THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 205/2020
In the matter between:
PEPKOR HOLDINGS LTD

FIRST APPELLANT
PEPKOR SPECIALITY (PTY) LTD
SECOND APPELLANT
TEKKIE TOWN (PTY) LTD

THIRD APPELLANT
and
AJVH HOLDINGS (PTY) LTD

FIRST RESPONDENT
FULL TEAM SURE TRADE (PTY) LTD
SECOND RESPONDENT
AQUILAM HOLDINGS (PTY) LTD

THIRD RESPONDENT
LIBER DECIMUS (PTY) LTD

FOURTH RESPONDENT
XANADO TRADE AND INVESTMENTS 327       FIFTH RESPONDENT
STEINHOFF INTERNATIONAL
HOLDINGS NV

SIXTH RESPONDENT
TOWN INVESTMENTS (PTY) LTD
SEVENTH RESPONDENT

Case no: 217/2020
In the matter between:
STEINHOFF INTERNATIONAL
HOLDINGS NV

FIRST APPELLANT
TOWN INVESTMENTS (PTY) LTD
SECOND APPELLANT
and

AJVH HOLDINGS (PTY) LTD

FIRST RESPONDENT
FULL TEAM SURE TRADE (PTY) LTD
SECOND RESPONDENT
AQUILAM HOLDINGS (PTY) LTD

THIRD RESPONDENT
LIBER DECIMUS (PTY) LTD

FOURTH RESPONDENT
XANADO TRADE AND INVESTMENTS 327       FIFTH RESPONDENT
PEPKOR HOLDINGS LTD

SIXTH RESPONDENT
PEPKOR SPECIALITY (PTY) LTD                  SEVENTH RESPONDENT
TEKKIE TOWN (PTY) LTD

EIGHTH RESPONDENT
Neutral citation: Pepkor Holdings Ltd and Others v AJVH Holdings (Pty) Ltd
and Others; and Steinhoff International Holdings NV and
Another v AJVH Holdings (Pty) Ltd and Others (205/2020 and
217/2020) [2020] ZASCA 134 (21 October 2020)
Coram:
CACHALIA, ZONDI, MOCUMIE and SCHIPPERS JJA and
GOOSEN AJA
Heard:
24 August 2020

Delivered: This judgment was handed down electronically by circulation to the
parties' representatives by email. It has been published on the Supreme Court of
Appeal website and released to SAFLII. The date and time for hand-down is
deemed to be 09h45 on 21 October 2020.

Summary: Interim interdict – preserving property pendente lite – based on res
litigiosa – requirements not met – fraud – inappropriate to make findings on
motion – company law – companies in a group of companies are separate legal
entities even if wholly-owned – no case made out for order restraining company
holding majority shares in subsidiary from freely dealing with shares – nor
directing company to exercise control in a particular manner.

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town
(Erasmus J sitting as court of first instance):
The application to adduce further evidence on appeal is dismissed with
costs, including the costs of two counsel.
The appeals under case numbers 205/2020 and 217/2020 are upheld with
costs, including the costs of two counsel.
The order of the high court is set aside and replaced with the following:
‘The application is dismissed with costs, including the costs of two
counsel.’

JUDGMENT

Schippers JA: (Cachalia, Zondi, Mocumie JJA and Goosen AJA
concurring):

[1] These are two appeals, with the leave of this Court, against an urgent
interim interdict issued by the Western Cape Division of the High Court, Cape
Town (the high court). The interdict restrained the appellant companies from
dealing freely with their property, pending the determination of an action which
was instituted in the high court under case number 8276/2018 by the first to fifth
respondents, namely, AJVH Holdings (Pty) Ltd, Full Team Sure Trade (Pty) Ltd,

Aquilam Holdings (Pty) Ltd, Liber Decimus (Pty) Ltd, and Xanado Trade and
Investments 327 (the respondents). The appellants in the first appeal (case no
205/2020), namely Pepkor Holdings Ltd (Pepkor), Pepkor Speciality (Pty) Ltd
(Speciality), Tekkie Town (Pty) Ltd (Tekkie Town), where appropriate, are
collectively referred to as ‘the Pepkor entities’. The appellants in the second
appeal (case no 217/2020) are Steinhoff International Holdings NV (Steinhoff
NV) and Town Investments (Pty) Ltd (Town Investments).

Facts
[1] The basic facts can be shortly stated. Tekkie Town formerly conducted a
footwear retail chain store business with 230 stores countrywide (the Tekkie
Town business), and stores in Namibia and Lesotho. In 2015 Mr Markus Jooste,
the former CEO of Steinhoff NV, approached Mr Abraham van Huyssteen, the
founder of the Tekkie Town business, for the acquisition of that business by
Steinhoff NV. Following negotiations, by April 2016 an agreement was
concluded in terms of which Steinhoff NV agreed to pay the then existing
shareholders of Tekkie Town an earn-out bonus, based on the financial results of
Speciality (the bonus scheme agreement). It was anticipated that the Tekkie Town
business would be included in Speciality’s footwear business. The bonus scheme
agreement was subject to the conclusion of a sale agreement of the Tekkie Town
shares, the business and other assets.

[2] On 29 August 2016 the respondents and Steinhoff NV entered into a
written agreement, entitled ‘Sale of Shares and Claims Agreement’ in terms of
which they sold in aggregate, 56.94% of their shares in, and ceded their claims
against, Tekkie Town (collectively, ‘the Tekkie Town shares’) to Steinhoff NV,
for a purchase price of R3 257 250 000 (the sale agreement). On 17 January 2017
the purchase price was discharged by the issue of consideration shares in

Steinhoff NV to each of the respondents, in proportion to its aliquot share as
defined in the sale agreement.

