SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 368/2022
In the matter between:
LEON HOWARD COHEN N O FIRST APPELLANT
G[…] W[….] D[…] N O SECOND APPELLANT
JONATHAN SHAWN RABIE N O THIRD APPELLANT
JONATHAN ALFRED LEONARD
CHAPMAN N O FOURTH APPELLANT
COLLIN WILLIAM GREEN N O FIFTH APPELLANT
COLIN ANDERSON N O SIXTH APPELLANT
(Appellants cited in their capacities as
trustees for the time being of the Century
City Property Investment Trust)
And
2
M[…] L[…] D[…] RESPONDENT
Neutral citation: Cohen N O & Others v D[…] (Case no 368/2022) [2023]
ZASCA 56 (20 April 2023)
Coram: SALDULKER, MOCUMIE and NICHOLLS JJA and MALI
and SIWENDU AJJA
Heard: 17 March 2023
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 release to SAFLII. The date and time for hand -
down is deemed to be at 11h00 on 20 April 2023.
Summary: Summary judgment - particulars of claim based upon incorrect
trust deed - plaintiff verified an incorrect cause of action - defendants
disclosed a bona fide defence - summary judgment refused.
ORDER
On appeal from: Western Cape Division of the High Court, Cape Town
(Allie J, sitting as court of first instance):
1 The appeal succeeds with costs, including the costs of two counsel.
2 The order of the court a quo is set aside and substituted with the
following order:
3
‘1 Summary judgment is refused.
2 The defendants are granted leave to defend the main action.
3 Costs shall be costs in the cause.’
JUDGMENT
Nicholls JA (Saldulker and Mocumie JJA and Mali and Siwendu AJJA
concurring)
[1] The appellants, the defendants in the high court, are the trustees of the
Century City Property Investment Trust (the Trust), a trading trust run as a
commercial enterprise. There are 23 beneficiaries of the Trust consisting of
the trustees, their wives, children and their respective f amily trusts. The
respondent, M[…] L[…] D[…] (Ms D[…]), the plaintiff in the high court, is
the ex-wife of the second appellant, G […] W[…] D[…] (Mr D[…]), one of
the trustees. During the course of their marriage, Ms D[…] was a beneficiary
of the Trust by virtue of her marriage to Mr D […] until the date of their
divorce on 8 February 2019.
[2] As a result of the sale of certain properties to a third party in 2013 and
2014, the Trust earned substantial capital gains. During the 2014 and 2015
tax years the trustees resolved to allocate the net income of the capital gains
to the 23 beneficiaries of the Trust . This resulted in a net allocation of
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R184 179 657 to the beneficiaries, of which two amounts of R6 050 895 and
R279 044.00, totalling R6 329 939, were allocated to Ms D[…]. The
amounts owing to the beneficiaries is reflected as a vested liability in the
2017 Annual Financial Statements of the Trust.
[3] On the basis of this allocation , Ms D […] issued summons in July
2021 against the Trust for payment of the amount of R6 329 939. The matter
was defended and after the Trust filed its plea, Ms D […] applied for
summary judgment. On 7 March 2022 , the Western Cape Division of the
High Court (the high court) granted summary judgment in favour of Ms
D[…] for an alternative amount . Because no alternative amount had been
claimed, a n application for variation of the order was brought by the
trustees, deleting any reference to the alternative amount . The variation
order was granted on 27 June 2022, the net effect of which was to reduce the
amount by deducting the tax paid by the Trust on behalf of Ms D […], in
respect of her allocations. Leave to appeal to this Cour t was granted by the
high court on the basis that an important issue was raised, namely whether ‘a
court seized with summary judgment may consider the common cause facts
that are at variance with the pleadings’.
[4] The trustees advanced six grounds of appeal , but only three of these
were seriously argued. The first was that there was non -compliance with the
peremptory requirements of rule 32(2)(b) of the amended rule 32. This sub-
rule sets out what is required of a plaintiff’s affidavit filed in support of an
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application for summary judgm ent.1 The second ground is that the summary
judgment was granted on a cause of action which differed materially from
what was pleaded, or advanced in the parti culars of claim. Thirdly, it is
contended that a bona fide defence was disclosed.
