IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU NATAL DIVISION: PIETERMARITZBURG
In the matter between:
SHAUN DOUGLAS DIXON
and
LU RIST AX (PTY) LTD
SANDILE RADEBE
COMMISSIONER OF COMPANIES AND
INTELLECTUAL PROPERTY COMMISSION
ORDER
APPEAL CASE NO: AR214/24
CASE NO: D8328/2021
APPLICANT
FIRST RESPONDENT
SECOND RESPONDENT
THIRD RESPONDENT
On appeal from: KwaZulu-Natal Division, Pietermaritzburg (Laing AJ sitting as a court
of first instance):
1. The appeal is upheld.
2. The first and second respondents' cross appeal is dismissed.
3. The order made by the court a quo is set aside, and it is replaced with the
following order:
2
1. The second respondent is directed to do all things necessary to transfer
20% of his shareholding in the first respondent to the applicant;
2. The first and second respondents are directed to deliver to the applicant
the audited financial statements/accounting records of the first
respondent from 2015 to date which records shall include the bank
account statements of the first respondent for the aforementioned period;
and
3. The second respondent is directed to pay the costs of the application.'
4. The first and second respondents are ordered to pay the costs of the appeal,
the cross appeal, and the costs of the application for leave to appeal, jointly and
severally, the one paying the other to be absolved, such costs to include the costs of
consequent upon the employment of two counsel on scale C.
JUDGMENT
Pillay AJ (Mngadi J and Chithi J concurring)
Introduction
(1] This is an appeal against a judgment of Laing AJ, in which he dismissed the
appellant's application with costs. The appeal by the appellant is with leave of the court
a quo. The appellant launched the application seeking the transfer of 20% of the
shares in the first respondent and that he be provided with access to the first
respondent's financial records. The court a quo dismissed the application on the basis
that the appellant's claim had prescribed.
[2] The first and second respondents cross appealed against the conduct of the
proceedings in the court a quo as well as against certain findings made by the court a
quo.
The application for transfer of shares
3
[3] The appellant, Mr Shaun Dixon, a logistic executive, launched an application
claiming a transfer of a 20% shareholding arising from an alleged oral agreement
between himself and the second respondent, Mr Sandile Radebe. The second
respondent was at all material times the sole director of the first respondent, Luristax
(Pty) Ltd.
[4) The appellant alleged that an oral agreement was concluded on 25 January
2016, when the second respondent met with the appellant and made the offer to
transfer a 20% of his shareholding to the appellant. The only term of the oral
agreement was that the second respondent would transfer 20% of his shareholding in
the first respondent to the appellant subject to the condition that the appellant would
work for the first respondent for six months without remuneration. The appellant
accepted the offer and it was common cause that he was employed for more than six
months without having received remuneration from the respondents.
[5) It follows that ownership of the shares in question remained vested in the
second respondent and could only pass upon fulfilment of the suspensive condition
being the appellant's completion of the six months employment without remuneration.
The respondents have not disputed the appellant's claim that he would only received
his first salary in September 2016, being three months after the date when he was
supposed to have been paid his first salary. The appellant alleged that notwithstanding
the extension of the period of employment by three months, that upon completion of
the first six months, that such period constituted complete payment for the 20%
shareholding and that he complied with the terms of the oral agreement. The appellant
alleges that up until 2017, the second respondent had still not attended to transfer the
appelant's shares in the first respondent, which led the appellant to reminding the
second respondent to do what was necessary to transfer the shares to the appellant.1
second respondent to do what was necessary to transfer the shares to the appellant.1
[6] The respondents opposed the appellant's claim contending, firstly, that there
was a dispute of fact regarding the oral agreement, and that oral evidence was
required to arrive at a decision. The respondents further alleged that the appellant had
agreed to be employed for six months without remuneration because he was
1 The papers, volume 1, foundin g affidavit, paras 22 and 24, at 13.
4
embroiled in a dispute with his former employer, Grindrod. The respondents' version
was to the effect that the appellant claimed for wrongful dismissal and damages, and
that he did not want to be prejudiced in the prosecution of that claim, therefore
relinquished any payment for six months. The respondents have not explained how
the payment of remuneration would have resulted in prejudice to a claim for damages
against the appellant's previous employer. 2 There is no indication that any of the
agreements, whether that contended for by the appellant, or the consultancy
agreement alleged by the respondents was required to be reduced to writing.
[7] The respondents also contend that the discussions between the second
respondent and the appellant were only proposals for the transfer of shares and in the
event that an agreement is found to exist, that the appellant's claim had prescribed. In
response, the appellant alleged that the second respondent remained silent regarding
the content of the emails, where second respondent either expressly or tacitly
acknowledged his indebtedness to the appellant, which acknowledgment interrupted
the running of prescription in terms of s 14 of the Prescription Act 68 of 1969.
[8] This was in essence the crux of the versions placed before the court a quo. The
court a quo considered the respective versions and found that there was an agreement
that the appellant would work for six months for which he would be compensated by
the transfer of shares from the second respondent. It was clear that the appellant's
acquisition of shares was subject to the fulfilment of one suspensive condition, being
completion of six months employment without remuneration, which condition was
fulfilled and which rendered the sale complete. 3
[9] In Southern Era Resources Ltd v Frande/1, Mpati P stated: -
'In terms of the agreement the appellant undertook to furnish the guarantee for the purchase
'In terms of the agreement the appellant undertook to furnish the guarantee for the purchase
price of the mineral rights within 14 days from the date of fulfilment of the second condition.
Upon its fulfilment, the appellant thus became bound to perform its side of the bargain - to
furnish the guarantee within the time stipulated in the agreement, ie within 14 days of the
2 The papers, volume 2, answering affidavit , paras 23 and 24, at 93.
3 Southern Era Resources Ltd v Farnde/1 NO [2009) ZASCA 150; 2010 (4) SA 200 (SCA) (Southern Era
Resources Ltd).
