Cohen N O & Others v Deans

The appellants were trustees of the Century City Property Investment Trust, a commercial trading trust with 23 beneficiaries. The respondent, Ms Deans, was the ex-wife of one trustee (Mr Deans) and had been a beneficiary during her marriage until divorce on 8 February 2019. Following property sales in 2013-2014, the Trust earned substantial capital gains. During the 2014 and 2015 tax years, trustees allocated net income from capital gains totaling R184,179,657 to beneficiaries, including R6,329,939 to Ms Deans. These amounts were reflected as vested liabilities in the Trust's 2017 Annual Financial Statements. In July 2021, Ms Deans sued for payment of R6,329,939. After the Trust filed a plea, Ms Deans applied for summary judgment. Critically, Ms Deans' particulars of claim were based on an amended trust deed dated 11 May 2015, but the allocations had actually occurred in 2013-2014, before this amendment. The original trust deed dated 13 June 2006 was therefore applicable. This error only became apparent at the summary judgment hearing. The trustees admitted the allocations but relied on clause 15.2 of the original trust deed (or clause 5.6 of the amended deed as pleaded) to justify withholding payment until a vesting date or Ms Deans' death.

• Whether the plaintiff complied with the peremptory requirements of rule 32(2)(b) in verifying the cause of action in a summary judgment application
• Whether summary judgment can be granted on a cause of action materially different from that pleaded in the particulars of claim
• Whether the defendants disclosed a bona fide defence to resist summary judgment
• Whether defects in pleadings can be cured when parties argue a matter on a common understanding different from what was pleaded
• What test applies to determine whether a defendant has disclosed a bona fide defence under the amended rule 32

The appeal succeeded with costs, including costs of two counsel. The high court order granting summary judgment was set aside and substituted with an order: (1) refusing summary judgment; (2) granting defendants leave to defend the main action; and (3) making costs in the cause.

A plaintiff seeking summary judgment must verify the correct cause of action in compliance with rule 32(2)(b). Reliance on an incorrect trust deed that goes to the heart of the claim is a material defect, not a technical one, and cannot be cured merely because parties argued the matter on a different basis at the hearing. To successfully resist summary judgment, a defendant need only disclose a bona fide defence that raises triable issues—a defence that is legally cognisable and, if proven at trial, would constitute a good defence to the claim. Prospects of success are irrelevant. A defence based on trustees' discretion under a trust deed to withhold payment until vesting, requiring interpretation of the trust deed provisions, constitutes a bona fide defence that is not a sham and deserves determination at trial.

The court made several notable observations: (1) It declined to definitively determine what is required to verify a cause of action under amended rule 32 or what should be contained in the affidavits, as this was not necessary given the clear existence of a bona fide defence. (2) The court noted that the learned authors in Erasmus Superior Court Practice preferred the Shackleton approach over the Roestof approach regarding technical defects. (3) The court observed that it was not incumbent on trustees to 'interact' with the plaintiff to inform her of errors in her pleadings, disagreeing with the high court's criticism of the trustees in this regard. (4) The court rejected characterization of the trustees' conduct as attempting to 'dupe' the plaintiff or court, finding no evidence they were aware of the defect until the hearing. (5) The court declined to make a punitive costs order despite the appellants' request, finding the usual costs order appropriate.

This judgment clarifies important principles regarding summary judgment applications under the amended rule 32 in South African civil procedure. It affirms that: (1) compliance with rule 32(2)(b) remains peremptory and defects in verifying the cause of action cannot be overlooked merely because parties argued the matter differently at the hearing; (2) reliance on an incorrect trust deed in pleadings constitutes a material defect, not a technical one; (3) the fundamental test for resisting summary judgment remains whether the defendant discloses a bona fide defence raising triable issues; (4) most of the old authorities on what constitutes a bona fide defence remain applicable under amended rule 32; and (5) defenses requiring interpretation of trust deed provisions and the scope of trustees' discretion are legally cognisable defenses deserving trial. The case reaffirms the approach in Shackleton over Roestof regarding whether defects can be cured by how parties conduct the hearing.