[5] Ms D […]’ particulars of claim were premised on an amended trust
deed dated 11 May 2015 (the amended trust deed) . It was pleaded that
during the period 1 March 2015 to 28 February 2017 , on a date peculiarly
within the knowledge of the trustees, they resolved to pay, apply or appoint
the realised capital gain for the benefit of the beneficiaries . In terms of
clause 5.1 and 5.2 of the amended trust deed, the trustees were entitled to
pay the whole or any portion of the capital to any of the beneficiaries,
subject to an aggregate sum of R50 million ‘. . . in such manner and upon
such terms and subject to such conditions, limitations and restrictions in all
respect as the trustees may from time to time in their sole and absolute
discretion determine . . . ’. Ms D[…] attached the signed Annual Financial
Statements of the Trust for the period ending 28 February 2017 , which
showed a liability for vested amounts in the sum of R184 179 657 in favour
of the 23 beneficiaries, including an amount of R6 329 939 for Ms Deans.
[6] The various famil y members and family trusts were divided in to
Groups A to G , with the Deans Fami ly being Group D beneficiaries.
Ms D[…]’ entitlement to the monies was as a Group D beneficiary. Her
claim was thus grounded in the provisions of the amended trust deed, and
the amount thereof confirmed by the 2017 Annual Financial Statements.
1 From 1 July 2019 rule 32 was amended to provide that an application for summary judgment could only
be made after the defendant had filed a plea. The rule also provides that a plaintiff's affidavit in a summary
judgment application may explain why the defence as pleaded does not raise any issue for trial.
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[7] In response to the particulars of claim, t he trustees raised a special
plea of prescription. In this Court , the special plea was abandoned. As a
result, it is unnecessary to deal with the question of prescription.
[8] In their plea on the merits, the trustees admitted the relevant clauses of
the trust deed as pleaded by Ms D […]. They also admitted that the first
allocation of R6 050 895 was made to Ms D […] during the tax year ended
28 February 2014, and the second allocation of R279 044 during the tax year
ended 28 February 2015. The first allocation attracted income tax of
R727 576, which the Trust paid on Ms D[…]’ behalf. The second allocation
did not attract a tax liability.
[9] The trustees, in their plea, relied on clause 5.6 of the a mended trust
deed to withhold payment to Ms D[…]. The clause provides:
‘ . . .the Trustees shall be entitled . . . to withhold actual payment of the whole of any part
of the nett income and/or capital gain applied or appointed to any Beneficiary for such
period and otherwise upon such terms and subject to such conditions as the Trustees may
from time to time in their sole and absolute discretion determine . . . ’
[10] The clause also makes provision for payment of any assessed taxes ,
for which the beneficiaries may be liable , to be paid by the Trustees . This
amount should be deducted from the sum payable to the beneficiaries.
Actual payment of the amounts withheld is to be made on the ‘ vesting date
or the date of death of the [b]eneficiary concerned (whichever first occurs) . .
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. ’. The vesting date is defined in the amended trust deed as the date which
the trustees ‘may at any time in writing appoint to be the [v]esting [d]ate’.
[11] The nub of the Trustees’ case is set out in their plea as follows:
‘In the premises , the Plaintiff’s claim, if any, would only arise upon the vesting date as
defined or the death of the Plaintiff, whichever occurs first, alternatively by the exercise
of the trustees’ discretion to effect payment, none of which have occurred to date.’
[12] In her founding affidavit in support of the application for summary
judgment, Ms D[…] verified the cause of action as set out in her particulars
of claim. She then dealt with the de fences put up by the trustees, as was
required of her in terms of rule 32(2)(b). Apart from denying that her claim
had prescribed, she stated that the trustees had not disclosed on what dates
they had exercised their absolute discretion to withhold the actual payment
of the capital gains applied to the beneficiaries. In any event , stated
Ms D[…], this provision only pertained to beneficiaries, and it was common
cause that with effect from 8 February 2019, she was no longer a beneficiary
as a result of her divorce . Therefore, this clause could not be invoked as a
pretext for withho lding payment to her as an acknowledged creditor of the
Trust. Because of the above , she submitted that there was no defence to her
claim and the plea and special plea had been raised purely for the purposes
of delay.