[3] Following the sale agreement, Steinhoff NV transferred the Tekkie Town
shares it had acquired from the respondents to Steinhoff Investments Holdings
Ltd (SIH) for a consideration equal to R2 983 856 000. On the same day, SIH
transferred the Tekkie Town shares to Steinhoff Africa Holdings (Pty) Ltd
(Steinhoff Africa) for a consideration equal to R2 983 856 000. On 1 July 2017
Pepkor bought the Tekkie Town shares from Steinhoff Africa for a purchase price
of R3 391 974 152. Pepkor listed on the Johannesburg Securities Exchange (the
JSE) in September 2017. On 1 October 2017 Speciality purchased the Tekkie
Town business. Thus, through a series of transactions, the Tekkie Town shares
were ultimately transferred to Pepkor which has held the shares with effect from
1 July 2017. The Tekkie Town business has been integrated with Speciality’s own
retail business and conducted as such since October 2017.

[4] By March 2018 the respondents claimed that the value of the consideration
shares had been overstated and were but a fraction of their value when the sale
agreement was concluded. They alleged that Mr Jooste had fraudulently
misrepresented and concealed Steinhoff NV’s true financial position, to induce
them to enter into the sale agreement. On 28 March 2018 they proposed the return
of the consideration shares to Steinhoff NV in exchange for shares in Steinhoff
Africa Retail Ltd (STAR), to the value of the consideration shares at the time of
implementation of the sale agreement. Steinhoff NV was the controlling majority
shareholder in STAR. The proposal was declined.

[5] On 11 May 2018 the respondents instituted the action under case number
8276/2018 against Steinhoff NV and Town Investments in the high court, in
which they claim redelivery of the equity, defined in the sale agreement as ‘the

Sale Shares and the Sale Claims’, according to the respondents’ purchase price
aliquot shares ‘in the condition and with their values, rights and exigibility as the
Sale Shares and Sale Claims had’ at the date of the conclusion of the agreement
(the main action). The alternative claim is one for damages in a cumulative
amount of R1 854 678 150. The claims in the main action are founded on an
alleged fraudulent misrepresentation by Mr Jooste concerning Steinhoff NV’s
financial position, which induced the respondents to enter into the sale agreement.
They allege in the particulars of claim that they have resiled from the agreement.

[6] Pepkor (the present owner of the Tekkie Town shares) and Speciality (the
present owner of the Tekkie Town business), were not parties to the main action
when the high court issued the interdict. This, despite the fact that the respondents
were at all times aware that Steinhoff NV no longer owns the Tekkie Town shares,
the return of which they seek as the principal form of relief in the main action.
The Pepkor entities were joined as parties in the main action after the high court
granted the interdict.

[7] In June 2018 the respondents instituted a separate action in the high court
against STAR in which they seek a declaratory order that it is bound by the bonus
scheme agreement and liable for the payment of bonuses to the respondents, based
inter alia on Speciality’s financial results (the bonus scheme action).

[8] In April 2019, almost a year after they had instituted the main action, the
respondents launched an urgent application in which they sought the following
relief:
‘2
Pending the final determination of the action instituted in the Western High Court under
case number 8276/2018

2.1
interdicting and restraining the second respondent [Pepkor] from alienating,
transferring, ceding, assigning, and/or otherwise encumbering its shareholding in the fourth
respondent [Tekkie Town], or any part thereof;
2.2
interdicting and restraining the fourth respondent [Tekkie Town] from allotting and/or
issuing any further shares in the fourth respondent;
2.3
interdicting and restraining the third respondent [Speciality] from alienating, ceding,
assigning, or otherwise encumbering the business trading under the name and style Tekkie Town
(including the assets thereof), acquired in terms of the sale agreement entered into by the parties
with the effective date 1 October 2017 (as amended in addendum No 1), otherwise than as
reasonably required in the normal course of operating a retail business;
2.4
interdicting and restraining the first respondent [Steinhoff NV] from dealing with its
shares in the second respondent [Pepkor] in any manner which would result in loss of control
of second respondent or prevent it from giving effect to the relief sought in prayer A in case
number 8276/2018.’

[9] The purpose and grounds of the application for the interdict were stated as
follows in the founding affidavit:
‘This application seeks to preserve the aforesaid property in the ownership of the current
owners and free of any hindrance, encumbrance or alteration which would serve to diminish
their value or prevent or delay their return to the applicants as plaintiffs, should the . . . Court
in due course so order. The pleadings in the said action having closed, both the shares and the
other assets, the restoration of which are sought in the action, are res litigiosa until the final
determination of the action by the . . . Court. . . .’
The first respondent [Steinhoff NV] holds 71% of the shares in the second respondent [Pepkor]
which, through a series of wholly-owned subsidiaries, owns and controls all of the shares in the
third respondent [Specialty]. In fact, the first respondent controls and directs all of the corporate
actions and activities within the Steinhoff Group. There can be no disposal of the shares in or
held by any company within the Group, or the disposal of any business or business unit, without
the approval of the board of directors of the first respondent. Similarly, the first respondent is
able to require that any of the shares in or held by any of the companies within the Steinhoff
Group, and any of those companies’ businesses or business units, be disposed of.’

[10] The appellants opposed the application, principally on the following
grounds. The res litigiosa doctrine was inapplicable. The companies within the
Steinhoff Group are all separate corporate entities, each with their own board of
directors which manages their business and affairs. Steinhoff NV does not control
Pepkor. The former is listed on the Frankfurt Stock Exchange and the latter, on
the JSE. Pepkor purchased the Tekkie Town shares bona fide and for value (some
R3.4 billion). Speciality acquired the Tekkie Town business in good faith and for
value. It was factually impossible to restore the Tekkie Town business which had
materially changed in the intervening period. The number of stores had grown
from 230 to 398 and numerous members of staff had left the business, which had
been integrated into the much larger business of Speciality.

