IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case No: 7274A/2011
In the matter between:
HERMAN CLOETE Appellant
and
ZIMELE SONKE BUSINESS CONSULTING (PTY) LTD Respondent
Neutral citation: Cloete v Zimele Business Consulting (Case No: 7274A/2011)
[2025] ZAWCHC…(18 September 2025)
Coram: FORTUIN J, LEKHULENI J et NZIWENI J
Heard: 25 July 2025
Delivered: Electronically on 18 September 2025
Summary: Company law - Sale of shares agreement - Respondent failing to pay
selling price – Appellant suing respondent for breach of contract -Trial court granting
absolution from the instance – Test for absolution from the instance restated - Trial
court misdirecting itself - Appeal upheld - Matter referred to the trial court for
continuation.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
LEKHULENI J: (FORTUIN et NZIWENI JJ Concurring)
Introduction
[1] This appeal is directed against the whole judgment and order of the court a
qou, handed down on 03 August 2023, in which the court granted absolution from
the instance in favour of the respondent at the closure of the appellant’s case. The
appeal is with leave from the court a quo, granted on 03 October 2024. The
appellant was the plaintiff at the court a quo and was a single witness for the
plaintiff’s case. At the end of his testimony, counsel for the appellant closed the
plaintiff’s case.
[2] Subsequent thereto, the respondent’s counsel applied for absolut ion from the
instance. The appellant opposed the application; however, the trial court found that
the appellant did not discharge his duty or, at the very least, failed to present a prima
facie case against the respondent. The trial court found that from t he evidence, it
was clear that the relationship between the appellant and the directors of the
respondent had soured and that the appellant may well have succeeded in different
circumstances. Having considered the matter, the trial court granted absolution from
the instance with no order as to costs. It is this order that the appellant seeks to
assail in this court.
The background facts
[3] For the sake of clarity, it is worth noting that on 12 July 2012, Zimele Sonke
Technologies and the present respondent (Zimele Sonke Business Consulting (Pty)
Ltd), concluded a sale of business agreement in terms of which Zimele Sonke
Technologies sold its business to the respondent as a going concern. Zimele Sonke
Technologies ceded to the respondent al l its incorporeal rights. The respondent,
Zimele Sonke Business Consulting, assumed liability for Zimele Sonke Technologies
and undertook to discharge the assumed liabilities in accordance with the terms of
the agreement. For all intents and purposes, the respondent in this judgment refers
to Zimele Sonke Business Consulting (Pty) Ltd , a ce ssionary of Zimele Sonke
Technologies.
[4] The facts relevant to the determination of this appeal are largely undisputed.
To the extent necessary, I will summarise the evidence led at the trial and will not
repeat the evidence verbatim. The plaintiff testified that he studied together with one
Thando Mjebeza (Mr Mjebeza) at the University of the Western Cape, and they
became close friends as they had similar business interests. They were both
passionate about black economic empowerment. At that time, the appellant had
approximately 10 years’ experience in the IT field. The appellant and Mr Mjebeza
decided to start an IT company named Zimele Sonke Technologies, which later
ceded its rights to Zimele Sonke Business Consulting, specialising in software
development. The company was registered on 6 April 2004, with a board consisting
of five directors. Following the company's formation, three directors resigned shortly
thereafter, leaving the appellant and Mr Mjebeza as the remaining directors.
[5] The appellant took on the role of technical expert within the company. At the
same time, Mr Mjebeza became the company’s networking specialist, leveraging his
extensive contacts. The company flourished and experienced a massive growth
curve. The appellant testified that they got big contracts involving the City of Cape
Town and Pick and Pay. Unfortunately, for their newly formed company, the appellant
fell in love with somebody who resided in Spain and had to relocate to Spain. As a
result, t he appellant an d Mr Mjebeza, after intense discussions and negotiations,
agreed that the appellant would sell his shares to the company and that Mr Mjebeza
and a newly appointed director, Sias Rafusa, would take over the directorship of the
company.
[6] To place value on the appellant’s shares, the parties agreed that an evaluation
of the company must be done. Mr Mjebeza, who acted as the chief financial officer of
of the company must be done. Mr Mjebeza, who acted as the chief financial officer of
the company, instructed an accountant of the respondent to attend to the valuation of
the company without any input from the appellant. The parties later engaged the
services of two independent valuators, who assessed the value of the appellant’s
shares at more than R1.2 million. Subsequently, the parties agreed on a fair value of
R1.2 million for the appellant’s shares.