5
fulfilment of the condition (within 14 days after 22 April 2004 ). The stipulation is an enforceable
contractual obligation ; a term of the contract. '4
[10) In arriving at the finding that an agreement was concluded, Laing AJ found that
there was no material dispute of fact regarding the oral agreement, and relied on the
following admitted facts:
(a) That the respondent discussed the transfer of 20% of his shares in the first
respondent to the appellant.
(b) That the correspondence strongly suggested there was an agreement to
transfer 20% of the second respondent's shares to the appellant.
(c) That the second respondent instructed his attorney in 2019 to prepare the
documentation to give effect to the transfer of shares.
(d) There was a request for more shares by the appellant suggesting that the
appellant already had 20% in the bag.
(e) That the respondents conceded that the appellant fulfilled what was expected
of him in his duties.
[11) The court a quo considered the Plascon Evans rule,5 by enquiring whether the
facts stated by the respondents together with the admitted facts in the applicant's
affidavit would justify an order in favour of the appellant. The court a quo rejected the
respondents denial of the agreement on the basis that it was untenable for the
respondents to claim that the appellant would not claim compensation for his services
because of his claim against his previous employer.
[12) The court took into account the respondents' version, which was to the effect
that the appellant would work for no remuneration, not only for just six months, but for
three years. The respondents' version was starkly in contrast to the common cause
facts and the email exchanges, which pointed out an unequivocal intention by the
second respondent on 20 April 2018 to always give the appellant 20% shareholding in
the first respondent.6
4 Southern Era Resources Ltd para 14.
5 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pfy) Ltd 1984 (3) SA 623 (A).
5 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pfy) Ltd 1984 (3) SA 623 (A).
6 The papers, volume 1, founding affidavit, at 16, para 33, and Annexure "E2", at 72.
6
[13] On 4 June 2018, the second respondent confirmed that he made an offer of
shares to the appellant, which is evinced from the following statement, 'Hi Shaun,
Please explain why you require a higher share than originally offered, for record
purposes. '7
[14] It was thus apparent from the agreement that there was an intention on the part
of the second respondent to transfer ownership of 20% of his shareholding and a
consequent intention on the part of the appellant to acquire such ownership.8 The
appellant's acceptance of the offer was clearly established from the moment when he
commenced employment without remuneration. From the exchange of emails, it is
also common cause that the appellant laid no claim for any remuneration for the six
months, but only persisted with his claim for the 20% shareholding.
[15] On 12 July 2019, pursuant to a meeting between the first respondent's auditor,
Mr Blaise Walker, an email was communicated to the second respondent
recommending that a shareholder's agreement be drawn up to govern the relationship
between the second respondent and the appellant as shareholders. 9
[16] It is apparent from this communication that the respondents had already
regarded the appellant as a shareholder. The shareholding agreement was meant to
formalise the agreement already reached and facilitate transfer of the appellant's
shareholding of 20%. The appellant contended in the court a quo that the signing of
the written agreement was no more than an administrative formality to record the
appellant's shareholding and to facilitate transfer of the shares from the second
respondent to the appellant. There is no dispute that Mr Walker was mandated by the
second respondent to act on behalf of the respondents and to ascertain the appellant's
complaints regarding additional shares he claimed and the appellant's employment
related issues.
[17] The appellant contended that the transfer of shares was not required to be in
[17] The appellant contended that the transfer of shares was not required to be in
writing, and that the agreement for the transfer of shares may be a tacit one or maybe
7 The papers, volume 1, founding affidavit , para 35 at 17, Annexure "E2", at 72.
8 Legator Mckenna Inc and another v Shea and others 2010 (1) SA 35 (SCA) at 44G - J.
9 The papers, volume 1, founding affidavit , Annexures "E4" and "ES", at 74 and 75.
7
inferred from the conduct of the parties.10 This is so especially in light of the second
respondent not disputing that he stated that it was always his intention to transfer 20%
of his shares to the appellant. It is clear that the parties had dispensed with the need
to have the agreement reduced to writing and there was no request prior to fulfilment
of the suspensive condition that the agreement be reduced to writing. In accepting that
the agreement was in accordance with the intention of the parties, the court decided
the application on the affidavits placed before it.
[18] I am of the view that the court a quo did not commit a misdirection in finding
that an agreement was concluded (when the suspensive condition was fulfilled), and
that the common cause facts at all material times established that ownership to the
20% shareholding was then vested with the appellant.
[19] In Fakie NO v CCII Systems (Pty) Ltd, 11 Cameron JA (as he then was)
summarised the position as follows:
'[55] That conflicting affidavits are not a suitable means for determining disputes of fact has
been doctrine in this court for more than 80 years. Yet motion proceedings are quicker and
cheaper than trial proceedings and, in the interests of justice, courts have been at pains not
to permit unvirtuous respondents to shelter behind patently implausible affidavit versions or
bald denials. More than 60 years ago, this Court determined that a Judge should not allow a
respondent to raise "fictitious" disputes of fact to delay the hearing of the matter or to deny the
applicant its order. There had to be "a bona fide dispute of fact on a material matter". This
means that an uncreditworthy denial, or a palpably implausible version, can be rejected out of
hand, without recourse to oral evidence. In Plascon-Evans Paints Ltd v Van Riebeeck Paints
(Pty) Ltd, this Court extended the ambit of uncreditwort hy denials. They now encompassed
not merely those that fail to raise a real, genuine or bona fide dispute of fact but also
not merely those that fail to raise a real, genuine or bona fide dispute of fact but also
allegations or denials that are so far-fetched or clearly untenable that the Court is justified in
rejecting them merely on the papers.