[11] The application came before Erasmus J on 25 April 2019. The judge said
that he would hand down an order the following morning. After the court had
adjourned, the judge invited the parties to send him a proposed draft order in the
terms sought by them, via email. The respondents sent a draft order to Erasmus J
at 23h22 on 25 April 2019. It was materially different from the order sought in
the notice of motion. The next morning, without granting the appellants an
opportunity to be heard or to make written submissions, the judge issued an order
in terms of the draft. I revert to these aspects below. The relevant part of the order
reads as follows:
‘2
Pending the final determination of the action instituted in the Western Cape High Court
under case number 8276/2018:
2.1
the first respondent [Steinhoff NV] is interdicted and restrained from dealing with the
shares it holds directly or indirectly in any of its subsidiaries or any juristic persons related to
it, or permitting them to be dealt with, in any manner which would result in it being unable to
give effect to the relief in para 2.2 below, and that sought in prayer A in case number 8276/2018;

2.2
the first respondent [Steinhoff NV] is directed to exercise the control it has over the
second [Pepkor], third [Speciality] and fourth [Tekkie Town] respondents respectively, in such
a manner that:
2.2.1 the shareholding of the second respondent [Pepkor] in the fourth respondent [Tekkie
Town] is preserved and prevented from being alienated, and/or encumbered in whole or in part;
2.2.2 the fourth respondent [Tekkie Town] is prevented from issuing any further shares in
itself;
2.2.3 the business trading under the name and style of Tekkie Town acquired in terms of the
sale agreement entered into by the first respondent [Steinhoff NV] and the third respondent
[Speciality] with effective date 1 October 2017 (as amended in addendum No 1), is preserved,
and third respondent [Speciality] is prevented from alienating or encumbering the said business
or its assets otherwise than as reasonably required in the normal course of operating the retail
business of Tekkie Town.
2.2
should –
2.3.1 the second respondent [Pepkor] intend to alienate, and/or encumber in whole or in part
the shares it holds in the fourth respondent [Tekkie Town], and/or
2.3.2 the third respondent [Speciality] intend to alienate and/or encumber in whole or in part
the business trading under the aforesaid name and style of Tekkie Town,
the second and/or the third respondent be directed to notify in writing all parties to the intended
transaction that the aforesaid shares and/or business, as the case may be, are the subject-matter
of claims by the present applicants in case number 8276/2018 in this Court, and to furnish a
copy of such notification to the applicants’ attorneys of record not later than 10 days prior to
the conclusion of any agreement having such effect.
3.
Costs to stand over for later determination.’

[12] The order issued by Erasmus J came to the attention of the appellants via
an email sent by the judge’s registrar on 29 April 2019, and the parties were
requested to indicate within five days whether they required ‘full reasons’ for the

order. On 30 April 2019 the appellants requested the reasons for the order. These
reasons had not been given by 10 May 2019 when the appellants had filed their
applications for leave to appeal.

[13] The reasons for the order were given orally by Erasmus J – more than three
months later, on 20 August 2019. The reason given for this delay was simply that
for ‘some or other reason there were crossed lines’. The judge granted the parties
permission to record the reasons given in court. This recording was transcribed
and given to the judge to assist him in providing the reasons in written form, in
accordance with rule 49 of the Uniform Rules of Court. However, the judge’s
registrar enquired of the attorney representing the Pepkor entities whether the
unedited transcript of the reasons could be circulated, to which they consented.
Erasmus J did not furnish written reasons and the unedited transcript of the oral
reasons, utilised in the application for leave to appeal, constitutes the reasons for
the order issued on 26 April 2019 (the transcript). According to the transcript, the
draft order tendered by the respondents was made an order of court ‘overnight’.

[14] At this point it is convenient to deal with the submission by counsel for the
Pepkor entities that the failure by Erasmus J to grant the appellants an opportunity
to make written or oral submissions on the draft order, which was very different
from the relief sought in the notice of motion, was inappropriate and likely to
bring the administration of justice into disrepute. The submission has merit. It is
axiomatic that a hearing should be fair. This lies at the heart of our system, is
common sense and is enshrined in the Constitution.1 As the litigants, the
appellants should have been given an opportunity to raise with the court, any
concerns they might have had in relation to the draft order. Secondly, as part of

1 Section 34 of the Constitution provides:
‘Everyone has the right to any dispute that can be resolved by the application of law decided in a fair public hearing
before a court, or where appropriate, another independent and impartial tribunal or forum.’

the decision-making process, their legal representatives were entitled to make
written or oral submissions regarding the draft order. This may well have obviated
the need for an appeal. The issuance of the order in the circumstances is
regrettable.

[15] The application for leave to appeal was heard on 13 September 2019 and
the judgment in that application delivered on 16 September 2019. The high court
concluded that there was no reasonable prospect that another court would come
to a different conclusion on the facts, and that the order was not final in effect.

