From: The Registrar, Supreme Court of Appeal

Please note that the media summary is intended for the benefit of the media and does not form part of the judgment of the Supreme Court of Appeal

H A KLOKOW v M B SULLIVAN

[1] The Supreme Court of Appeal today upheld an appeal against a decision of the full court of the TPD, that a party to an illegal agreement was not entitled to claim back an amount of R250 000 which he had paid pursuant to it.

[2] On 4 September 2000 Mr Klokow and Mr Sullivan entered into a written agreement in terms of which Klokow was to acquire from Sullivan a business that provided ‘adult entertainment’, which included the sale of liquor to its patrons. The business, based in Pretoria, trades under the name ‘Babe Watch – The Tease’. Pursuant thereto Klokow paid to Sullivan R250 000, half of the agreed purchase price. Klokow took possession of the business on 5 September 2000. However, on 18 October 2000, Klokow returned the business to Sullivan and issued summons against him for repayment of the R250 000.

[3] It was Klokow’s case that his agreement with Sullivan was illegal because Sullivan had failed to obtain consent for the sale of the business from the Chairperson of the Liquor Board, as required by the Liquor Act. Sullivan’s defence was that because Klokow was party to the illegality, he was not entitled to reclaim the R250 000 which he had paid to Sullivan.

[4] The SCA ruled that even though both parties were party to the illegality, it would not be in the interests of justice, or public policy, for Klokow to be denied a claim for repayment of the R250 000. If Sullivan was able to keep the business and the money, he would, said the SCA, be unjustly enriched. It accordingly ruled that Klokow is entitled to repayment.