[13] The trustees i n the affida vit opposin g summary judgment , while
admitting the allocation to Ms D […], and relying on clause 5.6 of the
amended trust deed, denied that she was entitled to payment of the amount
claimed until the vesting date or her death . In any event, because the amount
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had to be reduced by the payment made by the trustees in respect of the tax
liability, they contended that the quantum was in dispute. The Trustees
admitted that Ms D […] ceased to be a beneficiary on 8 February 2019 , the
date of her divorce, but stated that this did not change any rights which may
have accrued to her during the period in which she was a beneficiary. Nor
did it have any bearing on the ir absolute discretion to withhold actual
payment, which the amended trust deed conferred on them.
[14] It appears that it was only at the hearing of the appli cation for
summary judgment that both parties realised that it was not the amended
trust deed dated 11 May 2015 that was applicable, but rather the original
trust deed dated 13 June 2006 (the original trust deed). This was because the
allocations had taken place in the 2013 and 2014 tax years , respectively,
before the amended trust deed had come into effect in 2015. On the face of
it, the fact that the particulars of claim were premised o n an incorrect trust
deed, should have necessitated an amendment of the particulars of claim.
[15] Notwithstanding the above , and despite acknowledging that the
particulars of claim were drafted on the basis of the amended trust deed and
not the original trust deed , the high court f ound this to be of ‘no particular
moment’. Ultimately, said the high court, although not pleaded by Ms D[…],
it was common cause that the payment had been withheld in terms of
clause 15 of the original trust deed. And despite the pleading being defective
as a result thereof, the parties argued the matter as though clause 15.2 of the
original trust deed was applicable.
[16] Clause 15.2 provided that:
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‘Until the vesting date, the trustees shall have the power from time to time and at any
time, to accumulate any part of the income of the Trust for periods continuous or
discontinuous as the trustees shall think fit and shall hold any accumulations so made as
part of the capital of the Trust for all the purposes hereof, but so that the trustees may at
any time and from time to time pay, apply, or appoint in their sole discretion, the whole
or any part/parts of the said accumulations as if the same were income arising in the
current year.’
The vesting date in the original trust deed was defined as 1 June 2056 or the
date which the trustees may at any time in writing appoint to be the vesting
date.2
[17] The high court found that the defence put up by the trustees was
‘incredibly peculiar’, because they had admitted the allocation and had even
made payment of tax in re lation to the allocations. While the high court
accepted that the trustees had the power to make allocations and also to
withhold payment, it found that the trustees had not sufficiently pleaded the
basis on which th ey withheld payment. Clause 15, although granting
absolute discretion to the trustees to withhold payment, had more expansive
provisions than simply authorising the trustees to withhold payment and this
absolute discretion was subject to certain limitations in terms of the
provision, so the high court found . It is these c onditions and restrictions that
the trustees did not deem necessary to explain to the court.
[18] Further, the high court was of the view that by relying on the amended
trust deed as pleaded in the particulars of claim , the trustees were attempting
to ‘dupe’ Ms D […], the court or both. This finding was made on the basis
that the trustees were well aware that the incorrect trust deed was relied on
2 Clause 1.17.1 of the Original trust deed, dated 13 June 2006.
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by Ms D[…], bu t nonetheless went along with the incorrect allegations ,
presumably to gain some tactical ad vantage. The court criticised the trustees
for not interact ing with M s D […], presumably to inform her before the
hearing of the summary judgment application that the original trust deed was
applicable. As such their defence was not brought on reasonable g rounds.
Nor did they plead their reasons for withholding payment.
[19] Accordingly, the high court granted summary judgment in Ms D […]’
favour. It did so on the basis that the trustees had failed to advance a
reasonable and bona fide defence.
[20] The first question is whether Ms D[…] had failed to comply with the
peremptory requirements of rule 32(2)(b) by advancing a case which was not
pleaded and was thus unverified. Rule 32(2)(b) provides that:
‘The p laintiff shall, in the affidavit referred to in sub-rule (2) (a), verify the cause of
action and the amount, if any, claimed, and identify any point of law relied upon and the
facts upon which the plaintiff’s claim is based, and explain briefly why the defence as
pleaded does not raise any issue for trial.’