[56] Practice in this regard has become considerably more robust, and rightly so. If it were
otherwise, most of the busy motion courts in the country might cease functioning. But the limits
remain, and however robust a court may be inclined to be, a respondent's version can be
rejected in motion proceedings only if it is "fictitious" or so far-fetched and clearly untenable
10 Botha v Fick 1995 (2) SA 750 (A) (Botha v Fick) at 762.
11 Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52; 2006 (4) SA 326 (SCA).
8
that it can confidently be said, on the papers alone , that it is demonstrably and clearly unworthy
of credence. ' (Footnotes omitted .)
[20] It is apparent from the affidavits before the court a quo, that the second
respondent did not dispute that the appellant continued to receive a monthly income
of R40 000.00. Whilst the second respondent baldly denies that the appellant's first
payment was received in September 2016, such a denial, in my view is one that is
contradictory and uncreditworthy. The denial contradicts the second respondent's
communication to the appellant on 4 June 2018 where he states that the appellant
received R40 000.00 per month, plus bonuses, since the appellant joined the first
respondent.12
[21] The second respondent's version are therefore replete with contradictions and
the version presented in the answering affidavit are inconsistent with the unchallenged
email communications. Whilst the appellant disputes that he received any income for
the first nine months, the second respondent's communications make reference to an
employment relationship and not an independent contractor agreement.
[22] I am of the view that the appellant's employment is consistent with an
employment relationship in circumstances where the email exchanges between the
parties from February 2018 to July 2019 make reference to the appellant receiving a
salary and bonuses, that the appellant was employed as the Chief Operating Officer
and was represented as an appointee in terms of s 16(2) of the Occupational Health
and Safety Act 85 of 1993, for the purposes of Health and Safety legislation.13 It is
evident that during the aforesaid period the respondents fail to place in dispute the
relationship at play between the appellant and the respondents.
[23] During this period, ie between February 2018 to July 2019, when the appellant
sought to negotiate a further shareholding and formalise issues relating to his
employment, there was no express claim by the second respondent that the appellant
employment, there was no express claim by the second respondent that the appellant
12 The papers . volume 1. founding affidavit . para 37 at 17. Annexure "E2" . at 72.
13 Section 16(2) of the Occupational Health and Safety Act 85 of 1993 provides that:
'Without derogating from his responsibility or liability in terms of subsection ( 1 ), a chief executive officer
may assign any duty contemplated in the said subsection, to any person under his control , which person
shall act subject to the control and directions of the chief executive officer.'
9
was not an employee but a consultant , or that the appellant was not entitled to a salary.
The circumstances that prevailed during this intervening period was material as it
established an offer and acceptance , the fulfilment of a material condition and the
passing of ownership in the 20% shareholding. The respondents belated disputes to
the shareholding only arose on 25 January 2021 when the appellant and first
respondent had a meeting and later when the respondents engaged their attorneys on
26 March 2021. I am of the view that the belated disputes raised by the respondents
in the answering affidavits are accordingly uncreditworthy , palpably implausible , not
genuine and do not serve to assist the respondents .
[24] The respondents' version that the appellant was employed as a consultant is
also contradictory and untenable in circumstances where the respondents admit that
the appellant continued to receive a monthly income of R40 000.00 per month. The
receipt of an income is not consistent with services rendered as a consultant. The
second respondent failed to substantiate its bald claim that the appellant was
employed as a consultant for the first part of 2016, which could have been easily
demonstrated by a consultancy agreement or invoices from the appellant for
consultancy services rendered, even after the six month period.
[25] I am of the view that the respondents' version is patently far-fetched and clearly
untenable , and was correctly rejected by the court a quo , especially in light of the fact
that it was in direct contrast with the objective evidence such as the various emails,
which communicated the express and unequivocal intention of the second respondent
to pass ownership of a 20% shareholding .
The appeal
[26] The court a quo, having accepted that an agreement was concluded , was then
constrained to determine whether the appellant's claim had prescribed. The
respondents ' plea of prescription was pleaded on the basis that the appellant's claim
respondents ' plea of prescription was pleaded on the basis that the appellant's claim
would have only arisen six months later from January 2016, that being July 2016 (when
the suspensive condition was fulfilled). The respondents consequently pleaded that
prescription would have begun to run as of 1 August 2016 , and that the appellant's
claim prescribed on 31 July 2019, well before the application was launched on 14
September 2021.The court a quo upheld the plea of prescription on the basis that the
10
appellant had acquired rights to the shares, on 31 July 2016, being the date when the
obligation to deliver became due.14 It reasoned that it was at this point that the
appellant had a personal right to the shares or to their value.15 The court a quo further
found that the appellant had not acquired ownership over the shares and that the delay
in requesting delivery of the shares was detrimental to the appellant's right to exercise
control over the shares.16
[27] The court a quo held that the obligation to deliver the shares constituted a debt
in terms of the agreement between the parties17 and placed reliance on Barnett and
others v Minister of Land Affairs , 18 where the court stated that:
'Though the Act does not define the term "debt", it has been held that, for purposes of the Act,
the term has a wide and general meaning and that it includes an obligation to do something
or refrain from doing something ... Thus understood, I can see no reason why it would not
include a claim for the enforcement of an owner's rights to property'. (References omitted.)
[28] The court a quo then concluded that the appellant failed to enforce his rights to
acquire ownership of the shares from the second respondent and therefore the
appellant was not the owner of the shares, and consequently that the appellant's claim
prescribed in terms of s 12(1) of the Prescription Act.19
[29] The challenge on appeal is premised on the court a quo's finding that ownership
requires delivery, and consequently that the court a quo failed to take into account that
delivery of a right of action should not be considered in the same way as delivery of a
movable thing. The appellant contended that the court a quo failed to apply the
approach followed in Botha v Fick.