Is the order appealable?
[16] The respondents submitted, on the authority of Zweni v Minister of Law
and Order,2 that the order is not appealable because it is not final in effect, does
not dispose of any relief claimed in the main action, and is not definitive of the
rights of the parties. However, these traditional requirements have now been
subsumed under the broader constitutional ‘interests of justice’ standard.3 This
standard applies both to appealability and the grant of leave to appeal, regardless
of the existence of pre-constitutional common law impediments.4

[17] In my view, it is in the interests of justice that the order granted against the
appellants is appealable, not least because it is final in effect and not susceptible
to alteration by the high court or the court hearing the main application.5 The
issues upon which final pronouncements have been made are not matters that will
arise for determination in the main action, on the pleadings as they stood at the

2 Zweni v Minister of Law and Order [1993] 1 All SA 365 (A); 1993 (1) SA 523 (A) at 536A-C.
3 Philani-Ma-Afrika and Others v Mailula and Others [2009] ZASCA 115; 2010 (2) SA 573 (SCA); [2010] 1 All
SA 459 (SCA) para 20; City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19;
2016 (9) BCLR 1133 (CC); 2016 (6) SA 279 (CC) para 40.
4 City of Tshwane City fn 3 para 41.
5 Cipla Agrimed (Pty) Ltd v Merck Sharp Dohne Corporation and Others [2017] ZASCA 134; [2017] 4 All SA
605 (SCA); 2018 (6) SA 440 (SCA) para 47.

time, in particular: the application of the res litigiosa doctrine; Steinhoff NV’s
alleged control of the Pepkor appellants; fraud in relation to the transactions
following the sale agreement; and whether Pepkor bought the Tekkie Town shares
in good faith and for value.  Likewise, the order restraining Steinhoff NV from
dealing with its shares at will, and directing it to exercise the control it has over
the Pepkor entities in a particular manner, will also not be revisited in the main
action, on the pleadings as they stood at the time.

[18] After the interdict was issued, the respondents joined the Pepkor entities as
parties in the main action, and delivered amended particulars of claim on 9 June
2020, in which they allege the abuse of corporate personality by the defendants
in that action. These subsequent events are however irrelevant, since this Court
must decide ‘whether the judgment appealed from is right or wrong, according to
the facts in existence at the time it was given and not according to new
circumstances which came into existence afterwards’.6

Res litigiosa
[19] Res litigiosa is property which is the subject of litigation. A plaintiff may
in principle apply to preserve res litigiosa, pendente lite.7 The requirements are
those for an ordinary interim interdict. As a general principle, there are two
additional inherent features: the first is that the property which is the subject of
the interim interdict is the subject of the action; and the second, that the action
and the interim application are between the same parties.

6 Weber-Stephen Products Co v Alrite Engineering (Pty) Ltd and Others [1992] 4 All SA 453 (AD); 1992 (2) SA
489 (A) at 507D-E.
7 Opera House (Grand Parade) Restaurant (Pty) Ltd v Cape Town City Council [1986] 4 All SA 120 (C); 1986
(2) SA 656 (C) at 656C; Knox D’Arcy Ltd and Others v Jamieson and Others [1996] 3 All SA 669 (A); 1996 (4)
SA 348 (A) at 371H.

[20] In Knox D’Arcy Ltd and Others v Jamieson and Others E M Grosskopf JA
referred to a same-parties same-property type interdict as ‘the usual case where
its purpose is to preserve an asset which is in issue between the parties’.8 Since
the applicants in that case did not apply to preserve property ‘in issue between the
parties’ and laid no claim to the respondent’s assets in the anticipated action, the
judge said that ‘(t)he interdict sought was therefore of an unusual nature’.9

[21] In this case the order issued by the high court does not preserve the property
in issue in the main action, but affects Steinhoff NV’s right to deal with different
property, ie the shares which Steinhoff NV holds directly and indirectly in any of
its subsidiaries, or any juristic persons related to it. The order was granted against
the Pepkor entities despite the fact that they were not parties to the main action.
Although the respondents asserted that Steinhoff NV was disposing of non-core
assets, which would frustrate their chances of obtaining redress in due course,
they stated that ‘the application is not one for an anti-dissipation order’. Their
case, instead, was that the Tekkie Town shares and business became res litigiosa,
which entitled them to an interdict pending the final determination of the main
action.

[22] The stage at which property becomes res litigiosa, is stated in Silberberg
and Schoeman’s The Law of Property,10 as follows:
‘In Roman law, broadly speaking, a res became litigiosa at the stage of litis contestatio, which
in our law arises upon the closing of pleadings. In Roman-Dutch law a distinction was drawn
between real actions (in rem) and personal actions (in personam). Where a real action with
regard to the thing was instituted, the thing became litigiosa when the defendant was informed

8 Knox D’Arcy fn 7 at 371H.
9 Knox D’Arcy fn 7 at 371H-I.
10 P J Badenhorst, J Pienaar and H Mostert Silberberg and Schoeman’s The Law of Property 5 ed (2006) at 268,
footnotes omitted.

of the summons issued against him or her. In the case of a personal action the thing became
litigiosa at the close of pleadings.’

[23] The high court concluded that it would defeat the relief granted against
Steinhoff NV (in the main action), if no relief was granted against the Pepkor
entities, since they were ‘the possessors and/or current owners’ of the Tekkie
Town shares and business. The transcript is however opaque as to the reasons for
reaching this conclusion. The judge appears to have concluded, without any
factual basis, that when one has regard to ‘the nature of the relationship inter se
in the Steinhoff Group’, the transfer of the Tekkie Town shares and business was
‘clearly plotted’; some decisions were made the day before a transaction took
place; and it was stated on behalf of the Pepkor entities that the sale of the shares
and business was part of an internal restructuring. This reasoning however bears
no relation to the res litigiosa doctrine.

