Vesagie NO & others v Erwee NO & another

The appellants, acting as trustees of the BEN Trust, purchased shares and loan accounts in various companies from the respondents, trustees of the ACE Trust, in terms of a written agreement concluded on 24 October 2008. The purchase price of R15 million was payable in deferred instalments, with only R750 000 having been paid. The agreement provided for deferred payment dates and included a clause stating that interest would be charged at prime minus 1%. When no further payments were made, the respondents sued for the outstanding balance, interest and costs. The appellants contended that the agreement constituted a credit transaction under the National Credit Act 34 of 2005 (NCA) and was unlawful because the respondents were not registered as credit providers.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order dismissing the claim with costs and declaring the agreement null and void ab initio.

This case clarifies that a sale agreement providing for deferred payment together with interest constitutes a credit transaction under the National Credit Act, even where the transaction involves the sale of shares. It underscores the strict consequences of non-compliance with the NCA, particularly the requirement that parties extending credit must be registered as credit providers, and reinforces proper principles of contractual interpretation in the context of statutory invalidity.