[21] The issue of Ms D […]’ non -compliance with rule 32(2) (b) is
inextricably bound up with whether summary judgment was granted on a
case that was materially different from that which was pleaded in her
particulars of claim and that which she advanced in her affidavit in the
support of her application for summary judgment. The cause of action which
Ms D […] verified was that in terms of clause 5 of the provisions of the
amended trust deed, the trustees applied capital gains in the sum of
R6 329 939 to which she was entitled as a Group D beneficiary.
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[22] Insofar as it was argued that the cause of action which Ms D […]
verified was that payment of R6 329 939 was due to her b y the trustees, this
is misconceived. A cause of action is generally defined as a set of facts
which give rise to a claim enforceable in law . The set of facts which gave
rise to her action was not the non-payment of R6 329 939, as contended, but
her entitlement to payment in terms of the relevant trust deed. It is common
cause that the inco rrect trust deed was relied on in the particulars of claim.
She therefore verified a defective cause of action. Given the errors contained
on the particulars of claim, Ms D […] was neither able to correctly verify the
cause of action nor the facts upon which she relied.
[23] It was also contended on behalf of Ms D[…] that the trustees were not
obliged to rely on the amended trust deed , merely because it had been
incorrectly pleaded by her . Instead , they knew very well that Ms D […]
placed reliance on the 2017 financials of the Trust and these were peculiarly
in their knowledge. Because both parties finally argued the summary
judgment application on the basis that clause 15 of the original trust deed
was applicable, it was suggested that her non-compliance with rule 32(2)(b)
should be overlooked . This submission , too, does not bear scrutiny. It
matters not whether the correct cause of action was argued by both parties at
the hearing.
[24] In Standard Bank of South Africa Ltd v Roestof (Roestof),3 it was held
that a technical defect due to some obvious and manifest error which causes
3 Standard Bank of South Africa Ltd v Roestof 2004 (2) SA 492 (W) at 496F -H, followed in Coetzee and
Others v Nassimov 2010 (4) SA 400 (WCC) (Coetzee).
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no prejudice to the defendants, can be overlooked. 4 Wallis J did not follow
this decision in Shackleton Credit Management (Pty) Ltd v Microzone
Trading 88 CC and Another (Shackleton).5 Also dealing with the old rule
32(2), he stated that the suggestion that a defective summary judgment
application could be cured if the defence dealt with the merits of the claim,
was incorrect. The fact that a defence has been set out and argued, does not
cure the defect in the particulars of claim or the summary judgment
application. Such a view, he stated, would amount to saying that defects
would be overlooked if the defence dea ls with the merits of the claim. This
was not tenable.
[25] Paragraph 25 of Shackleton sets out why the approach in Roestof
should not be adopted:
‘Insofar as the learned judge suggested that a defective application can be cured because
the defendant or defendants have dealt in detail with their defence to the claim set out in
the summons that is not in my view correct. That amounts to saying that def ects will be
overlooked if the defendant deals with the merits of the defence. It requires a defendant
who wishes to contend that the application is defective to confine themselves to raising
that point with the concomitant risk that if the technical point is rejected they have not
dealt with the merits. It will be a bold defendant that limits an opposing affidavit in
summary judgment proceedings to technical matters when they believe that they have a
good defence on the merits. The fact that they set out t hat defence does not cure the
defects in the application and to permit an absence of prejudice to the defendant to
provide grounds for overlooking defects in the application itself seems to me unsound in
principle. The proper starting point is the applicat ion. If it is defective then cadit
4 Coetzee at 402B-403A.
5 Shackleton Credit Management (Pty) Ltd v Microzone Trading 88 CC and Another [2010] ZAKZPHC 15;
2010 (5) SA 112 (KZP); [2011] 1 All SA 427 (KZP) para 25.
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quaestio. Its defects do not disappear because the respondent deals with the merits of the
claim set out in the summons.’
[26] It is noteworthy that the learned authors in Erasmus Superior Court
Practice preferred the Shackleton decision over the Roesetof decision. They
suggested that the principles in Shackleton should be applied when dealing
with the amended rule 32(2)(b).6
[27] In the present matter, it is immaterial whether one follows the Roestoff
or the Shackleton approach. The defect in the particulars of claim is not
merely some technical defect. The reliance on the incorrect trust deed , and
therefore on the incorrect clauses, goes to the heart of Ms D […]’ claim.
