Nel & Others v Cilliers

Mr JJG Nel, a businessman and controlling mind of several companies, invested in a golf estate development through a sale of shares agreement concluded with Mr PJJ Cilliers in 2008 (D1). Under D1, Cilliers agreed to buy Nel’s 5% shareholding in the development company for R30 million, payable by February 2011, interest-free and described as 'tax friendly'. Cilliers defaulted on his obligations, prompting the parties in 2011 to conclude a second agreement (D2), reducing the purchase price to R12 million, payable in instalments with interest. Cilliers made partial payment and then defaulted again. Neither party was registered as a credit provider under the National Credit Act 35 of 2005 (NCA). Nel and his companies sued for specific performance or, alternatively, payment under D1. At a pre-trial conference, Nel conceded that clauses of D2 contravened the NCA and were inseverable, rendering D2 invalid. The High Court and full court dismissed Nel’s claims, holding that D2 was unlawful, D1 abandoned or inchoate, and that both agreements contravened the NCA. Nel appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the full court was set aside and replaced with an order directing the respondent to pay the first appellant R5 million plus interest at 15.5% from 1 March 2011 to date of payment, together with costs of the action, including the costs of two counsel.

The judgment clarifies the binding nature of pre-trial concessions in South African civil procedure and confirms that acceptance by the opposing party is not required. It provides important guidance on abandonment and novation of contracts, the limits of courts deciding unpleaded issues, and the proper interpretation of section 8(4) of the National Credit Act in the context of deferred payment for the sale of shares.