[30] The further challenge on appeal is founded on the learned acting judge having
erred in finding that the second respondent's email to Mr Walker, dated 15 July 201 9,
14 The papers, volume 2, judgm ent, para 24, at 144.
14 The papers, volume 2, judgm ent, para 24, at 144.
15 The papers, volume 2, judgment, para 24, at 144.
16 The papers , volume 2, judgment, para 24, at 144.
17 The papers, volume 2, judgm ent, para 26, at 145.
1a Barnett and Others v Minister of Land Affairs and Others (2007) ZASCA 95: 2007 (6) SA 313 (SCA)
para 19.
19 Section 12(1) of the Prescription Act 68 of 1969 states that: 'Subject to the provisions of subsections
(2), (3), and (4), prescription shall commence to run as soon as the debt is due.'
11
as well as his email to the appellant , dated 20 April 2018 , were insufficient to interrupt
the running of prescription and that such emails interrupted the running of prescription .
It is therefore important to first deal with whether the appellant's claim in actual fact
constitutes a personal right or real right of action , and whether prescription is
applicable in the circumstances upon which the relief is sought.
Does the appellant's claim prescribe?
[31] The appellant contends that the court a quo failed to apply settled law,
specifically the decision by the Supreme Court of Appeal in Botha v Fick which
confirmed that a share is a }us in personam , the ownership which passes by cession ,
and which is established by consensus between the parties .
[32) In Botha v Fick the court confirmed that the legal duty resting on a registered
shareholder of a company who has sold his shares to deliver a share certificate and a
completed share transfer form to the purchaser arises from the obligatory agreement
of sale (between the parties) and is not a requirement for the validity of the cession
whereby the right and title to the shares are transferred .20
[33] In Brayton Carlswald (Pty) Ltd and another v Brews , 21 Theron JA, considered
the distinction between the obligatory agreement and the date when the cession takes
effect , and stated as follows:
'The court a quo failed to distinguish between the agreement to cede (the obligatory
agreement whereby an obligation is created), also referred to as the pactum de cedendo , and
the cession itself (the real agreement whereby rights are bilaterally transferred), also known
as the pactum cessionis. In Grobbe/aar v Shoprite Checkers Ltd Brand JA explained that "(a)
cession is an abstract legal act that is independent of the underlying, obligationary,
agreement". Justice PM Nienaber puts it well in his contribution to The Law of South Africa,
aptly distinguishing between these two types of agreements:
aptly distinguishing between these two types of agreements:
'The undertaking to cede and the actual cession will often coincide and be
consolidated in a single document, yet they remain discrete juristic acts. However,
because they are frequently merged into one transaction the clear distinction between
the obligatory agreement to cede and the actual cession sometimes tend to be
20 Botha v Fick at 778C-D. See also FH v YAH and Others [2019) ZAKZDHC 31 (FH v YAH).
21 Brayton Carlswald (Pty) Ltd and Another v Brews [2017] ZASCA 68; 2017 (5) SA 498 (SCA) para 15.
12
smudged. They are nevertheless distinct in function and can be so in time: by the
former a duty to cede is created, by the latter it is discharged."' (Footnotes omitted.)
[34] It follows that in the present case , the appellant and second respondent had
contemplated that the appellant would acquire right and title to a 20% shareholding
when such shares were to be earned through the appellant being employed for six
months without remuneration. There is no dispute that the second respondent , as sole
director was the duly authorised representative of the first respondent when he entered
into the oral agreement and offered the 20% shareholding .
[35] In FH v YAH and Others, Olsen J followed the approach in Botha v Fick, and
stated that:22
'I think that the proposition may be put this way: that in the case of cession properly so called,
as a mode of transfer employed in respect of shares, it takes place when the parties agree it
should take place. Nothing more is required, unless of course their agreement or mutual
intention is that something more is required. I can see no obstacle at all to an agreement
designed to pass shares from the ownership of A to the ownership of B, which provides that
that the actual transfer will only take place upon the amendment of the company's register of
shareholders and delivery of the share certificate generated by that. It is a question of fact as
to when the parties anticipated the transfer of the shares to have been effected.'
[36] In the present matter , there was an offer of shares , which was subject to a
suspensive condition . Upon the appe llant's acceptance of the offer, (in commencing
employment without remuneration) , and the fulfilment of the suspensive condition ,
(completion of the six month period of employment without remune ration), it was clear
that the parties anticipated that such transfer and ownership of the 20% shareholding
would be complete .
[37] The learned acting judge had accordingly erred in finding that the appellant had
[37] The learned acting judge had accordingly erred in finding that the appellant had
not acquired ownersh ip of the shares . In my view, once the cession had taken effect ,
ownership of the shares then vested in the appellant , who then had a real right to the
shares . There was accordingly no legal requirement that the appellant was then
22 FH V YAH para 21
13
obliged to enforce such a real right as though it was a debt covered by extinctive
prescription under s 10 of the Prescription Act.
[38] In Cooper v Boyes the court emphasised that a share has a complex set of
characteristics which are peculiar to it, with the court stating:
'The gist thereof is that a share represents a share in the company, which interest consists of
a complex of personal rights which may, as an incorporeal movable entity, be negotiated or
otherwise disposed of. It is certainly not a consumable article, such as money, even though a
money value can be placed on it. Nor can it, by any analogy, be likened to a debt which may
give rise to a claim of some kind or another, even though the debt and related claim may
eventuate in an award of money being made to the claimant in respect of such debt.'23
[39] In Standard Bank of SA Ltd v Ocean Commodities Inc. ,24 the court held that:
'There is an important legal difference between immovable property and movable property
whether corporeal or incorporeal. In regard to immovable property, a court cannot go behind
the register. In respect of registered shares, a court can go behind the register to ascertain the
identity of the true owner. The fact, therefore , that the shares are registered in the name of
Standard Bank Nominees does not mean that it is the actual owner or that one cannot look
behind the register to ascertain the identity of the true owner. Vide, Randfontein Estates Ltd v
The Master 1909 TS 978 at 981 , 982. Further, an agreement for the sale of shares does not
mean that the seller must procure registration of the transfer into the name of the purchaser.