[7] Thereafter, the appellant sourced a template of a sale of shares agreement
from the internet, which they could use to facilitate the sale of shares. The appellant
asserted that they made some amendments to the template and added some
clauses to suit their needs. Mr Mjebeza, who rep resented the company, made
certain amendments, and the appellant signed the written agreement at the offices of
the respondent in Cape Town on 08 October 2008. As foreshadowed above, the
parties agreed that the appellant would be paid the sum of R1.2 million for the fair
value of his shares in the company. Payment was to be effected in monthly
instalments of R50 000 per month as from 01 November 2008.
[8] Upon signature of the sale agreement on 01 November 2008, the appellant
resigned as a director of the respondent. Despite resigning from the company and no
longer holding an official position, the appellant continued to work online on various
tasks to assist the respondent. He acted as an external consultant for the company
on various projects, though he did not perform these duties in a capacity of a
director. His contributions were made on a pro bono basis, and he did not receive
any compensation for his efforts. He rendered these services freely, aiming to ensure
that the knowledge would be transferred to the person who would take his position in
the company.
[9] The appellant contended that it was mutually agreed that Mr Mjebeza, acting
on behalf of the respond ent, would be responsible for preparing all the requisite
documentation to finalise the sale agreement in compliance with the Companies Act
1973. Furthermore, he would engage third parties to assist in ensuring adherence to
the provisions of the Act.
[10] The appellant further asserted that he signed all the necessary documents
required to effect the sale of his shares to the company, including the security
transfer form. Additionally, Mr Mjebeza provided him with documents to sign,
transfer form. Additionally, Mr Mjebeza provided him with documents to sign,
confirming compliance w ith sections 85(3) and 85(4) of the Companies Act 1973.
These documents indicated that the company would still be able to pay its debts as
they become due in the ordinary course of business, even after the payment for the
shares. The appellant stated that all necessary documents and processes to
facilitate the sale of his shares to the company were complied with.
[11] The appellant stated that after finalising the sale agreement with the
respondent, the respondent only paid him R30,000 as the first instalment instead of
the agreed R50,000. He demanded payment in terms of the contract to no avail.
Despite the respondent's failure to fulfil the payment obligations outlined in the
written agreement, it was observed that the two directors of the responde nt
subsequently proceeded to each acquire a Land Rover vehicle. Later, when the
appellant demanded payment according to their agreement, Mr Mjebeza informed
the appellant that the respondent was facing financial cash flow issues. Furthermore,
Mr Mjebeza informed the appellant that the South African Revenue Services claimed
the sum of approximately R1 million from the respondent in respect of Value Added
Tax, and for non-payments of Unemployment Insurance Fund.
[12] According to the appellant, any liabilit y owed by the respondent did not fall
under the warranty provided by the appellant in the sale agreement. The appellant
further stated that after he signed the securities transfer form, he resigned as a
director. Mr Mjebeza informed him that he would engage a third party and make sure
that all the necessary documents to effect the sale of the shares to the company
would be complied with. The board of directors passed a resolution on 01 November
2008, approving the resignation of the appellant as director of the respondent and
accepting the appointments of other directors.
[13] In addition, the remaining directors signed a document confirming that the
company had acquired shares according to section 85(2) of the Companies Act
1973, from the appellant in the amount of 57 shares back to the company.
Furthermore, the appellant asserted that directors also signed a confirmation
Furthermore, the appellant asserted that directors also signed a confirmation
envisaged in section 85(4) of the Companies Act 1973, that the company would,
after payment of the shares, still be able to pay its debts as they become due in the
ordinary course of business. The appellant asserted that all the necessary provisions
in terms of the Companies Act 1973 , were complied with to effect the sale. The
appellant prayed that judgment be granted in hi s favour as prayed for in the
summons.
Applicable legal principles
[14] As explained above, at the end of the appellant’s case, Mr Holland, counsel
for the respondent, applied for an order absolving the respondent from the instance.
The application was predicated on the grounds that there was no evidence
presented that a solvency and liquidity test was done before the sale of shares
agreement was concluded. Furthermore, Mr Holland premised his application on the
fact that there was no res olution to support the sale of shares to the company, nor
was such a resolution registered with the CIPC. Ms Brown, counsel who appeared
for the appellant at the trial, opposed the application and submitted that the evidence
adduced by the appellant was su fficient to avert the granting of absolution from the
instance.
[15] Having heard the argument on the matter, the trial court granted an order of
absolution from the instance. Subsequently, the court furnished its reasons in writing
in terms of Rule 49(1)(c) of the Uniform Rules of Court.