[24] Before us, counsel for the respondents submitted that the property claimed
in the main action is one in rem, since the respondents are seeking restoration of
their ownership and possession of the equity. The property thus became res
litigiosa upon the service of the summons in the main action.11 Alternatively, if
this Court regards the main action as being one in personam, the equity would
nevertheless have become res litigiosa by virtue of litis contestatio having been
reached. Further alternatively, it was submitted that ‘the doctrine of res litigiosa
in modern South African law should be revisited in the light of the alteration in
status of contracts induced by fraud from being void ab initio to merely voidable’.

[25] In my view these submissions do not withstand scrutiny. The doctrine of
res litigiosa is inapplicable for three reasons. First, the doctrine could not apply

11 Blue-Cliff Investments (Pty) Ltd and Another v Griessel and Others [1971] 2 All SA 523 (C); 1971 (3) SA 93
(C) at 96C-F; Opera House fn 7 at 659G-660B.

to Pepkor and Speciality as the current owners of the Tekkie Town shares and
business respectively, since the res described in the particulars of claim in the
main action was not litigiosa in relation to them. They were not parties to the
main action. There was no lis between the respondents and Pepkor and Speciality,
the subject matter of which was the Tekkie Town shares which the respondents
sold to Steinhoff NV. The doctrine of res litigiosa only applies where there is a
lis between the plaintiff enforcing a right to or ownership of property and the
possessor thereof.12 Further, there was no question of property subject to litigation
in the main action being transferred to the Pepkor entities while those proceedings
were pending. It is common ground that the Tekkie Town shares and business
were transferred to Pepkor and Speciality respectively, well before the main
action was instituted, and thus before the Tekkie Town shares or the Tekkie Town
business could become res litigiosa in the main action.

[26]  Second, the high court’s order restrains the appellants from dealing with
property that is self-evidently not the subject matter of the main action. In this
regard the court referred to Van Heerden v Sentrale Kunsmis Korporasie,13 on
which the respondents had relied, but gave no reasons for apparently following
this decision, as is clear from the transcript. Erasmus J said:
‘The Applicants relied on the dicta of Rumpff JA, as well as another matter of Holmes JA, in
the matter of van Heerden v Sentrale Kunsmis Korporasie at paragraph 31H and further in the
old style of reporting under 1973 (1) SA 17 AD. I do not deem it necessary to repeat the
quotations from these cases that were contained in the heads of argument and presented to me.
I mention this because when counsel prepare their leave to appeal application they can read it
at their own time and see what it says.’

12 Opera House fn 7 at 661C.
13 Van Heerden en Andere v Sentrale Kunsmis Korporasie (Edms) Bpk [1973] 1 All SA 150 (A); 1973 (1) SA 17
(A).

[27] This statement is both unusual and unfortunate, particularly in the light of
the judge’s observation that one of the litigants was present in court when it was
made. The duty to give reasons for a decision, in my opinion, is a function of due
process, embodied in the right to a fair hearing enshrined in s 34 of the
Constitution. Fairness requires that the parties – especially the losing party –
should be left in no doubt as to the reasons for an order and consequently, why
they have won or lost. The explanation by Buckley LJ in Capital and Suburban
Properties Ltd v Swycher and Others,14 concerning the  appropriateness of
reasons in a case such as the present, is instructive:
‘There are some sorts of interlocutory applications, mainly of a purely procedural kind, on
which a judge exercising his discretion on some such question as whether a matter should be
expedited or adjourned or extra time should be allowed for a party to take some procedural
step, or possibly whether relief by way of injunction should have been granted or refused, can
properly make an order without giving reasons. This, being an application involving questions
of law, is in my opinion clearly not such a case. Litigants are entitled to know on what grounds
their cases are decided. It is of importance that the legal profession should know on what
grounds cases are decided, particularly when questions of law are involved. And this court is
entitled to the assistance of the judge of first instance by an explicit statement of his reasons for
deciding as he did.’

[28] We were informed by counsel for the appellants that the respondents had
relied on Van Heerden in support of an argument that they were entitled to claim
the return of the Tekkie Town shares and business wherever they were then
housed. Van Heerden arose from the sale of a going concern, effected by transfer
of 100% of the issued share capital of a company. The purchaser reclaimed the
purchase price and tendered return of the sale shares. The question was whether
the tender was sufficient. Rumpff JA explained that the purpose of restitution was
to place the parties in the same position as they would have been had the contract
not been concluded. The judge said that in a case where the sale of shares was

14 [1976] 1 All ER 881 at 884, [1976] Ch 319 at 325-326.

simply a formal means of effecting the sale of a business as a going concern, and
the purchaser was responsible for the diminution in value or destruction of the
business assets, a tender to return the shares would not suffice as restitution.15

[29] Van Heerden does not support the argument that the respondents were
entitled to claim the return of the Tekkie Town shares and business wherever they
were located. The respondents did not make this claim in the main action. The
argument could not assist them to preserve assets in advance of a claim they did
not make.16 Apart from this, the respondents did not sell 100% of the shares in
Tekkie Town: they sold only 56,94% and there is no basis in law for a restitution
claim for more than what was in fact delivered by them. There was consequently
no entitlement to preserve that which never served as the res vendita in terms of
the sale agreement.