The seller's duty is completed when he has done all in his power to put the transferee in a
position to demand transfer from the company. Vide, McGregor 's Trustees v Silberbauer 9 SC
36 at 38; Jeffery v Pollak & Freemantle 1938 AD 1 at 24. Until registration of transfer, however,
the transferor or his nominee is a trustee of the shares for the transferee . The trustee must act
according to the A instructions of the transferee who becomes the beneficial owner of the
proprietary rights in respect of the shares by means of the conclusion of the contract of
cession . The true owner of the proprietary rights can, therefore , demand of the person in
whose name the share is registered that he does all things necessary to enable the owner to
approach the company for registration of the shares into his name.'
23 Cooper v Boyes 1994 (4) SA 521 (C) at 5358-D .
24 Standard Bank of SA Ltd v Ocean Commodities Inc 1980 (2) SA 175 (T) (Ocean Commodities (T).
14
[40] The Court of Appeal in Standard Bank of South Africa Ltd and another v Ocean
Commodities25 ruled in favour of the Harris brothers. The court found that they had the
right to sell the shares even though they were not the registered shareholders. The
sale was affected via a cession of rights to Ocean Commodities. The court further
found that the fact that the beneficial owners were not able to deliver the share
certificates did not invalidate the transfer of ownership. The new beneficial owner,
Ocean Commodities, demanded the share certificates. The court ruled that the
certificates were to be registered in the name of Ocean Commodities via a partial rei
vindicatio in opposition to a 'true' rei vindicatio, since the Harris brothers did not have
full and unfettered ownership of the shares.
[41] Similarly, in Oakland Nominees (Pty) Ltd v Gelria Mining & Investments Co
(Pty) Ltd26 the beneficial owner launched an action against the person in possession
of the shares for delivery of the share certificates. The court granted the relief and
confirmed that the beneficial owner, not being the shareholder, is entitled to an action
to assert its right of possession of the share certificates.
[42] The appeal court upheld the court a quo's declaration that the first defendant is
obliged to deliver to the plaintiff certificate No. 25794 in respect of 2 000 shares in
Gledhow Sugar Co. Ltd., together with transfer form duly completed by the first
defendant.27
[43] The Companies Act 71 of 2008 makes provision for a situation where a person,
other than the registered shareholder, could hold a 'beneficial interest' in a share. A
'beneficial interest' is defined in s 1 of the Companies Act and includes a person who
has a right to receive a distribution. In the present appeal, whilst the court a quo was
correct regarding a cession constituting a personal right, it misdirected itself regarding
the nature of the appellants claim, being a right to assert ownership of shares. The
the nature of the appellants claim, being a right to assert ownership of shares. The
court a quo failed to distinguish a personal right and the right to ownership which has
passed to the appellant as cessionary, which right would constitute a real right.
2s Standard Bank of South Africa Ltd and Another v Ocean Commodities Inc and Others 1983 (1) SA
276 (A) at 290A.
26 Oakland Nominees (Pty) Ltd v Gelria Mining & Investments Co (Pty) Ltd 1976 (1) SA 441 (A) (Oakland
Nominees) at 461 Hand 462H .
27 Oakland Nominees.
15
[44] The court a quo therefore erred in finding that the obligation to deliver the
shares constituted a debt, and placing reliance on Barnett. The decision in Barnett and
the confusion as to whether the rei vindicatio is a debt for purposes of the Prescription
Act has now been settled. In Absa v Keet,28 the Supreme Court of Appeal held as
follows:
'[23) The obligation which the law imposes on a debtor does not create a real right Uus in rem),
but gives rise to a personal right Uus in personam). In other words, an obligation does not
consist in causing something to become the creditor's property, but in the fact that the debtor
may be compelled to give the creditor something or to do something for the creditor or to make
good something in favour of the creditor.
[24) The manner in which the Prescription Act is structured reflects this distinction -
acquisitive prescription of real rights is dealt with in chs 1 to 2 and the extinctive prescription
of obligations is dealt with in ch 3. The reason for arranging the Prescription Act in this manner
was explained by Prof JC de Wet, the author and draftsman of the present Prescription Act, in
a full memorandum he submitted to the legislature. The memorandum was published in
February 1979 in a work called Opuscula Miscellanea. Professor De Wet had this to say at 77
para 5:
"Whether prescription is concerned with a single legal concept with two branches, viz.
acquisitive and extinctive prescription , or whether there are in fact two distinct legal
concepts is an old controversy. It appears to me that one is actually concerned with
two distinct legal concepts and even the expressions acquisitive and extinctive
prescription are somewhat unfortunate and misleading. It is true that the passage of
time plays a role in both legal concepts and that certain circumstances , connected to
the person against whom prescription runs, apply to both legal concepts , but
nonetheless the two legal concepts rest on different foundations. In the case of
nonetheless the two legal concepts rest on different foundations. In the case of
acquisitive prescription one is concerned with real rights, which do not concern simply
the acquisition of a right by the one and the loss of a right by the other, but also outward
appearances that may affect third parties in their relationships with the one or the other.
The rationale for the acquisition of real rights by prescription is the perpetuation of a
factual situation that has existed for a long time, and upon which third parties may rely
in their relationships with the ostensible rightful owner. In the case of extinctive
prescription one is more specifically concerned with the relationship between creditor
and debtor and prescription serves in the first instance to protect the debtor against
28 Absa Bank Ltd v Keet[2015] ZASCA 81 ; 2015 (4) SA 474 (SCA) (Keet).
16
claims that perhaps never came into existence or had already been extinguished. The
obligation is by its nature and substance a temporary relationship that is destined to
terminate through performance and moreover a relationship between creditor and
debtor in which third parties are only indirectly involved. A real right, by contrast, is a
relationship of a durable nature, that can be maintained against anyone and everyone ,
and which can impede commerce if outsiders cannot with confidence rely on the
appearance thereof." [My own translation .]
