in the tenor of the agreement. ’31

29 Op cit fn 27 at 1156F -G.
30 Op cit fn 16 at 396 .
31 Op cit fn 13 at 309 .
17


[29] An important corollary of these principles is that if the Court concludes, on
the available and admissible evidence, that one of the parties genuinely intended
to conclude a contract of type ‘X’ and did not intend to disguise it as a contract
of type ‘Y’ then there can be no finding of simulation.32

[30] For the impugned transactions to be brought within the ambit of s 8(1) (b)
read with s 8(4) (f) of the NCA, the transaction must provide for the deferral of
the amount owed by one party to another and payment of a charge, fee or interest
in respect of the agreement or the amount that is deferred.

[31] A review of the disputed transactions shows that they do not create, reflect,
or suggest any legal obligation for the individuals to repay the property's purchase
price to the Trust. Instead, the transactions merely grant an option to purchase the
property , which may be exercised by the individual if certain conditions are met.
Accordingly, there is no basis to conclude that any of the disputed transactions,
on their face are simulated and qualify as credit agreements as defined in s 8 of
the NCA.

Relief
[32] The Regulator was seeking wide -ranging and final relief in motion
proceedings before the Tribunal. There was no confirmatory evidence from either
of the complainants . Nor did the Regulator deliver a replying affidavit in response
to the Trust's answering affidavit . No oral evidence was led by the Regulator . In
the absence of supporting evidence on the papers, the Tribunal/Regulator should
have summonsed the complainants to give oral testimony . The content of Mr
Seabi's and Ms Slabbert's complaints , on their own, did not support a conclusion

32 Absa Ltd v Moore [2015] ZASCA 171 ; 2016 (3) 97 (SCA) para s 26-27; Op cit fn 2 3 paras 144-145.
18

of simulation. At best for them, they were each misled as to the legal nature and
import of the impugned transactions.

[33] On the well -known principle cited in Plascon Evans (TVL) Ltd v Van
Riebeeck Paints (Pty) Ltd , 33 in seeking final relief the Trust’s version must be
accepted and as it was not far -fetched, inherently improbable, or capable of being
dismissed on the papers alone. It was submitted by the Trust that when the
cumulative factors are taken into account , there was no evidential basis for the
Tribunal or the full court to conclude, on a balance of probabilities, that the
impugned transactions were simulated credit agreements.
[34] The Regulator sought , and the Tribunal granted , the same relief in respect
of the six other transactions, which the Trust volunteered it had concluded on
similar terms and conditions with other sellers. In the case of those transactions,
there is absolutely no evidence of those individuals' intentions regarding the
conclusion of those transactio ns.

[35] The individuals who were the contracting parties in the other transactions
did not deliver any complaints to the Regulator and were not parties to the
proceedings before the Tribunal. There was, thus, no evidence to dispute the
Trust's contentions in its answering affidavit regarding the other transactions.

[36] In the absence of such evidence, neither the Tribunal nor the full court w as
in a position to determine that they were simulated or tainted in any way. For all
of these reasons, the Regulator has failed to show that the impugned agreements
were disguised credit agreements, which fell to be set aside. The appeal must
therefore succeed.


33 Plascon -Evans Paints (TVL) Ltd. v Van Riebeck Paints (Pty) Ltd. [1984] ZASCA 51; [1984] 2 All SA 366
(A); 1984 (3) SA 623; 1984 (3) SA 620 para 55.
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[37] The following order is made:
1 The appeal succeeds with costs including the costs of two counsel where
so employed.
2 The order of the full court is set aside and replaced with the following:
‘1 The judgment and order of the second respondent
is set aside .
2 The first respondent is ordered to pay the costs of the appeal
including costs occasioned by the employment of two counsel. ’

_______________________
S E WEINER
JUDGE OF APPEA L



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Appearances

For the appellants: N Redman SC with E Fasser
Instructed by: B Karolia Inc
Cape Town
Webbers Attorneys , Bloemfontein .

For th e respondent: M Makgato with V Qithi
Instructed by : Lebethe Attorneys & Associates Inc,
Johannesburg
MM Hattingh Inc , Bloemfontein .