[30] The third reason why the res litigiosa doctrine finds no application is that
on the pleadings before the high court, the main action was not one in rem, but an
action in personam, and pleadings had not closed when the interdict was granted.
As stated earlier, the cause of action is an alleged fraudulent misrepresentation by
Mr Jooste that induced the respondents to enter into the sale agreement. This was
confirmed in the founding affidavit in the interdict application. The relief claimed
is rescission of the sale agreement and restitutio in integrum; alternatively,
damages in the event that Steinhoff NV is unable to make restitution. The source
of the right asserted is a legal relationship between the plaintiffs and the
defendants in the main action – not a legal relationship between the plaintiffs and

15 Van Heerden fn 13 at 32H-33A.
16 In an attempt to align their case with the approach in Van Heerden, the respondents served a notice of intention
to amend their particulars of claim shortly before the hearing of the application and well after it was launched.
According to the amendment, ‘the subject matter of the contract was the whole of Tekkie Town, including its
business as a going concern’. However, the amendment had not been effected when the application was heard. In
any event, the amendment did not alter the relief claimed – restitution of the applicable proportion of the sale
shares and sale claims as defined in the sale agreement; alternatively, damages.

the property itself.17 The claim for rescission and restitution is one in contract: the
remedy of rescission to an aggrieved contracting party is a contractual remedy.18
This is reinforced by the alternative claim for damages: the respondents recognise
that Steinhoff NV may not be able to make restitution.

[31]  Given that the respondents’ claim in the main action is one in personam
against Steinhoff NV, the relevant property would have become res litigiosa only
after litis contestatio.19 Pleadings in the main action had not closed when the
interdict was granted, as the respondents had delivered a notice of intention to
amend their particulars of claim.20

[32] Finally, on this aspect of the case, the principle that a contract induced by
improper means, such as a fraudulent misrepresentation, is valid until it is set
aside and not void but voidable at the election of the innocent contracting party,
is well-settled.21 There is accordingly, in my view, no reason for the law in this
regard to be extended so as to enable a defrauded former owner to reclaim, in a
vindicatory action, things lost as a result of a contract induced by fraud.

Fraud and the issue of control
[33] In the founding affidavit the respondents’ main deponent, Mr Bernard
Mostert, a director of the first and fifth respondents, alleged that the sales and
transfers of the shares in Tekkie Town were ‘simulated transactions’ forming part

17 Examples of an action in rem are claims of ownership, of usus, usufruct or a servitude. See in this regard G B
Bradfield Christie's Law of Contract in South Africa 7 ed (2016) at 4.
18 Baker v Probert [1985] 2 All SA 263 (A); 1985 (3) SA (A) at 439A-B;
S W J van der Merwe et al Contract: General Principles 4 ed (2012) at 354.
19 Blue Cliff Investments fn 11 at 94B- 95C.
20 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; [2012] 2 All SA 262 (SCA);
2012 (4) SA 593 (SCA) paras 14-16.
21 Preller v Jordaan 1956 (1) SA 483 (A) at 494H; North West Provincial Government and Another v Tswaing
Consulting CC and Others [2006] ZASCA 108; [2007] 2 All SA 365 (SCA); 2007 (4) SA 452 (SCA) paras 11-
12.

of a ‘labyrinthine fraud’, perpetrated by those in charge of Steinhoff NV and its
controlled subsidiaries.

[34] The allegation of fraud was based on submissions by Steinhoff NV’s
representatives before parliamentary committees concerning accounting
irregularities by directors and officers of Steinhoff NV. The committees were
informed that owing to these irregularities, Steinhoff NV’s annual financial
statements for the 2015 and 2016 financial years had to be restated. The
respondents also relied on a report by Pricewaterhouse Coopers Advisory Service
Proprietary Ltd (PwC) dated 15 March 2019, concerning an investigation into
accounting irregularities and non-compliance with laws and regulations made
against various Steinhoff entities and former executives, in South Africa and other
jurisdictions.

[35] The PwC report states that a small group of Steinhoff NV’s executives and
other non-executives had structured and implemented various fictitious and
irregular transactions over a number of years, which resulted in false profits and
asset values of the Steinhoff Group of some €4.5 billion over an extended period,
whilst simultaneously diminishing the Group’s liabilities. The main transactions
in which this was done – of which no details are given in the report – relate to
fictitious profit and asset creation; asset overstatement and reclassification; false
asset and entity support; and mitigating losses through sham contributions by
companies in the Steinhoff Group. The PwC report concludes with remedial
actions that were required to be taken. These included ensuring that the findings
in the report were treated appropriately in the preparation of the Steinhoff Group’s
financial statements for the 2017 and 2018 financial years; and recovery of the
losses incurred and damages suffered by the Group.

[36]  The appellants denied the allegation of a web of fraud. It was not pleaded
in the main action in which the respondents relied only on the alleged fraud by
Mr Jooste, representing Steinhoff NV, that induced the sale agreement. The
appellants’ answer to the alleged fraud was this. The very transactions which the
respondents say are fraudulent, form the basis of their claims to an earn-out bonus
in the bonus scheme action. Mr Mostert and Mr Van Huyssteen were directly
involved in the pre-listing statement of Pepkor and its listing on the JSE in
September 2017. They knew the rationale for the listing and the context in which
it occurred. Mr Mostert had informed Mr Van Huyssteen in an email on 10
January 2018 that the latter had no claim against STAR to recover his losses or
the Tekkie Town business, because ‘STAR is an independent company that
bought TT at exactly the same price from SHNV [as] what you were paid’. The
respondents were thus aware of the integrity of the transactions in terms of which
the Tekkie Town shares were transferred to Pepkor, and the Tekkie Town
business, to Speciality. These were transactions in good faith and for value.

[37] Regarding the appellants’ defence that they had obtained the Tekkie Town
shares for value and had grown the business substantially since the time of
takeover, the high court concluded that ‘(t)hese assertions lose sight of the nature
of the relationship inter se in the Steinhoff Group. That, it seems, might also not
be always what it [is] portrayed to be at first sight’. There is however no factual
basis for this conclusion. Erasmus J stated that the ‘flow of this transaction’ was
set out in the papers and annexures. The judge went on to say:
‘The transfer passed of the Tekkie Town business and its shares was clearly plotted, having
regard to the timeline before the first transfer took place. These timelines are common cause.
Some of the decisions were made the day before the transaction would take place and on the
same day the flow would go from one subsidiary to another at either the same price and/or an
inflated price, and there is still an issue of the missing millions on the first transfer’.