(25] In the circumstances the view that the vindicatory action is a "debt" as contemplated by
the Prescription Act, which prescribes after three years is in my opinion contrary to the scheme
of the Act. It would, if upheld, undermine the significance of the distinction which the
Prescription Act draws between extinctive prescription on the one hand and acquisitive
prescription on the other. In the case of acquisitive prescription one has to do with real rights.
In the case of extinctive prescription one has to do with the relationship between a creditor
and a debtor. The effect of extinctive prescription is that a right of action vested in the creditor,
which is a corollary of a "debt", becomes extinguished simultaneously with that debt. In other
words, what the creditor loses as a result of operation of extinctive prescription is his right of
action against the debtor, which is a personal right. The creditor does not lose a right to a
thing. To equate the vindicatory action with a "debt" has an unintended consequence in that
by way of extinctive prescription the debtor acquires ownership of a creditor's property after
three years instead of 30 years that is provided for in s 1 of the Prescription Act. This is an
absurdity and not a sensible interpretation of the Prescription Act.' (Footnotes omitted.)
[45] The approach and distinction between extinctive prescription and acquisitive
[45] The approach and distinction between extinctive prescription and acquisitive
prescription in Keet was adopted by the Constitutional Court in Makate v Vodacom
Ltd.29 Wallis AJ in a minority judgment which concurred with the decision of the
majority regarding whether the debt in question prescribed held as follows:
'(189] Not all rights of action give rise to debts. That is well illustrated by the recent decision
in Keet. Based on an ambiguous and obiter statement in the first-instance court in Evins it had
been said in a series of cases in the Supreme Court of Appeal that a vindicatory claim, that is,
a claim to assert a right of ownership in an asset, gave rise to a debt capable of being
extinguished by extinctive prescription under s 10 of the Prescription Act. This occasioned
confusion because the owner would remain the owner of the asset, but would not be entitled
to exercise its rights of ownership against the possessor thereof. In effect it would be deprived
of its rights of ownership by way of extinctive prescription, whereas the loss of the right of
29 Makate v Vodacom Ltd (2016] ZACC 13; 2016 (4) SA 121 (CC) (Makate).
17
ownership by way of prescription is a matter of acquisitive prescription, which is dealt with in
ch I and ss 1 - 5 of the Prescription Act, not ch 111 and ss 1 O - 12 of that Act.
(190) The court in Keet overruled these earlier cases [including Barnetij and held that
acquisitive prescription dealt with the acquisition (and corresponding loss) of real rights such
as ownership, while extinctive prescription dealt with the extinguishment of debts and their
correlative rights of action, in other words, with personal rights. The relevance of the case to
the present one is that it illustrates that not every right to approach a court for relief will amount
to a debt for the purposes of extinctive prescription. So the right to claim delivery of the motor
vehicle in that case did not give rise to a "debt" for the purposes of extinctive prescription in
terms of s 10 of the Prescription Act.' (Footnotes omitted.)
[46] The authors Parker and Zaal , in commenting on the appeal court 's decision in
Keet , pointed out: 30
'The overruling of the decision of the Absa [ie Keet] court a quo by the SCA is to be welcomed.
Since the appeal court holding that vindicatory claims do not prescribe after three years was
essential for purposes of its conclusion and thus is clearly not obiter, it may safely be accepted
that the uncertainty concerning this point of law has at last been resolved. It is the submission
of the authors that the SCA judgment is clearly correct for two main reasons. First, it accords
with the nuanced approach in our law to real and personal rights. It recognises the primary
distinction between these, and their corresponding actions. Real rights arise out of a
relationship with a thing and personal rights out of an obligationcreating event, such as a
contract or delict. It is trite to say that real rights are enforceable against the world at large and
personal rights only as against the other person. The creation of a personal right with its
personal rights only as against the other person. The creation of a personal right with its
correlative obligation results in a creditor-debtor relationship, but no such relationship flows
from the creation of a real right. Because of the fundamental difference in nature between real
and personal rights, they require different remedies for their enforcement. In relation to
personal rights, for example, delictual remedies are available to enforce rights arising out of
delicts, and contractual remedies are available to enforce rights that arise out of contractual
relationships. The protection of a real right is quite different - the main remedy is, of course,
the rei vindicatio which is available to an owner for the return of the possession of his or her
property, but there are other remedies such as the actio negatoria available to protect limited
real rights. The Absa (ie Keet) appeal decision, in recognising that vindicatory claims need to
be treated differently from debts relating to personal rights, supports the durable and sui
generis nature of the rei vindication .'
30 J Parker and FN Zaal 'Absa Bank Limited v Keet 2015 JDR 0996 (SCA)' (2016) 49(1) De Jure 181 at
189.
18
[47] In this matter the second respondent had expressly ceded all his right, title and
interest in the 20% of his shareholding in the first respondent to the appellant. I
accordingly find that delivery and transfer of ownership of the 20% shareholding took
place when the second respondent ceded his right, title and limited interest to the
appellant on 31 July 2016. The approach to the appellant's claim falling within a
vindicatory claim and therefore not hit by prescription is consistent with the
Constitutional Court's finding in Makate which held that not every right of action would
amount to a debt.
[48] In the present matter the appellant remained the owner of a 20% shareholding
upon the cession taking effect, and was prevented from exercising his rights of
ownership against the possessor of the shares, that being the second respondent. In
effect, the appellant was not deprived of his rights of ownership by way of acquisitive
prescription.31 The loss of the right of ownership by way of prescription is a matter of
acquisitive prescription.The appellant's claim for delivery and/transfer of the 20%
shareholding therefore must succeed.