There is no evidence that the trustees were aware of this defect in the
particulars of claim until the day of the hearing. But even if they had been, it
was not incumbent on them to ‘interact ’ with Ms D […] in this regard, as
found by the high court . Nor does it assist Ms D […] that both partie s may
have argued on the basis that clause 15 of the original trust deed was
applicable. This was not the case that the trustees came to court to meet.
[28] I am not convinced on the facts of this matter that one even has to
determine what is required to verif y a cause of acti on under the amended
rule 32 or what should be contained in the affidavits of a pla intiff and a
defendant, respectively. Nor is the question whether reliance can be placed
on facts not pleaded but which emerged during argument. Whether under the
old rule 32 or the amended rule 32, what has not changed is that a defendant,
6 D E van Loggerenberg and E Bertelsmann, Erasmus Superior Court Practice 2 ed 2015 at D1-404.
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to successfully oppose a summary judgment application, has to disclose a
bona fide defence.
[29] The only decision to trace the history and reason ing behind the
amended procedure for summary judgment in detail is Tumileng Trading CC
v National Security and Fire (Pty) Ltd ; E & D Security Systems CC v
National Security and Fire (Pty) Ltd (Tumileng).7 As observed by Binns -
Ward J in Tumileng, most of the old authorities still apply in determining
whether a defendant has disclosed a bona fide defence. All the defendant is
required to do is disclose a genuine defence , as opposed to ‘a sham’
defence.8 Prospects of success are irrelevant and as l ong as the defence is
legally cognisable in the sense that it amounts to a valid defence if proven at
trial, then an application for summary judgment must fail.
[30] Be it the original trust deed or the amended trust deed which is
applicable, both require a court to interpret the extent of the trustees’
discretion and when vesting takes place . The defence of the trustees that ,
prior to the date of vesting, their discretion when to make actual paym ent is
absolute and unfettered, cannot be considered as unrea sonable and male
fides. It is certainly not a ‘sham defence’ in any sense of the word.
[31] The high court failed to consider the test to be applied in deciding
whether to grant summary judgment. This was, and remains, whether the
facts put up by the defendants raise a triable issue and a sustainable defence
7 Tumileng Trading CC v National Security and Fire (Pty) Ltd; E & D Security Systems CC v National
Security and Fire (Pty) Ltd (3670/2019; 3671/2019) [2020] ZAWCHC 52 (15 June 2020)
8 Ibid para12.
15
in the law, deserving of their day in court.9 The defendants must fully
disclose the nature and grounds of their defence and the material facts on
which it is founded. All a defendant has to do is set out facts which if proven
at trial will constitute a good defence to the claim.10
[32] On the fa cts s o disclosed, the trustees have put up a sustainable
defence which is bona fide, namely that until vesting occurs the decision to
make payment is solely within their discretion. In the context of summary
judgment, all the trustees are asking for is their day in court. They have met
this threshold and summary judgment should accordingly be refused.
[33] As far as costs are concerned , both parties asked for the costs of two
counsel in respect of this appeal. The appellants sought a puni tive costs
order against the respondent. This is unjustified and there is no reason why
the usual costs order should not be appropriate.
[34] In the result I make the following order:
1 The appeal succeeds with costs, including the costs of two counsel.
2 The order of the court a quo is set aside and substituted with the
following order:
‘1 Summary judgment is refused.
2 The defendants are granted leave to defend the main action.
3 Costs shall be costs in the cause.’
9 Joob Joob Investments (Pty) Ltd v Stocks Mavundla Joint Venture Zek Joint Venture [2009] ZASCA 23;
2009 (5) SA 1 (SCA); [2009] 3 All SA 407 (SCA) para 32.
10 Maharaj v Barclays National Bank Ltd 1976 (1) SA 418 (A) at 418H-419A.
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_______________________
C H NICHOLLS
JUDGE OF APPEAL
Appearances
For appellant: H Loots SC (with him, M A McChesney)
Instructed by: BDP Attorneys, Cape Town
Phatshoane Henney Attorneys, Bloemfontein
For respondent: F J Gordon-Turner (with her, A J Brouwer)
Instructed by: Mandy Simpson Attorneys, Cape Town
Webbers Attorneys, Bloemfontein