[38] This conclusion at an interim stage of the proceedings and the reasons for
it – that suggest some sort of preconceived, co-ordinated and deceitful conduct by
entities involved in transactions resulting in ‘missing millions’ of Rands – are
however at odds with the following statement by the judge in the transcript:
‘I do not deem it necessary nor prudent to delve into the details of the transactions that led to
the business of Tekkie Town ultimately being placed in the third respondent, that’s Pepkor
Speciality (Pty) Limited, nor the issues of control and/or the placement of the shares in the
second respondent [Pepkor] by the first respondent [Steinhoff NV] or any of its subsidiaries, as
I am aware that these matters might be the subject of further litigation before this and potentially
other courts.’

[39] Despite this, paragraph 2 of the order, which restrains Steinhoff NV from
dealing freely with its shares in any of its subsidiaries or related companies, and
directs Steinhoff NV ‘to exercise the control it has’ over the Pepkor entities in a
particular manner, is based entirely on the alleged control by Steinhoff NV of the
corporate actions within the Steinhoff Group. And the cases make it clear that it
is inappropriate and unwise for findings of fraud or deceit to be made on the basis
of untested allegations on motion, which are denied on grounds that cannot be
described as far-fetched or untenable. This is based not only on common sense,
but also on ‘many years of collective judicial experience’.22

[40] The high court erred. To begin with, the respondents produced no evidence
to substantiate fraud in the application for the interdict, other than the fact of the
transactions subsequent to the sale agreement themselves, and the accounting
irregularities in relation to the Steinhoff Group. Instead, the respondents merely
referred to submissions before parliamentary committees by company officers of
Steinhoff NV; liquidation proceedings and other claims instituted against it in
South Africa and foreign jurisdictions; and the PwC report. Then Mr Mostert

22 Prinsloo NO and Others v Goldex 15 (Pty) Ltd and Another [2012] ZASCA 28; 2014 (5) SA 297 (SCA) paras
19-20.

made the sweeping allegation that it ‘would appear to be self-evident’ that the
sales and transfers of the Tekkie Town shares were simulated transactions; and
‘entirely in accordance with the scheme’ of the PWC report. In this regard, the
respondents failed to identify in the founding affidavit, the parts of the PwC report
on which they relied, nor the case they sought to make out on the strength thereof.
This is impermissible.23

[41] On the papers in the interdict application, the allegation in the founding
affidavit that Steinhoff NV controls and directs all corporate actions and activities
within the Steinhoff group, is wrong both in fact and in law. The facts before the
high court were these. Pepkor is a listed company. Steinhoff NV owns 71% of its
shares. The remaining 29% of the shares, valued at some R19.5 billion, are listed,
publicly tradable shares held by independent investors. Pepkor’s interests are not
synonymous with those of Steinhoff NV and it is not wholly-owned by the latter.

[42] The answering affidavit states that the parties are all separate corporate
entities, each with their own board of directors who have discrete obligations and
fiduciary duties to the companies on which boards they serve. These allegations
were not contradicted. Further, Pepkor, as an entity listed on the JSE, is obliged
to comply with the King IV Code on Corporate Governance, in terms of which
the board of a company must act in the best interests of the company as a separate
entity, taking into account the interests of various stakeholders and not merely
those of its shareholders. Pepkor would thus breach the Code were Steinhoff NV
to control all of Pepkor’s corporate actions.

23 Van Zyl and Others v Government of the Republic of South Africa and Others [2007] ZASCA 109; [2008] 1 All
SA 102 (SCA); 2008 (3) SA 294 (SCA) para 40, approving Swissbourgh Diamond Mines (Pty) Ltd v Government
of the RSA and Others 1999 (2) SA 279 (T) at 323F-325C.

[43] More fundamentally, it is an established principle that a company is a legal
entity distinct from its shareholders and that property owned by a company is not
that of its shareholders. This principle was recently affirmed by this Court in
Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others.24  The
principle applies equally where the company is a subsidiary or even a wholly-
owned subsidiary of another company.25 The principle that each company in a
group has a separate legal existence of its own was stated in Adams v Cape
Industries PLC,26 as follows:
‘Our law, for better or worse, recognises the creation of subsidiary companies, which though
in one sense the creatures of their parent companies, nevertheless under the general law fall to
be treated as separate legal entities with all the rights and liabilities which would normally
attach to separate legal entities.’

[44] The board of a holding company is thus not able to dictate the decisions of
the board of a subsidiary, even if that subsidiary is a direct, wholly-owned
subsidiary. In terms of s 66(1) of the Companies Act 71 of 2008, the board of a
subsidiary must independently manage and direct the business and affairs of the
subsidiary company.27

[45] In Shipping Corporation of India Ltd v Evdomon Corporation and
Another,28 Corbett CJ affirmed the principle that a company has a separate juristic
personality, and said that the only permissible deviation from this rule known to

24 Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others [2020] ZASCA 83; [2020] 3 All SA
650 (SCA) paras 17 and 24.
25 Wambach v Maizecor Industries (Edms) Bpk [1993] 2 All SA 158 (A); 1993 (2) SA 669 (A) at 674H- 675C.
26 Adams v Cape Industries PLC [1991] 1 All ER 929 (Ch D) at 1019.
27 Section 66(1) of the Companies Act 71 of 2008 provides:
‘66  Board, directors and prescribed officers
(1) The business and affairs of a company must be managed by or under the direction of its board, which has
the authority to exercise all of the powers and perform any of the functions of the company, except to the extent
that this Act or the company's Memorandum of Incorporation provides otherwise.’