The cross appeal
[49] The respondents contend that it was never the appellant's case that he was
vindicating his shares and that the affidavits did not support the allegation that the
appellant was already the owner. The argument proceeded on the basis that the
appellant, in asserting a vindicatory claim, was obliged to have alleged that at some
stage he would have taken possession of the shares because it is only upon
possession being acquired that ownership passes. The respondents counsel, Mr
Collingwood , whilst accepting that that transfer of possession can take place 'brevi
manu' or 'longa manu' argued that delivery was still a prerequisite to ownership,
regardless of the method of delivery. The contentions which make possession a pre
requisite loses sight of the fact that the sale of shares was effected via a cession of
requisite loses sight of the fact that the sale of shares was effected via a cession of
rights to the appellant, and accordingly that the passing of ownership was not
31 Makate para 189 and 190.
19
dependant on actual physical control, but that ownership had passed automatically
upon the fulfilment of the suspensive condition.32
[50] The approach to the manner in which a real right of ownership can be
transferred by means of cession was considered by the court in Page Automation (Pty)
Ltd v Profusa Properties CC tla Homenet or Tambo and Others, 33 where the court
stated:
'[18] In the strict sense ownership in corporeals cannot be transferred by cession . Ownership
must be transferred by either physical delivery or various forms of constructive delivery such
as clavium traditio ; traditio /onga manu; traditio brevi manu; and constitutum possessorium.
[19] It is generally accepted that in respect of hire-purchase agreements , whilst delivery takes
place when the article is handed over, ownership is suspended until the purchase price is paid
in full. The passing of ownership is not dependent on the actual physical control but happens
automatically when the condition is fulfilled. This can be categorised as a new form of
constructive delivery or a type of traditio brevi manu.' (Footnotes omitted.)
[51] The appellant's claim was always premised on a right of ownership of his
shares. This right of action did not constitute a debt and was never hamstrung by the
manner in which he pleaded his case in seeking transfer of his 20% shareholding . The
second respondent's intention to pass ownership remained extant at all material times
from fulfilment of the six month period without remuneration . This constituted a cession
of ownership or cession of the right of vindication in favour of the appellant.34 I am
accordingly of the view that the plea of prescription is not applicable and not consistent
with the definition of 'debt' as contemplated in the Prescription Act. The obligation, on
the part of the second respondent effectively entails facilitating the signing of
necessary transfer documents and delivery of share certificates to enable registration
necessary transfer documents and delivery of share certificates to enable registration
of the share certificates as directed by the appellant. 35 The relief claimed is not a debt
that was due prior to the commencement of the present litigation and the plea of
prescription should have been dismissed by the court a quo.36
32 Page Automation (Pty) Ltd v Profusa Properties CC tla Homenet or Tambo and Others 2013 (4) SA
37 (GSJ ) (Page Automation) paras 16-19.
33 Page Automation .
34 Page Automation (Ply) Ltd para 29.
35 See also Oakland Nomine es.
36 Makate para 186 and ( Ocean Commodities (T) at 16 C-G.
20
[52] The respondents' cross appeal was also premised on the ground that there was
a profound dispute of fact and that the court a quo should have dismissed the
application on that ground alone. The respondents' appeal ground in this regard is
based on its version that there was no agreement between the parties and that it was
impermissible for the appellant to argue the matter on the basis of probabilities. I
accept that motion proceedings are utilized to resolve legal issues based on common
cause facts, and that motion proceedings are not designed to determine
probabilities. 37
[53] Whilst counsel for the respondents placed reliance on the test to be applied in
National Director of Public Prosecutions v Zuma, the following proviso from that
decision regarding the proper approach to motion proceedings must also not be
ignored:38
'It may be different if the respondent's version consists of bald or uncreditworthy denials, raises
fictitious disputes of fact, is palpably implausible, far-fetched or so clearly untenable that the
court is justified in rejecting them merely on the papers. The court below did not have regard
to these propositions and instead decided the case on probabilities without rejecting
the NDPP's version.' (Footnotes omitted.)
[54] It is also clear that the findings of the court a quo was not reached on the basis
of probabilities or on arguments based on probabilities. The findings of an oral
agreement was based on the admitted facts on the part of the respondents. I have
already set out the common cause facts upon which the court a quo concluded that
there was an agreement and that the respondents version to the contrary was
untenable. It is clear from my reasons outlined above that the respondents' version,
apart from being uncreditworthy was also contradictory and untenable, and
accordingly there was no misdirection by the court a quo.
[55] The further ground contended for in the cross appeal was that there was an
[55] The further ground contended for in the cross appeal was that there was an
ambush during argument, which amounted to a trial by ambush. Mr Collingwood for
the respondents referred to Minister of Land Affairs and Agriculture and others v D &
37 National Director of Public Prosecutions v Zuma (2009] ZASCA 1; 2009 (2) SA 277 (SCA) (Zuma)
para 26.
38 Zuma para 26.
F Weve/1 Trust and others, 39 the relevant comments of which were relied upon and
where the court stated:
21
'Before doing so, it is necessary to emphasise two aspects. The first is that the only issue for
the court a quo to decide on the merits was whether the respondents were entitled to cancel
the sale agreements because of fraud. The second is that the case argued before this court
was not properly made out in the answering affidavits deposed to by Andreas. The case that
was made out, was conclusively refuted in the replying affidavits as I pointed out in paras [18]
to [20] above. It is not proper for a party in motion proceedings to base an argument
on passages in documents which have been annexed to the papers when the conclusions
sought to be drawn from such passages have not been canvassed in the affidavits. The reason
is manifest - the other party may well be prejudiced because evidence may have been
available to it to refute the new case on the facts. The position is worse where the arguments
are advanced for the first time on appeal. In motion proceedings , the affidavits constitute both
the pleadings and the evidence: Transnet Ltd v Rubenstein , and the issues and averments in
support of the parties' cases should appear clearly therefrom . A party cannot be expected to
trawl through lengthy annexures to the opponent's affidavit and to speculate on the possible
relevance of facts therein contained . Trial by ambush cannot be permitted.' (Footnotes
omitted .)