[16] I must emphasise that the test for absolution from the instance at the closure
of the plaintiff’s case is well established in our law. The test to be applied is not
whether the evidence led by the plaintiff established what would finally be required to
be established, but whether there is evidence upon which a court, applying its mind
reasonably to such evidence, could or might (not should or ought to) find for the
plaintiff. (Claude Neon Lights (SA) Ltd v Daniel 1976 (4) SA 403 (A ); See also
Couldridge v Eskom and Another 1994 (1) SA 91 (SE) at 95E.
[17] In determining the question whether the defendant's application for absolution
from the instance should be granted, it is not whether the evidence adduced by the
plaintiff required an answer, but whether such evidence holds the possibility of a
finding for the plaintiff: put differently, whether a reasonable Court can find in favour
of the plaintiff. At the absolution stage, the inference contended for by the plaintiff
of the plaintiff. At the absolution stage, the inference contended for by the plaintiff
need not be the most probable, but only a reasonable inference. The plaintiff's
evidence should consequently, at the absolution stage, hold a reasonable possibility
of success for him, and should the court be uncertain whether the plaintiff's evidence
has satisfied this test, absolution ought to be refused. (See Build-A- Brick BK en ‘n
Ander v Eskom 1996 (1) SA 115 (O) 123-C-D / 128J).
[18] Crisply, t he plaintiff must provide sufficient evidence relating to all the
elements of the claim to avert a ruling of absolution from the instance at the end of
the plaintiff's case. Importantly, if certain facts in issue are within the knowledge of
the defendant, the court should ta ke that into account and more readily refuse to
grant absolution from the instance. A defendant who might be afraid to go into the
witness box should not be permitted to shelter behind the procedure of absolution
from the instance. (Supreme Service Station (1969) (Pty) Ltd Fox and Goodridge
(Pty) Ltd 1971 (4) SA 90 (RA) at 93G).
Discussion
[19] For clarity’s sake , I will first examine the trial court's ruling regarding the
granting of absolution in light of the principles mentioned above. Thereafter , I will
proceed to determine if the appellant has adduced sufficient evidence to avert an
award for absolution from the instance.
[20] It is trite law that a court of appeal should be slow to interfere with the findings
of fact of the trial court in the absence of material misdirection. (R v Dhlumayo and
Another 1948 (2) SA 677 (A) at 705 -706). An appeal court’s powers to interfere on
appeal with the findings of fact of a trial court are limited. S v Francis 1991 (1) SACR
198 (A) at 204E.
[21] In the absence of a demonstrable and material misdirection by the trial court,
its findings of fact are presumed to be correct. They will only be disregarded if the
recorded evidence shows them to be clearly wrong. When a n appeal is lodged
against the trial court’s findings of fact, the appeal court should consider the fact that
the trial court was in a more favourable position than itself to form a judgment ,
because it was able to observe the witnesses during their questi oning and was
because it was able to observe the witnesses during their questi oning and was
absorbed in the atmosphere of the trial. (S v Monyane and Others 2008 (1) SACR
543 (SCA) para 15). The Supreme Court of Appeal in S v Naidoo and Others 2003
(1) SACR 347 (SCA) at para 26, reiterated this principle as follows:
‘In the final analysis, a court of appeal does not overturn a trial court’s findings of
fact unless they are shown to be vitiated by material misdirection or are shown by
the record to be wrong.’
a. The trial court’s findings
[22] In the present matter, I must emphasise at the outset that the findings of the
trial court are not supported by the facts and the evidence that w as presented during
the trial proceedings. Accordingly, the trial court made erroneous findings of fact .
This troubling disconnection raises serious questions on the soundness of the
conclusion drawn by the court a quo. I do not intend to deal with all the misdirection
committed by the court a quo; however, the discussion that follows is sufficient for
the order I propose herein below.
[23] The court a quo found in its ruling that the agreement between the parties was
verbal and that the appellant testified that the sale of shares agreement was not
signed. To this end, the trial court found that there are inherent risks that come with
verbal agreements and non-compliance with statutory provisions. This finding, with
respect, is diametrically at variance with the evidence that was placed before the trial
court. The conclusion of the written sale agreement was admitted by the respondent
in the plea. It was also not in dispute even during the trial.
[24] The appellant testified that he acquired a template from the internet, which he
subsequently modified to serve as a guide for their agreement. They incorporated
the necessary amendments to the template to suit their needs. A copy of the signed
written agreement was attached to the appellant’s summons and was marked
annexure POC1 and was exhibited in court during the evidence of the appellant. The
appellant was not challenged during cross-examination on this evidence.