28 Shipping Corporation of India Ltd v Evdomon Corporation and Another [1994] 2 All SA 11 (A); 1994 (1) SA
550 (A).

our law occurs in those rare cases (in practice) where the circumstances justify
piercing or lifting the corporate veil. Those circumstances generally must include
an element of fraud or other improper conduct in the establishment or use of the
company, or the conduct of its affairs.29 No such case was made out in the
founding affidavit in the application for the interdict.

[46] The respondents’ allegations that the sales and transfers of the shares in
Tekkie Town were simulated transactions and that Steinhoff NV controlled all
corporate actions within the Steinhoff Group, were simply not established on the
papers in the interdict application. Neither did they make out a case on those
papers for the high court to disregard the separate corporate personalities of the
appellants. It follows that the high court’s order must be set aside.

[47] I expressly refrain from deciding the validity or otherwise of the appellants’
defences to the alleged fraud referred to in paragraph 37 above, for two reasons.
First, the appellants’ defences, and the alleged abuse of corporate personality by
Steinhoff NV, Tekkie Town and the Pepkor entities, are triable issues in the main
action according to the respondents’ amended particulars of claim. Second, it is
unnecessary to decide the defences by reason of the conclusion to which I have
come.

The application to adduce evidence on appeal
[48] At the inception of the hearing of this appeal the respondents applied to
adduce further evidence on affidavit. The new evidence sought to be introduced
was the respondents’ notice of intention to amend their particulars of claim in the
main action; the amended particulars of claim dated 9 June 2020; and the
exception to the latter pleading by Pepkor and Speciality, following their joinder

29 Shipping Corporation of India fn 27 at 565I-566F.

as parties in the main action.  The application was refused and we indicated that
reasons would be given in this judgment. These are the reasons.

[49] In terms of s 19(b) of the Superior Courts Act 10 of 2013, this Court is
empowered to receive further evidence on appeal.30 According to the cases, the
following criteria must be met. The general principle, as stated earlier, is that an
appellate court does not decide an appeal according to new circumstances that
came into existence after the judgment appealed against.31 There may be
exceptional circumstances where an appellate court might be able to take
cognisance of subsequent events.32 The power to admit evidence on appeal should
be exercised sparingly.33 There must be a reasonably sufficient explanation why
the evidence was not tendered earlier in the proceedings.34 The evidence ‘must be
weighty and material and presumably to be believed’.35 These criteria were
confirmed by the Constitutional Court in Rail Commuters Action Group v
Transnet Ltd t/a Metrorail,36 concerning the power of an appellate court to admit
evidence on appeal under s 22(a) of the Supreme Courts Act 59 of 1959, the
precursor to s 19(b) of the Superior Courts Act.

[50] The new evidence sought to be introduced by the respondents is neither
weighty nor material to the case that served before the high court. It comprises
court process delivered after the high court issued the order restraining the

30 Section 19 of the Superior Courts Act provides in the relevant part:
‘The Supreme Court of Appeal or a Division exercising appeal jurisdiction may, in addition to any power as may
specifically be provided for in any other law–
(b)
receive further evidence. . . .’
31 Weber-Stephen Products fn 6 at 507C-D.
32 Goodrich v Botha and Others [1954] 3 All SA 40 (A); 1954 (2) SA 540 (A) at 545G-546C; S v Louw [1990] 4
All SA 703 (AD); 1990 (3) SA 116 (A) at 123H.
33 Van Eeden v Van Eeden 1999 (2) SA 448 (C) at 450J-451A.
34 S v Louw fn 31 at 123-124.
35 Colman v Dunbar 1933 AD 141 at 161-163.
36Rail Commuters Action Group v Transnet Ltd t/a Metrorail 2005 (4) BCLR 301 (CC); 2005 (2) SA 359 (CC)
paras 42 and 43. See also Moor and Another v Tongaat-Hulett Pension Fund and Others [2018] ZASCA 83;
[2018] 3 All SA 326 (SCA); 2019 (3) SA 465 (SCA) para 36.

appellants from dealing with their property; and is entirely irrelevant to that order.
Quite apart from this, there is no explanation for the delay in launching the
application to adduce the new evidence. The respondents delivered their amended
particulars of claim on 10 June 2020. The application to adduce further evidence
was launched only on 13 August 2020. For these reasons the application was
refused and there is no reason why costs should not follow the result.

[51] The following order is issued:
The application to adduce further evidence on appeal is dismissed with
costs, including the costs of two counsel.
The appeals under case numbers 205/2020 and 217/2020 are upheld with
costs, including the costs of two counsel.
The order of the high court is set aside and replaced with the following:
‘The application is dismissed with costs, including the costs of two counsel.’
_______________
A SCHIPPERS
JUDGE OF APPEAL

APPEARANCES
For Appellants (case no 205/2020)

A Sholto-Douglas SC and

B J Vaughan
Instructed by

Bowman Gilfillan Inc,
Cape Town

Matsepes Inc, Bloemfontein

For Appellants (case no 217/2020)

A M Smalberger SC and
R Patrick
Instructed by

Werksmans Attorneys, Cape Town

Lovius Block, Bloemfontein

For First to Fifth Respondents
(case no 217/2020)
D F Irish SC, W Duminy SC and D
M Lubbe
Instructed by

C&A Friedlander, Cape Town
Symington De Kok Attorneys,
Bloemfontein.