[56] The decision in D & F Weve/1 Trust is clearly distinguishable in the present case
and circumstances where the conclusions drawn from the various emails and common
cause facts were in fact dealt with in the founding affidavit. The appellant clearly
evinced an offer and acceptance and the conclusion of an oral agreement for the sale
of shares, which shares vested in the appellant upon fulfilment of the suspensive
condition agreed to by the parties. In addition the respondents' version was
condition agreed to by the parties. In addition the respondents' version was
conclusively refuted in the replying affidavit.
[57] The respondents further allege that the appellant's claim to ownership of shares
was not raised in the founding papers, in reply and or in the appellant's heads of
argument in the court a quo. This contention is not correct as the appellant's founding
affidavit did disclose that the application was launched on the basis that he was a
shareholder, which is established from the allegation that the appellant had in fact
communicated to the second respondent that he was already a shareholder at their
39 Minister of Land Affairs and Agriculture and Others v D & F Weve/1 Trust and Others (2007] ZASCA
153; 2008 (2) SA 184 (SCA) (D & F Weve/1 Trust) para 43.
22
meeting on 28 January 2021 .40 The appellant's reference to 'my shares' in 2017 leaves
no doubt that the claim was for ownership of shares.
[58] In addition, the appellant's heads of argument did in fact disclose that the claim
was based on a cession of ownership and a claim under the rei vindicatio. The
appellant had also placed reliance in the decision of Botha v Fick. The respondents
were accordingly not taken by surprise as to the appellant's case and the facts which
supported the cession of the shares. There was accordingly no prejudice to the
respondents and the claim of a trial by ambush is thus without merit and cannot be
sustained.
[59] If I am wrong in holding that the appellant's claim for transfer of his shares does
not constitute a debt, and that prescription does not apply, then it also becomes
evident that the respondents had tacitly interrupted the running of prescription. It is
clear from the court a quo's reasoning that it has correctly delineated the conclusion
of the agreement whereby the appellant was vested with a 20% shareholding as at 31
July 2016 and the subsequent negotiations regarding additional shares. It is therefore
correct that it was at this stage that the appellant would be able to assert his right of
action to ownership.
[60] The court a quo regarded the negotiations after this date as constituting a
separate claim by the appellant for an additional 10%. The court a quo, in dealing with
the question as to whether the emails between the parties interrupted the running of
prescription, concluded that the further negotiations regarding the request for more
shares constituted negotiations in respect of a separate claim.
[61] The court a quo, however erroneously reasoned that it cannot be said that these
further negotiations had the effect of interrupting prescription. I am of the considered
view that this latter finding also constitutes a misdirection of the facts and the law.
view that this latter finding also constitutes a misdirection of the facts and the law.
Whilst it is accepted that the negotiations post July 2016 constituted a separate claim,
it was common cause that the email dated 12 July 2019 from Mr Walker, acting as the
first respondent's auditor, expressly confirmed a shareholding relationship.
40 The papers , volume1, founding affidavit , para 59, at 24 and 25.
23
[62] It is clear that the exchange of emails elicited the true intention of the parties
during the relevant period after the appellant fulfilled the suspensive condition. It is
therefore clear that the email of 12 July 2019 evidenced a tacit acknowledgment of
liability. Section 14 of the Prescription Act provides that:
'(1) The running of prescription shall be interrupted by an express or tacit acknowledgement
of liability by the debtor.
(2) If the running of prescription is interrupted as contemplated in subsection (1 ), prescription
shall commence to run afresh from the day on which the interruption takes place or, if at the
time of the interruption or at any time thereafter the parties postpone the due date of the debt
from the date upon which the debt again becomes due.'
[63] It follows that the respondents' acknowledgment on 12 July 2019 of a
shareholding relationship had the effect of tacitly interrupting the running of
prescription in accordance with s 14 of the Act. The running of prescription would
therefore begin to run from 13 July 2019 to 11 July 2022. The appellant instituted the
action on 14 September 2021, well within the three year prescriptive period provided
for in the Act.
[64] I am satisfied that there is no reason to deviate from the principle that costs
should follow the result in the circumstances of this matter.
Order
[65] In light of the above, the following order is made:
1. The appeal is upheld.
2. The first and second respondents' cross appeal is dismissed.
3. The order made by the court a quo is set aside, and it is replaced with the
following order:
'1. The second respondent is directed to do all things necessary to transfer
20% of his shareholding in the first respondent to the applicant ;
2. The first and second respondents are directed to deliver to the applicant,
the audited financial statements/accounting records of the first
respondent from 2015 to date which records shall include the bank
24
account statements of the first respondent for the aforementioned period;
and
3. The second respondent is directed to pay the costs of the application.'
4. The first and second respondents are ordered to pay the costs of the appeal,
the cross appeal, and the costs of the application for leave to appeal, jointly and
severally, the one paying the other to be absolved, such costs to include the costs of
consequent upon the employment of two counsel on scale C.
Pillay AJ
I agree.
I agree
Heard on: 31 October 2025
Delivered on: 13 March 2026
Appearances
For the appellant: Mr KC Macintosh SC
Mr M Sewpal
Instructed by: Attorney 's Murugasens
For the respondents : Mr AD Collingwood
Instructed by: Dhuki Attorneys Incorporated
25