[25] In addition, the appellant testified that the parties signed the agreement on 1
November 2008, and a few days thereafter, certain amendments were made at the
November 2008, and a few days thereafter, certain amendments were made at the
request of Mr Mjebeza, which were effected and initialled by the parties. It is worth
noting that the evidence regarding the conclusion and the signing of this agreement
was not challenged or refuted by the respondent during cross -examination, even in
the plea. Moreover, it was admitted during the hearing that the parties agreed on
R1.2 million for the shares of the appellant, as specified in paragraph 2.1.4 of the
sale of shares agreement. Cl early, the court a quo erred when it found that the
agreement was verbal and that there are inherent risks in verbal agreements.
[26] The court a quo also found that the appellant sought to rely on email
correspondence between him and Mr Mjebeza. This fi nding is at odds with the
evidence presented at the trial. As correctly pointed out by Mr Rysbergen, counsel
for the appellant, on the proper interpretation of the pleadings, the conclusion of the
written sale of shares agreement and the terms thereof is not in dispute, nor was it in
dispute that payment in respect of the shares was not made in full.
[27] In paragraph (a) of the respondent’s plea, the respondent asserted that at the
time when the sale of shares agreement was entered into, and immediately
thereafter, the respondent was not liquid, its liabilities exceeded its assets, and the
respondent was trading from a f actually insolvent position. Ostensibly, from the
respondent’s plea, the agreement was not disputed. Furthermore, the evidence of
the appellant is that the material terms of the sale of shares agreement were
breached in that payment was not made in terms o f the agreement. The only
payment made was R30,000, with no further payments made.
[28] Clearly, the appellant’s case is not only based on email correspondence. To
the contrary, the email correspondence exchanged between the appellant and Mr
Mjebeza corroborates the appellant’s version of the sale of shares agreement and
the respondent’s default for non-payment of the agreed sum of R1.2 million. In those
correspondences, the appellant demanded payment, and the appellant was informed
that the respondent wa s experiencing cash flow problems. The trial court's finding
that the respondent wa s experiencing cash flow problems. The trial court's finding
that the appellant placed significant reliance on email correspondence is
fundamentally flawed and unsupported by the facts.
[29] The trial court also found that the appellant confirmed under oa th that the sale
agreement was in fact unsigned and that the company’s articles of association did
not allow for the sale of shares. Furthermore, the court stated that the appellant
confirmed that no special resolution was passed to facilitate the sale of the shares.
As explained above, the agreement was in writing and was signed by the parties.
Moreover, the appellant testified that all the statutory requirements in terms of the
Companies Act 1973 had been met to effect the transfer of the shares. The appellant
was not challenged on this evidence. The findings of the trial court regarding these
issues are demonstrably wrong and lack support from the evidence presented. A
careful analysis of the evidence shows substantial discrepancies in the conclusions
reached by the trial court.
[30] Consequently, the Court a quo's finding that the appellant did not present at
the very least prima facie evidence against the respondent, and that his evidence
was unsupported by the agreement he relied on, entirely disregards the undisputed
evidence the appellant presented before it. This analysis fails to adequately consider
the unchallenged evidence adduc ed by the appellant at the trial . As foreshadowed
above, I firmly believe that the trial court made significant errors in its factual
findings. The conclusions reached by the court a quo are inconsistent with the
evidence presented, as well as with the ple adings submitted by the parties. The
disconnection between the trial court’s conclusions and the evidence presented is
not only disconcerting but fundamentally vitiates the ruling it made of absolving the
respondent from the instance.
[31] I must stress again that the factual findings made by the court a quo are
clearly wrong and must be disregarded.
b. Prima facie case
[32] I turn to consider whether the appellant has produced sufficient evidence to
avert an award for absolution from the instance. From the summary of evidence
discussed above, it is common cause that the parties entered into a written sale of
shares agreement. The respondent agreed to pay the appellant the sum of R50 000
shares agreement. The respondent agreed to pay the appellant the sum of R50 000
monthly as from 01 November 2008. The respondent failed to pay the said amount
and only paid R30 000. To date, the respondent has not paid the appellant promptly
in terms of their agreement. The respondent cited non-compliance with Section 85 of
the Companies Act 1973, noting the absence of a solvency and liquidity test when
the share sale was effected.
[33] It must be stressed that in his evidence in chief and during cross -examination,
the ap pellant explained that all the required steps to facilitate the sale of shares
transaction had been complied with. Moreover, the respondent’s counsel reinforced
the appellant‘s case when he stated at the commencement of his cross -examination
that the respondent’s article of association had in fact been amended to facilitate the
sale of shares agreement and that this occurred on 17 August 2007. This aspect was
put to the appellant as a fact. In my view, it is incontestable that the article of
association of the respondent was amended to effect the sale of these shares.
[34] Additionally, from the evidence of the appellant, it is indisputable that the
parties allocated responsibilities to each other to effect the sale of the shares. To this
end, the appellant testified during cross -examination that they did everything that
had to be done in compliance with the Companies Act 1973 to permit the buyback of
shares to happen. The appellant was not challenged with this piece of evidence.
Significantly, the appellant added that Mr Mjebeza, the remaining director, promised
the appellant that he would attend to all the necessary documentation to finalise the
sale of shares in compliance with the provisions of the Comp anies Act 1973 and
engaged a third party to assist with compliance with these provisions.
[35] In this regard, after the plaintiff had resigned as a director, the remaining
directors were to sign the special resolution to effect transfer of the shares, t he
documents confirming that the respondent had a return of acquisition of shares done
in terms of section 85(2) of the Companies Act; that the remaining directors had to
sign documents in terms of section 85(4) of the Companies Act confirming that the
sign documents in terms of section 85(4) of the Companies Act confirming that the
company, after payment in respect of the shares , would be able to pay its debts as
they became due in the ordinary course of the business. The evidence of the
appellant was that these documents, in terms of section 85(2) and 85(4), were
prepared by Mr Mjebeza, and the directors signed these documents. The resolution
accepting the resignation of the appellant as a director of the respondent and
appointing new directors was also adopted by the directors of the respondent.
[36] The appellant was not chal lenged on these issues during cross -examination.
In fact, throughout the cross -examination, the version of the respondent was not put
to the appellant. Furthermore, the respondent did not, during cross -examination,
dispute or challenge the evidence presented by the appellant. The trial court failed to
consider the fact that the respondent had acknowledged the existence of a valid
written sale agreement and had performed, at least partially, in terms of the
agreement by making the initial payment of R30 000. The trial court failed to
acknowledge that the appellant testified that the directors of the respondent complied
with section 85 of the Companies Act 1973.
[37] In conclusion, from the evidence presented, the appellant clearly established
prima facie evidence at the closure of his case . At the closure of the appellant’s
case, there was evidence upon which a court might find for the appellant. In my view,
the respondent must not be permitted to shelter behind the procedure of absolution
from the instance. The registration of the resolution with CIPC falls within the
knowledge of the respondent as the appellant has formally resigned from his position
as a director within the respondent organi sation. Our courts have stressed that if
certain facts in issue are within the knowledge of the defendant, the court should
take this into account and more readily refuse to grant absolution from the instance.
(Union Government (Minister of Railways) v Sykes 1913 AD 156 at 173-4)
[38] The respondent must explain why it has not paid the appellant the amount
that the parties agreed upon. The respondent must be afforded the opportunity to
address the assertions made by the appellant during his evidence in chief,
particularly concerning the claims that Mr Mjebeza and his co -director bought
expensive luxury vehicles following the appellant's resignation. This is of particular
significance in light of the respondent's plea, which asserts that subsequent to the
significance in light of the respondent's plea, which asserts that subsequent to the
conclusion of the sale agreement, the respondent's liabilities exceeded its assets,
resulting in a state of insolvency.
c. Conclusion
[39] In the circumstances, I agree with the appellant’s counsel that the appellant
has proven that the trial court committed several material or demonstrable
misdirection in respect of its factual findings on the evidence of the appellant during
the trial. Furthermore, the appellant has proven that the court a quo erred by failing
to properly apply the principles applicable to an appli cation for absolution from the
instance at the closure of the plaintiff’s case.
Order
[40] In the result, I would propose the following order:
40.1 the appeal is upheld.
40.2 the order of the trial court granting absolution from the instance be set
aside.
40.3 the matter be referred to the trial court for continuation.
40.4 the respondent is ordered to pay costs hereof on a party and party
scale including counsel’s costs on Scale B.
___________________________
LEKHULENI J
JUDGE OF THE HIGH COURT
I agree:
_____________________________
NZIWENI J
JUDGE OF THE HIGH COURT
I agree and it is so ordered:
_____________________________
FORTUIN J
JUDGE OF THE HIGH COURT
APPEARANCES
For the appellant: Adv Rysbergen
Instructed by: MacGregor Eramus Attorneys
For the Respondent: Adv Holland
Instructed by: Maguga Attorneys